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