One of the fastest ways to fail your AZ-900 exam — or your monthly cloud budget — is to misunderstand how Azure pricing works. This guide breaks down the three tools Microsoft provides for understanding and controlling costs, and explains the cost optimization strategies that appear repeatedly in the exam.
How Azure Pricing Works
Azure uses a pay-as-you-go model. You pay for what you use, measured per second, per GB, per transaction, or per month depending on the service. There is no up-front infrastructure cost, which converts capital expenditure (CapEx) into operational expenditure (OpEx).
Pricing varies by:
- Region — Costs differ between Azure regions. West US 2 is often cheaper than UK South for compute.
- Service tier — A D4s_v5 VM costs more than a B2s. Premium SSD costs more than Standard HDD.
- Consumption — Egress (data leaving Azure) is billed; ingress is free.
- Licensing — Windows VMs cost more than Linux VMs. Azure Hybrid Benefit lets you reuse existing on-premises licences.
The Azure Pricing Calculator
The Azure Pricing Calculator (azure.microsoft.com/en-us/pricing/calculator/) lets you estimate monthly costs before deploying anything. You select services, configure SKUs, regions, and usage hours, and the calculator produces an itemised cost estimate.
Key use cases on the exam:
- Estimating the cost of a new Azure deployment before committing resources.
- Comparing costs across regions or VM sizes.
- Sharing saved estimates with stakeholders for budget approval.
Important distinction: The Pricing Calculator estimates future Azure costs. It does not analyse what you are currently spending.
The Total Cost of Ownership (TCO) Calculator
The TCO Calculator (azure.microsoft.com/en-us/pricing/tco/calculator/) is designed to help you build a business case for migrating from on-premises infrastructure to Azure. You enter your current on-premises environment — servers, storage, networking, databases — and the tool estimates what it would cost to run equivalent workloads in Azure over a 1–5 year period.
The TCO Calculator accounts for:
- Hardware refresh cycles and depreciation
- Data centre costs (power, cooling, physical space)
- IT labour costs
- Software licensing
Exam tip: If a question asks "What tool helps a company justify migrating to Azure by comparing on-premises costs with cloud costs?" — the answer is the TCO Calculator, not the Pricing Calculator.
Microsoft Cost Management
Microsoft Cost Management (built into the Azure portal) is your real-time cost monitoring and governance tool. Once you have deployed resources, Cost Management lets you:
- View cost breakdowns by resource group, subscription, or tag.
- Set budgets with alert thresholds (e.g., alert at 80% of a £500/month budget).
- Analyse spending trends over time.
- Export cost data to a storage account for further analysis.
Cost Management does not automatically stop resources when a budget is exceeded. Alerts are notifications — you must take action or create an automation (e.g., a Logic App or Action Group) to shut resources down.
Cost Optimization Strategies
The exam expects you to understand these levers for reducing Azure spend:
Reserved Instances
Commit to a VM for 1 or 3 years in exchange for up to 72% discount versus pay-as-you-go pricing. Ideal for stable, predictable workloads. Not suitable for short-lived or variable workloads.
Azure Hybrid Benefit
If your organisation has existing Windows Server or SQL Server licences with Software Assurance, you can apply those licences to Azure VMs, eliminating the Windows licensing component of the VM price. This can reduce VM costs by up to 40%.
Spot VMs
Spot VMs use Azure's surplus compute capacity at up to 90% discount. The trade-off: Azure can evict your VM with 30 seconds' notice when capacity is needed. Suitable for batch jobs, rendering, and fault-tolerant workloads — not web servers or databases.
Right-Sizing
Azure Advisor analyses your VM CPU, memory, and network utilisation and recommends downsizing VMs that are consistently underutilised. This is often the lowest-effort, highest-impact cost saving for existing deployments.
Tagging for Cost Allocation
Resource tags (key-value pairs like CostCentre: Marketing) allow you to split costs across departments or projects. Azure Policy can enforce mandatory tagging so untagged resources are easy to identify. This is cost governance, not reduction, but it is essential for large organisations.
Exam Scenario Practice
Try answering these before your exam:
- "A company wants to estimate how much they would save by moving their on-premises data centre to Azure. What tool should they use?" — TCO Calculator.
- "A developer wants to estimate the monthly cost of an Azure SQL Database before deploying it. What tool should they use?" — Pricing Calculator.
- "An administrator wants to be alerted when Azure spend reaches £400 of a £500 monthly budget. What feature should they configure?" — Budget alert in Microsoft Cost Management.
- "A company runs a VM that is needed 24/7 for 3 years. What should they use to reduce costs?" — Reserved Instance.
Understanding the distinction between these tools is one of the highest-yield areas of the AZ-900 exam. Get these right and you'll gain easy marks in the governance domain.