When looking at running workloads in Azure, we consider them either as predictable or variable. Variable workloads benefit from Pay As You Go (PAYG) where you only pay for the time that it is active.
Predictable workloads or those that run for the majority of the time in a month can benefit from reserving those resources for 1 or 3 years. This can significantly reduce your costs by up to 72 percent when compared to pay-as-you-go prices.
Lower your total cost of ownership by combining Azure Reserved Instances with pay-as-you-go prices to manage costs across predictable and variable workloads. What’s more, you can improve budgeting and forecasting with a single upfront payment, making it easy to calculate your investments.
After you buy an Azure Reserved Virtual Machine Instance, the reservation discount is automatically applied to virtual machines that match the attributes and quantity of the reservation.
A reservation covers the compute costs of your virtual machines.