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articles/cost-management-billing/costs/cost-mgt-best-practices.md

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# How to optimize your cloud investment with Cost Management
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Cost Management gives you the tools to plan for, analyze and reduce your spending to maximize your cloud investment. This document provides you with a methodical approach to cost management and highlights the tools available to you as you address your organization's cost challenges. Azure makes it easy to build and deploy cloud solutions. However, it's important that those solutions are optimized to minimize the cost to your organization. Following the principles outlined in this document and using our tools will help to make sure your organization is prepared for success.
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Cost Management gives you the tools to plan for, analyze and reduce your spending to maximize your cloud investment. This document provides you with a methodical approach to cost management and highlights the tools available to you as you address your organization's cost challenges. Azure makes it easy to build and deploy cloud solutions. However, it's important that those solutions are optimized to minimize the cost to your organization. Following the principles outlined in this document and using our tools can help your organization be better prepared for success.
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## Methodology
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Cost management is an organizational problem and should be an ongoing practice that begins before you spend money on cloud resources. To successfully implement cost management and optimize costs, your organization must:
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Cost management is an organizational problem and should be an ongoing practice that begins before you spend money on cloud resources. To successfully implement cost management and optimize costs, we recommend that your organization:
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- Be prepared with the proper tools for success
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- Be accountable for costs
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- What business problem am I solving?
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- What usage patterns do I expect from my resources?
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Your answers will help you select the offerings that are right for you. They determine the infrastructure to use and how it's used to maximize your Azure efficiency.
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Your answers can help you select the offerings that are right for you. They determine the infrastructure to use and how it's used to maximize your Azure efficiency.
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#### Visibility
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- The Azure offer that best meets your needs
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- The resources you plan to use
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- How much they might cost
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- The services available to track, report and optimize cost, also via leveraging automation
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- The cost of the resources
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- The services available to track, report, and optimize cost, also via using automation
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Azure provides tools and APIs to assist you in the assessment process. These tools can give you a good idea of the investment required to enable your workloads, and help you automate cost management from the start. Use the [Azure pricing calculator](https://azure.microsoft.com/pricing/calculator) to estimate costs, and consider using the [Cost Management Exports API](/rest/api/cost-management/exports), [Cost Details API](/rest/api/cost-management/generate-cost-details-report), and [Query API](/rest/api/cost-management/query) to automate cost data retrieval and analysis.
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> [!NOTE]
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> Cost data in Azure is refreshed every four hours. API rate limits may apply when automating data retrieval. For more information, see [Cost Management API reference](https://learn.microsoft.com/rest/api/cost-management/operation-groups?view=rest-cost-management-2025-03-01).
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> Cost data for the open billing period is refreshed every four hours in Azure. At month close, billed charges are typically available within 72 hrs after invoice is issued. Note that your billing period might not necessarily align to a calendar month. Plan automation and reporting accordingly.
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> API rate limits might apply when automating data retrieval. For more information, see [Cost Management API reference](https://learn.microsoft.com/rest/api/cost-management/operation-groups).
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### Azure onboarding options
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- CSP partners are the first point of contact for their customers’ needs and the center of the customer relationship
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- CSP partners provision new customers, order subscriptions, manage subscriptions, and perform admin tasks on behalf of their customers
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- CSP partners bundle services with unique solutions or resell Azure while controlling the pricing, terms and billing
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- CSP partners bundle services with unique solutions or resell Azure while controlling the pricing, terms, and billing
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## Estimate the cost of your solution
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### Tag shared resources
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Tags are a effective way to understand costs that span across multiple teams and Azure scopes. For example, you might have a resource like an email server that many teams use. You can put a shared resource, like the email server, in a subscription that's dedicated to shared resources or put it in an existing subscription. If you put it in an existing subscription, the subscription owner might not want its cost accruing to their team every month. For this example, you can use a tag to identify the resource as being shared.
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Tags are an effective way to understand costs that span across multiple teams and Azure scopes. For example, you might have a resource like an email server that many teams use. You can put a shared resource, like the email server, in a subscription that's dedicated to shared resources or put it in an existing subscription. If you put it in an existing subscription, the subscription owner might not want its cost accruing to their team every month. For this example, you can use a tag to identify the resource as being shared.
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Similarly, you might also have web apps or environments, such as Test or Production, that use resources across multiple subscriptions owned by different teams. To better understand the full cost of the workloads, tag the resources that they use. When tags are applied properly, you can apply them as a filter in cost analysis to better understand trends.
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### Use cost analysis
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Cost analysis allows you to analyze your organizational costs in-depth by slicing and dicing your costs using standard resource properties. Consider the following common questions as a guide for your analysis. Answering these questions on a regular basis will help you stay more informed and enable more cost-conscious decisions.
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Cost analysis allows you to analyze your organizational costs in-depth by slicing and dicing your costs using standard resource properties. Consider the following common questions as a guide for your analysis. Answering these questions regularly will help you stay more informed and enable more cost-conscious decisions.
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- **Estimated costs for the current month** – How much have I incurred so far this month? Will I stay under my budget?
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- **Investigate anomalies** – Do routine checks to make sure that costs stay within a reasonable range of normal usage. What are the trends? Are there any outliers?
