How to Reduce Azure Costs

Running workloads in the cloud should feel like freedom – flexible, scalable, and cost-efficient. But for many IT teams, the monthly Azure bill tells a different story. Hidden charges, idle resources, and over-provisioned services quietly eat away at budgets, leaving finance teams frustrated and IT managers under pressure.

The truth is, cloud overspend isn’t inevitable – it’s often just a sign that costs aren’t being tracked and tuned in the right way. That’s why knowing how to reduce Azure costs is such a critical skill. The good news? With a few smart adjustments, you can take back control and make Azure work harder for your organisation, without cutting corners on performance.

How to reduce Azure costs in 8 steps

Step 1. Gain visibility into your Azure spending

You can’t control what you can’t see, and cloud costs are no exception. Start by improving transparency across your organisation with Azure’s built-in Cost Management and billing tools. 

• Tag your resources with clear labels (like project, department, or environment). It might feel tedious, but tagging makes it easy to see exactly where spend is coming from—and most companies don’t do this well. 

• Set budgets and alerts so you’ll know if spending creeps up before it blows past your limit. 

• Review cost reports regularly to spot spikes or unusual trends, and dig into the “why” before they get out of hand. 

• For larger or more complex setups, you can always layer in third-party tools for deeper insights or real-time anomaly detection. 

The more visibility you have, the easier it is to take control of your Azure bill. 

Step 2. Eliminate idle and over-provisioned resources

One of the quickest wins for reducing Azure costs is cutting out “cloud waste” — resources you’re paying for but not actually using. 

• Remove unused or orphaned resources: think forgotten test environments, unattached disks, or old load balancers still racking up charges. Tools like Azure Cost Management, Resource Graph, and Azure Advisor make finding these a lot easier. 

• Downsize or switch off idle VMs: if a VM has been sitting at near-zero CPU for weeks, either shut it down or resize it to match the workload. Even halving the cores on an underused VM can halve the cost. 

• Reclaim storage: delete old backups, logs, or disks left behind after deleting VMs – they keep charging until you clear them. 
• Check license usage: make sure you’re not paying for duplicate software licences on Windows or SQL Server.
   

Step 3. Right-size your workloads for actual demand

Back in the on-prem days, IT teams often over-provisioned “just in case.” In the cloud, that mindset translates into wasted spend. Right-sizing is about making sure your VMs, databases, and services actually match what’s being used. 

• Spot over-provisioning with Azure Advisor: if a VM or database is barely scratching its CPU, memory, or storage allocation, scale it down to a cheaper option. 

• Resize or consolidate VMs: don’t run a 16-core VM if the workload only needs 4. Likewise, many small VMs could be combined into fewer, better-utilised ones. 

• Pick the right VM series: for dev/test or low-priority tasks, B-series burstable VMs are often the most cost-effective choice. 

• Use cheaper storage where possible: not every workload needs premium SSDs or geo-redundancy—Standard HDDs or LRS might do the job for less. 

• Scale service tiers wisely: Azure SQL, App Services, and other PaaS offerings don’t always need to run on premium tiers. Drop down if utilisation is low. 
  
  

Step 4. Automate shutdowns and scaling to avoid idle time

Even after right-sizing, many workloads don’t need to run 24/7. By automating shutdowns and scaling, you only pay for what you actually use. 

• Schedule off-hours shutdowns: dev/test or training VMs don’t need to run overnight or on weekends. Using Azure Automation or DevTest Labs, you can set them to power down at 7 PM and restart at 7 AM—cutting costs by up to 60%. 

• Shut down idle machines automatically: with Azure Monitor and runbooks, you can power off VMs if CPU usage stays low for a set time—handy when someone forgets to switch them off. 

• Enable autoscaling for variable workloads: instead of running at peak capacity 24/7, scale up during busy hours and down when things are quiet. This works for VM Scale Sets, App Services, AKS, and more. 

• Custom routines with Azure Automation: if you need more flexibility, runbooks or scripts can start and stop whole groups of VMs on your schedule. 
  
