Why Azure Reserved Instances? - Purpose & Use Cases

The Big Idea

What if you could cut your cloud bills by up to 72% just by planning ahead?

The Scenario

Imagine you run a small business and rent computers by the hour to run your work. Every day, you guess how many computers you need and pay for each hour separately.

Sometimes you pay too much because you rented more than needed, or your work slows down because you rented too few.

The Problem

Paying for computers hour by hour can get very expensive and unpredictable.

You waste money when computers sit idle, and you risk delays when you don't have enough.

Also, constantly checking and adjusting your rentals takes time and causes stress.

The Solution

Azure Reserved Instances let you commit to using computers for a long time, like a year or more, at a much lower price.

This way, you save money and get steady access to the computers you need without guessing every day.

Before vs After

✗ Before

Pay $0.50 per hour, every hour, no commitment

✓ After

Pay $0.30 per hour by reserving for 1 year upfront

What It Enables

It enables predictable costs and guaranteed access to cloud resources, making budgeting and planning simple and stress-free.

Real Life Example

A company running a website knows it needs servers 24/7. By reserving instances, it saves thousands of dollars yearly compared to paying hourly.

Key Takeaways

Manual hourly payments can be costly and unpredictable.

Azure Reserved Instances offer big savings by committing upfront.

This makes cloud costs stable and easier to manage.

Practice

1. What is the main benefit of using Azure Reserved Instances?

easy

A. Automatically scale virtual machines up and down

B. Save money by pre-paying for virtual machines

C. Create virtual machines without any cost

D. Backup virtual machines to Azure Storage

Solution

1. Step 1: Understand the purpose of Azure Reserved Instances

   Azure Reserved Instances allow you to pre-pay for virtual machines to get a discount compared to pay-as-you-go pricing.

2. Step 2: Compare options with this purpose

   Only Save money by pre-paying for virtual machines mentions saving money by pre-paying, which matches the main benefit.

3. Final Answer:

   Save money by pre-paying for virtual machines -> Option B

4. Quick Check:

   Reserved Instances = Pre-pay savings [OK]

Hint: Reserved Instances = pre-pay to save money [OK]

Common Mistakes:

• Confusing Reserved Instances with auto-scaling
• Thinking Reserved Instances are free
• Mixing backup features with Reserved Instances

2. Which Azure CLI command is used to purchase a Reserved Instance?

easy

A. az vm create

B. az vm start

C. az storage account create

D. az reservations reservation-order create

Solution

1. Step 1: Identify the CLI command for Reserved Instances

   The Azure CLI command to purchase Reserved Instances is under the 'az reservations' group, specifically 'reservation-order create'.

2. Step 2: Eliminate unrelated commands

   Commands like 'az vm create' create virtual machines, not reservations. 'az vm start' starts VMs, and 'az storage account create' creates storage accounts.

3. Final Answer:

   az reservations reservation-order create -> Option D

4. Quick Check:

   Purchase Reserved Instance = az reservations reservation-order create [OK]

Hint: Reservations commands start with az reservations [OK]

Common Mistakes:

• Using VM creation commands to buy reservations
• Confusing storage commands with reservations
• Trying to start VMs to create reservations

3. Given this Azure CLI command output snippet after buying a Reserved Instance:

{
  "id": "/subscriptions/123/resourceGroups/myRG/providers/Microsoft.Capacity/reservationOrders/abc123",
  "properties": {
    "term": "P1Y",
    "appliedScopeType": "Shared",
    "skuName": "Standard_D2s_v3"
  }
}

What does the "term": "P1Y" mean?

medium

A. The reservation lasts for 1 year

B. The reservation is for 1 month

C. The reservation is for 1 day

D. The reservation is permanent

Solution

1. Step 1: Interpret the term format

   The term 'P1Y' follows ISO 8601 duration format, where 'P' means period and '1Y' means 1 year.

2. Step 2: Match the term to options

   Only The reservation lasts for 1 year correctly states the reservation lasts for 1 year.

3. Final Answer:

   The reservation lasts for 1 year -> Option A

4. Quick Check:

   Term P1Y = 1 year reservation [OK]

Hint: P1Y means period of 1 year in ISO duration [OK]

Common Mistakes:

• Thinking P1Y means 1 month or 1 day
• Assuming term means permanent
• Ignoring ISO 8601 duration format

4. You tried to purchase a Reserved Instance but received an error: "Invalid scope type". What is the likely cause?

medium

A. You specified an unsupported scope type for the reservation

B. You forgot to specify the VM size

C. You used the wrong Azure CLI command

D. Your subscription has no active VMs

Solution

1. Step 1: Understand the error message

   The error 'Invalid scope type' means the scope type parameter for the reservation is not valid or supported.

2. Step 2: Analyze other options

   Missing VM size or wrong CLI command would cause different errors. Having no active VMs does not cause this error.

3. Final Answer:

   You specified an unsupported scope type for the reservation -> Option A

4. Quick Check:

   Invalid scope type error = wrong scope parameter [OK]

Hint: Check scope type parameter when 'Invalid scope type' error appears [OK]

Common Mistakes:

• Assuming missing VM size causes this error
• Using wrong CLI command without checking scope
• Thinking no active VMs cause scope errors

5. You have a steady workload running 4 Standard_D2s_v3 VMs continuously. You want to save costs using Azure Reserved Instances. Which approach is best?

hard

A. Purchase 4 Reserved Instances for different VM sizes

B. Purchase 1 three-year Reserved Instance for Standard_D2s_v3 VM

C. Purchase 4 one-year Reserved Instances for Standard_D2s_v3 VMs

D. Use pay-as-you-go pricing and scale VMs manually

Solution

1. Step 1: Match workload to reservation quantity and term

   You have 4 steady VMs of the same size. Buying 4 Reserved Instances matching the VM size and quantity saves costs.

2. Step 2: Choose appropriate term length

   One-year term is common for steady workloads. Three-year is longer commitment but not required here. Different VM sizes do not match your workload.

3. Final Answer:

   Purchase 4 one-year Reserved Instances for Standard_D2s_v3 VMs -> Option C

4. Quick Check:

   Match VM count and size with Reserved Instances [OK]

Hint: Match Reserved Instances count and size to steady VMs [OK]

Common Mistakes:

• Buying fewer Reserved Instances than VMs
• Choosing wrong VM sizes for reservations
• Ignoring steady workload benefits