Azure Reserved VM Savings Calculator

Test whether a reserved VM instance pays off at your real utilisation, and find the break-even usage point.

About Azure Reserved VM Savings Calculator

A reservation bills the full 730 hours per month for the whole term whether the VM runs or not, so the break-even point is simply the ratio of the reserved rate to the pay-as-you-go rate — around 43% for a 3-year term. Below that utilisation the reservation loses money; above it the saving grows linearly with usage. Reservations are the single largest Azure discount available without renegotiating an agreement, but they are the wrong instrument for bursty or seasonal workloads — a savings plan or Spot capacity fits those better. Confirm both the pay-as-you-go and reserved rates for your size and region in the Azure pricing calculator.

Formula

Azure Reserved VM Savings

reservation cost = instances × reserved rate × 730 (billed in full); pay-as-you-go cost = instances × rate × 730 × utilisation; break-even utilisation = reserved rate ÷ pay-as-you-go rate.

break-even utilisation: Fraction of the month a VM must run before the reservation is cheaper
utilisation: Share of the 730 hours the instances are actually running
term saving: Monthly saving extended across the whole 12 or 36 months

Worked example

With the default values below, Azure Reserved VM Savings Calculator returns Monthly Saving of $543.41. Change any input above and every figure here is recalculated in your browser.

Inputs used

Pay-as-you-go rateaccepts 0–100 USD/hour: 0.192 USD/hour
Instances to reserveaccepts 1–5,000 instances: 10 instances
Reservation termone of 1-year term, 3-year term: 3-year term
1-year reserved rateaccepts 0–100 USD/hour: 0.121 USD/hour
3-year reserved rateaccepts 0–100 USD/hour: 0.083 USD/hour
Hours the instances actually runaccepts 0–100 %: 82 %
Billed hours per monthaccepts 1–744 hours: 730 hours

Results

Monthly Saving: $543.41
Saving vs Actual Usage: 47.3%
Break-even Utilisation: 43.2%
Reservation Charge: $605.90
Pay-as-you-go Cost of the Same Usage: $1,149.31
Saving Over the Whole Term: $19,562.83
Recommendation: Reservation pays off comfortably at this utilisation

Step by step

1Values used
2Azure Reserved VM Savings
3Monthly Saving= 543.41
4Saving vs Actual Usage= 47.3
5Break-even Utilisation= 43.2
6Reservation Charge= 605.90
7Pay-as-you-go Cost of the Same Usage= 1,149.31
8Saving Over the Whole Term= 19,562.83

Assumptions and limits

The result is derived only from the 7 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Azure Reserved VM Savings calculated?

reservation cost = instances × reserved rate × 730 (billed in full); pay-as-you-go cost = instances × rate × 730 × utilisation; break-even utilisation = reserved rate ÷ pay-as-you-go rate. A reservation bills the full 730 hours per month for the whole term whether the VM runs or not, so the break-even point is simply the ratio of the reserved rate to the pay-as-you-go rate — around 43% for a 3-year term. Below that utilisation the reservation loses money; above it the saving grows linearly with usage.

Why does Azure Reserved VM Savings matter?

Reservations are the single largest Azure discount available without renegotiating an agreement, but they are the wrong instrument for bursty or seasonal workloads — a savings plan or Spot capacity fits those better. Confirm both the pay-as-you-go and reserved rates for your size and region in the Azure pricing calculator.

What values do I need to enter?

This calculator takes 7 inputs: Pay-as-you-go rate, Instances to reserve, Reservation term, 1-year reserved rate, 3-year reserved rate, Hours the instances actually run, Billed hours per month. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.