Purchasing a Reserved Instance

When you purchase a Reservation to prepay for the base compute cost of a virtual machine it’s known as a Reserved Instance. At the time of purchase you choose the VM type and the Azure data center region: a D16 v3 virtual machine in the West US region, for example. You also choose the scope across which it will be used: a single Subscription or all Subscriptions, or a Resource Group or Management Group (see here for some useful diagrams), as well as the term (1, 3, or the more unusual 5 years), and the payment option (monthly or annually). Reserved Instances are automatically applied to matching virtual machines in the same Azure region, and charges for the base compute part of the virtual machine are stopped.

If the virtual machine is running Windows Server and/or SQL Server, then the Reserved Instance does not cover the cost for this software – the most cost-effective way of paying for the software is to take advantage of the Azure Hybrid Benefit. If you don’t bring your own licenses via this method, then the software costs will be charged on a meter while the virtual machine is running.