VM pricing models in Azure - Step-by-Step Execution

Process Flow - VM pricing models

Start: Choose VM

↓

Select Pricing Model

↓

Pay-As-You-Go

↓

Pay per usage

↓

Reserved Instances

↓

Commit 1-3 years

↓

Spot VMs

↓

Use unused capacity

↓

Lower cost, possible eviction

↓

Calculate Cost

↓

Deploy VM

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End

The flow shows choosing a VM, selecting a pricing model (Pay-As-You-Go, Reserved, Spot), calculating cost, and deploying the VM.

Execution Sample

Azure

Choose VM -> Select Pricing Model -> Calculate Cost -> Deploy VM

This flow models how Azure VM pricing options affect deployment cost and behavior.

Process Table

Step	Action	Pricing Model Selected	Cost Behavior	Notes
1	Choose VM size and specs	N/A	N/A	Select VM based on needs
2	Select pricing model	Pay-As-You-Go	Pay per hour of use	No upfront commitment
3	Calculate cost	Pay-As-You-Go	Higher cost if used long term	Flexible but more expensive
4	Deploy VM	Pay-As-You-Go	Charged per usage	VM runs until stopped or deleted
5	Select pricing model	Reserved Instances	Lower hourly cost	Commit 1 or 3 years upfront
6	Calculate cost	Reserved Instances	Discounted rate	Save money for steady workloads
7	Deploy VM	Reserved Instances	Charged at reserved rate	VM runs with cost savings
8	Select pricing model	Spot VMs	Lowest cost	Uses unused capacity, can be evicted
9	Calculate cost	Spot VMs	Very low cost	Best for interruptible workloads
10	Deploy VM	Spot VMs	Charged at spot rate	VM may be stopped anytime
11	End	N/A	N/A	Deployment complete

💡 All pricing models lead to VM deployment with different cost and availability trade-offs.

Status Tracker

Variable	Start	After Step 2	After Step 5	After Step 8	Final
Pricing Model	None	Pay-As-You-Go	Reserved Instances	Spot VMs	Selected model determines cost and behavior
Cost Behavior	Unknown	Pay per hour	Discounted hourly	Lowest hourly, eviction risk	Varies by pricing model
VM Availability	Not Deployed	Always available	Always available	May be evicted	Depends on pricing model

Key Moments - 3 Insights

Why does Reserved Instances cost less than Pay-As-You-Go?

Because you commit to using the VM for 1 or 3 years upfront, Azure offers a discount as shown in execution_table rows 5 and 6.

What risk comes with using Spot VMs?

Spot VMs can be evicted anytime when Azure needs capacity, as shown in execution_table rows 8 to 10.

Can you stop a Pay-As-You-Go VM anytime without penalty?

Yes, Pay-As-You-Go charges only for usage time, so stopping the VM stops charges, as shown in execution_table rows 2 to 4.

Visual Quiz - 3 Questions

Look at the execution_table, what pricing model is selected at step 6?

A Pay-As-You-Go

B Reserved Instances

C Spot VMs

D No pricing model selected

💡 Hint

Check the 'Pricing Model Selected' column at step 6 in execution_table.

At which step does the cost behavior become 'Very low cost'?

A Step 4

B Step 6

C Step 9

D Step 11

💡 Hint

Look at the 'Cost Behavior' column in execution_table for 'Very low cost'.

If you want a VM with no risk of eviction, which pricing model should you avoid?

A Spot VMs

B Reserved Instances

C Pay-As-You-Go

D All have eviction risk

💡 Hint

Check 'VM Availability' in variable_tracker for eviction risk.

Concept Snapshot

Azure VM Pricing Models:
- Pay-As-You-Go: No upfront, pay per use, flexible
- Reserved Instances: Commit 1-3 years, lower cost
- Spot VMs: Use unused capacity, lowest cost, eviction risk
Choose based on workload needs and cost trade-offs.

Full Transcript

This visual execution shows how Azure VM pricing models work. First, you choose a VM size. Then you pick a pricing model: Pay-As-You-Go, Reserved Instances, or Spot VMs. Pay-As-You-Go charges per hour with no commitment. Reserved Instances require 1 or 3 year commitment but offer discounts. Spot VMs use spare capacity at very low cost but can be evicted anytime. The execution table traces each step, showing cost behavior and deployment. Variable tracking shows how pricing model choice affects cost and availability. Key moments clarify common confusions about discounts, eviction risk, and flexibility. The quiz tests understanding of pricing model selection and cost implications. The snapshot summarizes the models for quick reference.

Practice

1. Which Azure VM pricing model allows you to pay only for the time you use without any long-term commitment?

easy

A. Spot VMs

B. Reserved Instances

C. Hybrid Benefit

D. Pay-as-you-go

Solution

1. Step 1: Understand Pay-as-you-go model

   This model charges you based on actual usage with no upfront commitment.

