How to Optimize Azure Costs with Savings Plan?

Managing cloud costs is like managing your electricity bill—you can keep the lights on, but if you leave the AC blasting all day, don’t be shocked when the bill comes in high. Azure is no different. You can scale, deploy, and build at lightning speed, but without proper cost controls in place, you’re likely leaving money on the table.

If you’re already using Azure or planning to grow your cloud footprint, Azure Savings Plans can be a game-changer for reducing your compute costs—but only if you use them right.

In this blog, we’ll unpack what Azure Savings Plans are, how to use them effectively, common pitfalls to avoid, and how a tool like Turbo360 can help you optimize every dollar spent.

What is Azure Savings Plan?

Azure Savings Plan for Compute is a pricing model that lets you commit to a fixed hourly spend on compute services in exchange for significant discounts—up to 65% off pay-as-you-go rates.

It’s ideal for workloads with predictable usage patterns. Unlike Azure Reserved Instances (RIs), which are tied to specific VM sizes and regions, Savings Plans offer flexibility. Your commitment is applied automatically across eligible services, sizes, and regions.

Here’s how it works in simple terms:

• You commit to spending a certain amount per hour (e.g., $20/hour).
• Azure tracks your usage of eligible services like VMs, App Services, Containers, etc.
• Azure applies the discounted rate to as much of your usage as fits within your commitment.
• Any usage beyond the commitment gets charged at regular pay-as-you-go rates.

Eligible Resources Include:

• Virtual Machines (VMs)
• Azure App Services (Premium plans)
• Azure Container Instances
• Azure Functions (Premium plan)
• Dedicated Hosts

Important: Azure Savings Plans don’t cover storage, networking, databases, or other non-compute services.

Why Should You Care About Savings Plans?

Here’s what makes them attractive:

• Cost savings up to 65% depending on the commitment and term
• More flexibility than Reserved Instances (applies across VMs, sizes, and regions)
• Simplified management – No need to assign specific workloads to reservations
• Better coverage for dynamic environments that may scale or change VM SKUs

But remember, you are making a financial commitment—so doing your homework before jumping in is crucial.

Step-by-Step Guide to Optimizing Azure Costs with Savings Plans

Let’s go beyond the theory and look at practical steps to actually maximize your ROI with this model.

1. Analyze Your Historical Usage First

Before committing to anything, you need to know:

• What resources you’re consistently using
• How much you’re currently spending per hour on compute
• Which workloads run 24/7 vs burst workloads
• Usage trends over the last 30, 60, and 90 days

Azure Cost Management reports or third-party tools like Turbo360 can help visualize this.

Tip: Look for patterns, not just peaks. Savings Plans reward consistency.

2. Determine Your Baseline Hourly Commitment

Once you know your usage trends, calculate a safe minimum spend that your environment hits consistently. This will be your committed spend (e.g., $15/hour).

If your average is $25/hour, it’s wise to commit to $15–$20/hour and leave the remaining for burst or variable workloads that may not always run.

Remember:

• Underutilization = Waste. You pay for what you commit, even if you don’t use it.
• Over-utilization = Missed savings. Usage above your plan is charged at pay-as-you-go rates.

3. Choose Between 1-Year and 3-Year Terms

Azure offers two term options:

If your workloads are new or your app architecture changes often, the 1-year plan gives more breathing room. If you’re running production systems that are unlikely to change, go with the 3-year plan for maximum savings.

4. Understand Scope: Shared vs. Single Subscription

Azure allows you to scope your savings plan either to:

• Single Subscription (savings apply only within that subscription)
• Shared (savings apply across all eligible subscriptions within the billing account)

Tip: Use shared scope if you have multiple subscriptions. It gives you better coverage and prevents underutilization.

5. Tag and Track Your Commitments

Once your savings plan is active, you’ll want to:

• Monitor usage vs. commitment
• See which teams or apps are benefiting
• Track the ROI of your plan

Use Azure tags or cost management tools to keep this visible. This is also useful for internal chargebacks or showback models.

6. Use Spot VMs and Autoscaling for Non-Consistent Workloads

Savings Plans are perfect for steady workloads, but what about unpredictable traffic spikes?

Here’s a strategy:

• Use Savings Plan for your base, consistent workloads.
• Use Spot VMs or autoscale policies to handle peaks without overcommitting.

This combo allows you to stay cost-efficient and agile at the same time.

7. Regularly Review and Adjust

Even if you nailed the perfect plan, cloud workloads evolve.

Set a quarterly or bi-annual review to:

• Check if your usage pattern has changed
• Adjust commitment levels if needed (only possible for new plans)
• Consider layering multiple plans if your spend increases over time

Note: Azure doesn’t let you reduce or cancel a savings plan once purchased. So a regular review is critical to avoid overspending.

Common Mistakes to Avoid

Here are some real-world missteps we’ve seen (and you should avoid):

• Overcommitting based on peak usage
• Committing for workloads that are about to be deprecated
• Ignoring multi-subscription scenarios and using single-scope plans
• Not tracking actual utilization after plan purchase
• Forgetting to include autoscaling behavior in your forecast

Avoid these and you’re already ahead of the curve.

So… How Do You Know What to Commit?

That’s the million-dollar question. Or more likely, the few-thousand-dollars-per-month question.

Manually checking Azure usage, Excel modeling, and trying to predict growth is time-consuming and error-prone. This is where Turbo360 comes in.

How Turbo360 Helps You Optimize Azure Savings Plan (The Smart Way)

Turbo360’s Cost Analyzer takes the guesswork out of savings plan optimization by giving you deep insights into your cloud spend patterns and helping you plan your commitments better.

Here’s how it helps:

Identify Ideal Candidates for Savings Plan

Turbo360 looks at your historical usage trends and helps you pinpoint which workloads are stable enough to commit. You can filter by:

• Subscription
• Application
• Environment (prod, dev, etc.)
• Resource group or tag

Suggest Optimal Commitment Amount

Rather than guessing, Turbo360 recommends a commitment amount based on actual usage data. You’ll know if $30/hour or $20/hour makes more sense for your baseline.

Track Utilization & ROI in Real-Time

It doesn’t stop after the purchase. Turbo360 continuously monitors:

• How much of your commitment is used
• Where the savings are being applied
• Whether you’re nearing underutilization or overuse

Get Notified Proactively

Get alerts if:

• You’re not fully utilizing your plan
• You’re about to exceed it frequently
• New workloads are eligible for savings plan coverage

Generate Reports for Finance and FinOps Teams

Cost Analyzer creates clean, detailed reports you can share with finance or leadership to justify your commitment decisions—or plan for future ones.

Final Thoughts

Azure Savings Plans are one of the best tools for long-term cloud cost control, especially for teams running predictable compute workloads. But like any cost-saving strategy, they only work if you:

• Understand your usage
• Choose the right commitment
• Continuously track and adjust

Turbo360 makes this whole process smarter, faster, and way less stressful. With its Cost Analyzer module, you can make informed decisions, reduce guesswork, and ensure your cloud budget is being spent efficiently—without losing sleep over it.