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### Automate cost data retrieval and analysis
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For Enterprise Agreement (EA) and Microsoft Customer Agreement
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(MCA) accounts, use the [Cost Details API](/rest/api/cost-management/generate-cost-details-report) to programmatically generate and download detailed, unaggregated cost data. For Pay-As-You-Go subscriptions, use the [Exports API](/rest/api/cost-management/exports). If you need to download small datasets and you don't want to use Azure Storage, you can also use the Consumption Usage Details API. See instructions on how to do this [here](/automate/get-usage-details-legacy-customer.md). For custom, on-demand analysis and dashboards, use the [Query API](/rest/api/cost-management/query).
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(MCA) accounts, use the [Cost Details API](/rest/api/cost-management/generate-cost-details-report) to programmatically generate and download detailed, unaggregated cost data. For Pay-As-You-Go subscriptions, use the [Exports API](/rest/api/cost-management/exports). If you need to download small datasets and you don't want to use Azure Storage, you can also use the Consumption Usage Details API. See instructions on how to do this [here](../automate/get-usage-details-legacy-customer.md). For custom, on-demand analysis, and dashboards, use the [Query API](/rest/api/cost-management/query).
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For more information, see [Get small cost datasets on demand](../automate/get-small-usage-datasets-on-demand.md) and [Query cost data](../costs/cost-analysis-common-uses.md).
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Emphasize the use of tags, management groups, and custom dimensions for cost allocation and reporting. Cost Analysis supports filtering and grouping by these attributes, enabling more granular cost tracking and accountability. Use the [Cost Management Dimensions API](/rest/api/cost-management/dimensions) to list and manage available dimensions.
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>[!NOTE]
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> Management groups are not supported for Microsoft Customer Agreement customers.
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> Management groups aren't supported for Microsoft Customer Agreement customers.
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### Leverage benefit recommendations and savings tools
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### Use benefit recommendations and savings tools
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Take advantage of Azure's cost-saving programs and recommendations:
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- **Benefit Recommendations API**: Use the [Benefit Recommendations API](/rest/api/cost-management/benefit-recommendations) and [Azure Advisor](/azure/advisor/advisor-overview) to proactively identify savings opportunities, such as reserved instances or savings plans, based on your usage patterns.
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### Additional best practices
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- Cost data is refreshed every four hours in Azure. Plan automation and reporting accordingly.
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- All cost data in the Azure portal, APIs, and exports is based on the same underlying dataset.
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- Use the [Price Sheet API](/rest/api/cost-management/price-sheet) to retrieve negotiated and retail meter rates for cost estimation and reconciliation.
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- For advanced reporting, integrate exported or queried cost data with Power BI, Azure Synapse, or other analytics platforms.
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### Size your VMs properly
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VM sizing has a significant impact on your overall Azure cost. The number of VMs needed in Azure might not equate to what you currently have deployed in an on-premises datacenter. Make sure your choose the right size for the workloads that you plan to run.
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VM sizing has a significant affect on your overall Azure cost. The number of VMs needed in Azure might not equate to what you currently have deployed in an on-premises datacenter. Make sure you choose the right size for the workloads that you plan to run.
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For more information, see [Azure IaaS: proper sizing and cost](https://azure.microsoft.com/resources/videos/azurecon-2015-azure-iaas-proper-sizing-and-cost/).
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For more information, see [Azure IaaS: proper sizing and cost](https://learn.microsoft.com/en-us/shows/microsoft-azure-azurecon-2015/acon210).
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### Use purchase discounts
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Azure has many discounts that your organization should take advantage of to save money.
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#### Azure savings plan for compute
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Azure savings plan for compute is our most flexible savings plan. It lets you save up to 65 percent on pay-as-you-go prices and applies to a broad range of compute services across subscriptions, resource groups, management groups or entire Azure accounts. You select an hourly compute commitment for a one-year or three-year term. The longer the commitment, the more savings you earn. You can pay monthly for no additional cost, and Azure automatically applies the largest savings to your account.
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Azure savings plan for compute is our most flexible savings plan. It lets you save up to 65 percent on pay-as-you-go prices and applies to a broad range of compute services across subscriptions, resource groups, management groups, or entire Azure accounts. You select an hourly compute commitment for a one-year or three-year term. The longer the commitment, the more savings you earn. You can pay monthly for no additional cost, and Azure automatically applies the largest savings to your account.
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For more information, see [Azure savings plan for compute](../savings-plan/savings-plan-compute-overview.md).
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#### Azure Reservations
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Azure Reservations allow you to prepay for one-year or three-years of virtual machine or SQL Database compute capacity. Pre-paying will allow you to get a discount on the resources you use. Azure reservations can significantly reduce your virtual machine or SQL database compute costs — up to 72 percent on pay-as-you-go prices with one-year or three-year upfront commitment. Reservations provide a billing discount and don't affect the runtime state of your virtual machines or SQL databases.
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Azure Reservations allow you to prepay for one-year or three-years of virtual machine or SQL Database compute capacity. Prepaying will allow you to get a discount on the resources you use. Azure reservations can significantly reduce your virtual machine or SQL database compute costs — up to 72 percent on pay-as-you-go prices with one-year or three-year upfront commitment. Reservations provide a billing discount and don't affect the runtime state of your virtual machines or SQL databases.
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For more information, see [What are Azure Reservations?](../reservations/save-compute-costs-reservations.md).
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