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AZ-900 Practice Question 23: Reservations Pricing

Microsoft Azure Fundamentals (AZ-900) · Test 3 · question 3 of 10

Cloud Conceptsmedium

A company runs the same 40 virtual machines around the clock and is confident it will keep doing so for the next three years. It wants the lowest price for that steady base load without changing how or where the VMs run. What should it do?

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Answer:

  • B. Buy a one-year or three-year Azure Reservation covering those VM instances

Azure Reservations save money by committing to a one-year or three-year plan, cutting resource costs by as much as 72% from pay-as-you-go prices. Crucially for this stem, a reservation is a billing discount that doesn't affect the runtime state of your resources; it applies automatically to matching resources, so nothing about how or where the VMs run changes. Microsoft's own guidance is to base reservation purchases on your consistent base usage, which is precisely what 40 always-on VMs are.

Option A, Spot Virtual Machines, buys Azure's surplus capacity at a deep discount but those instances can be preempted when Azure needs the capacity back; they suit interruptible batch work, not a round-the-clock production tier. Option C is the status quo; pay-as-you-go is the undiscounted rate the reservation discount is measured against. Option D, Azure Hybrid Benefit, is real and useful, but it discounts Windows Server or SQL Server *licensing* by letting you apply licences you already own; the documentation notes the reservation discount doesn't cover software costs, so the two are complements rather than alternatives.

Reference: What are Azure Reservations?

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