  

Step 5. Leverage Azure’s cost-saving options and discounts 

When it comes to how to reduce Azure costs, one of the smartest moves is to take advantage of Microsoft’s built-in savings programmes. With a little planning, the discounts can be substantial: 

• Reserved instances & Savings Plans: lock in capacity for 1 or 3 years and save up to 72%. Savings Plans are more flexible, applying discounts automatically across compute services. 

• Azure Hybrid Benefit: reuse existing Windows Server or SQL Server licences and cut VM costs by 40–50%. Combine with reservations for savings of up to 80%. 

• Spot VMs: use Azure’s spare capacity for up to 90% off—ideal for test environments, batch jobs, or workloads that can handle interruptions. 

• Dev/test rates: with a Visual Studio subscription, you can access dev/test pricing (up to 65% off) for non-production workloads. 
  
  

Step 6. Optimise storage and data transfer costs

When thinking about how to reduce Azure costs, don’t overlook storage and networking—they can quietly add up. A few smart tweaks can make a big difference: 

• Use the right storage tier: Hot, Cool, and Archive tiers are priced for different access patterns. Move old or rarely used data to cheaper tiers and let Lifecycle Management policies automate it for you. 

• Clean up old data and backups: prune outdated logs, snapshots, or extra backups you don’t need—storage charges apply until you delete them. 

• Optimise databases: offload historical data to cheaper storage, or use serverless databases that pause when idle to save on costs. 

• Cut egress fees: keep workloads in the same region, use Azure CDN or Front Door to cache content closer to users, and consider ExpressRoute if you transfer large volumes regularly. 

• Monitor network usage: spot and fix misconfigurations that push unnecessary traffic across regions. 
  
  

Step 7. Consider serverless and PaaS architectures for efficiency

A powerful way to tackle how to reduce Azure costs is by moving to services that only charge you when they’re actually in use. Serverless and PaaS options take care of scaling for you, so you’re not paying for idle capacity. 

• Go serverless for intermittent tasks: Azure Functions and Logic Apps bill per execution, making them ideal for event-driven jobs or nightly tasks that don’t need a full-time VM. 

• Switch to PaaS where possible: services like Azure App Service, Azure SQL Database, or Cosmos DB scale dynamically and remove the overhead of running and maintaining VMs. 

• Use containers for efficiency: running apps in containers (AKS or Azure Container Instances) lets you consolidate workloads and scale more precisely than with multiple underused VMs. 

• Adopt cloud-native patterns: event-driven setups (Event Grid, Service Bus, Functions) or services like Azure Batch can cut costs by spinning resources up only when needed. 
  
  

Step 8. Implement cloud cost governance and continuous optimisation

The final piece of how to reduce Azure costs is building a culture of cost awareness. It’s not a one-off project—it’s an ongoing habit. 

• Use Azure Policy and RBAC: set guardrails so only approved VM sizes or regions can be used, and limit who can spin up expensive resources. This stops costly mistakes before they happen. 

• Review costs regularly: make cost reviews part of your ops routine. Azure Advisor is always analysing your environment—actioning its recommendations (like downsizing plans or deleting unused IPs) can add up to big savings over time. 

• Encourage cost awareness in teams: train engineers to factor in costs when designing solutions. Some organisations even gamify savings, rewarding teams that reduce spend. 

• Do periodic audits: just like security checks, cost audits often uncover forgotten disks, idle clusters, or other hidden drains on your budget. 

Cut your Azure costs – without cutting corners

What is Microsoft Azure? It’s Microsoft’s powerful cloud platform, used by millions of organisations to run everything from simple apps to global enterprise systems. But here’s the thing—nearly a third of all cloud spend is wasted every year.

Our free whitepaper shows you exactly how to slash your Azure costs in 2025 without sacrificing performance.

From Reservations and Savings Plans to Commitment Tiers and right-sizing, you’ll learn the proven tactics top IT teams use to keep costs low and efficiency high.