2. Step 2: Compare with other models

   Reserved Instances require upfront commitment, Spot VMs can be interrupted, Hybrid Benefit is a discount on licenses.

3. Final Answer:

   Pay-as-you-go -> Option D

4. Quick Check:

   Flexible payment without commitment = Pay-as-you-go [OK]

Hint: Pay only for what you use with no upfront cost [OK]

Common Mistakes:

• Confusing Reserved Instances with Pay-as-you-go
• Thinking Spot VMs are always available
• Mixing Hybrid Benefit with pricing models

2. Which of the following is the correct description of Spot VMs in Azure?

easy

A. VMs that offer the lowest price but can be evicted anytime

B. VMs with a fixed monthly cost and no interruptions

C. VMs reserved for one year with upfront payment

D. VMs that use existing licenses for cost savings

Solution

1. Step 1: Identify Spot VMs characteristics

   Spot VMs provide the lowest price but can be interrupted or evicted when Azure needs capacity.

2. Step 2: Eliminate other options

   Fixed monthly cost applies to Reserved Instances, upfront payment is for Reserved Instances, license reuse is Hybrid Benefit.

3. Final Answer:

   VMs that offer the lowest price but can be evicted anytime -> Option A

4. Quick Check:

   Lowest cost but interruptible = Spot VMs [OK]

Hint: Spot VMs are cheap but can be stopped anytime [OK]

Common Mistakes:

• Assuming Spot VMs have fixed pricing
• Confusing Spot VMs with Reserved Instances
• Thinking Hybrid Benefit applies to Spot VMs

3. Consider you have a workload that runs continuously for 3 years. Which pricing model will most likely save you the most money?

medium

A. Pay-as-you-go

B. Reserved Instances

C. Hybrid Benefit

D. Spot VMs

Solution

1. Step 1: Analyze workload duration

   A continuous 3-year workload benefits from long-term commitment discounts.

2. Step 2: Match pricing model to workload

   Reserved Instances offer significant savings for long-term use compared to Pay-as-you-go or Spot VMs.

3. Final Answer:

   Reserved Instances -> Option B

4. Quick Check:

   Long-term continuous use = Reserved Instances [OK]

Hint: Long-term use? Choose Reserved Instances [OK]

Common Mistakes:

• Choosing Pay-as-you-go for long-term workloads
• Selecting Spot VMs for continuous workloads
• Confusing Hybrid Benefit with pricing model alone

4. You tried to deploy a Spot VM but it was evicted unexpectedly. What is the most likely reason?

medium

A. Azure needed the capacity and reclaimed the Spot VM

B. You exceeded your reserved instance quota

C. You did not apply Hybrid Benefit correctly

D. Your Pay-as-you-go subscription expired

Solution

1. Step 1: Understand Spot VM eviction

   Spot VMs can be evicted anytime Azure needs capacity for other workloads.

2. Step 2: Rule out other causes

   Reserved instance quota does not affect Spot VMs, Hybrid Benefit is unrelated to eviction, subscription expiration stops all VMs.

3. Final Answer:

   Azure needed the capacity and reclaimed the Spot VM -> Option A

4. Quick Check:

   Spot VM eviction = Azure capacity needs [OK]

Hint: Spot VMs can be stopped anytime Azure needs space [OK]

Common Mistakes:

• Blaming reserved instance quota for Spot eviction
• Thinking Hybrid Benefit prevents eviction
• Assuming subscription expiration causes eviction only

5. You want to run a batch job that can tolerate interruptions and save the most money. Which Azure VM pricing model should you choose and why?

hard

A. Reserved Instances because they offer the lowest price for long-term use

B. Pay-as-you-go because it offers flexibility without upfront cost

C. Spot VMs because they offer the lowest price but can be interrupted

D. Hybrid Benefit because it uses existing licenses to reduce cost

Solution

1. Step 1: Identify workload tolerance

   The batch job can handle interruptions, so a pricing model with possible evictions is acceptable.

2. Step 2: Match pricing model to workload needs

   Spot VMs offer the lowest price but can be interrupted, fitting the batch job's tolerance and cost-saving goal.

3. Step 3: Eliminate other options

   Reserved Instances are for long-term steady use, Pay-as-you-go is flexible but more expensive, Hybrid Benefit reduces license cost but not VM price.

4. Final Answer:

   Spot VMs because they offer the lowest price but can be interrupted -> Option C

5. Quick Check:

   Interruptible and cheap = Spot VMs [OK]

Hint: Interruptible jobs? Choose Spot VMs for best savings [OK]

Common Mistakes:

• Choosing Reserved Instances for interruptible jobs
• Confusing Hybrid Benefit with pricing model
• Ignoring interruption tolerance in choice