Azure Calculator – How to (Not) Calculate Cloud Costs?

3 Key Pieces of Information for Cloud Cost Calculation

• Large cloud providers offer thousands of services and products – all with different pricing models. Determining how high your bill will be for your cloud infrastructure can be difficult.

• Microsoft Azure therefore introduced the Azure Calculator – a tool designed to help calculate the costs of cloud services. However, it's not for everyone, and in the hands of a novice, it can do more harm than good.

• To arrive at a figure that aligns with reality, it's essential to have a detailed understanding of your entire IT infrastructure and the cloud environment.

Why Azure Calculator Estimates Might Not Align with Reality?

“Often, people decide to move to the cloud because it's popular today. They input a few details into the calculator, and the resulting figures vary by tens or even hundreds of euros. They didn't dedicate enough time to planning and considering what they actually need or don't need,” explains Václav Hrach, an IT architect certified in Azure for LinkSoft.

To calculate a cost close to reality, he suggests fulfilling several conditions:

• Have sufficient technical knowledge,
• Understand pricing models,
• Have information about the volume of cloud service utilization,
• And, last but not least, have a clear idea of what exactly you want from the cloud.

4 Conditions for Cloud Cost Calculation

1. Technical knowledge
2. Knowledge of pricing models
3. Information about the volume of cloud service utilization
4. A clear idea of cloud utilization

1. Requirement for Technical Knowledge

For accurate cost calculation in the Azure Calculator, deeper technical knowledge is required. This knowledge can help you choose services suitable for creating the desired state and contribute to a more realistic calculation of the overall cost.

“For example, saying that you want a Linux virtual machine and entering the desired Linux virtual machine into the calculator is only half the job,” describes Václav Hrach. “It's necessary to consider other aspects such as security, backup, disaster recovery, or meeting required SLAs. All of this will require involving additional services in your solution, leading to an increase in the final cost.”

2. Complicated Pricing Models

Each Azure service has its pricing model. In some cases, it's easily understandable (for example, with virtual machines, you know how much CPU and RAM you get for your money). Elsewhere, the pricing model can be more complicated or expressed in units incomprehensible to a layperson (for example, with Cosmos DB RU/s or DTU within SQL Database).

Understanding pricing models, however, is not just about knowing what you're paying for but also when you're paying for it. “For example, with a virtual machine that has one disk with the operating system and another data disk – in the case of the virtual machine being turned off, you don't pay for it, but you do pay for the disks,” adds Vašek.

3. Information about Cloud Service Utilization

Another issue you may encounter when calculating costs in the Azure Calculator is a lack of information about how much of each service you will actually be using. This goes hand in hand with the pricing model – each service determines what you will pay for based on the pricing model, and you must then determine the volume or quantity you will be using.

4. Clear Idea of Cloud Need and Utilization

“People want the cloud, but they don't really know what they need. At such a moment, using the Azure Calculator doesn't make much sense,” explains Vašek.

“They also often don't want to spend money on a higher tier, perhaps due to a limited budget. But if they don't look into the details of what they actually need and what they need to pay for, they often order a service that won't meet all the requirements,” he adds.

How to Find Out How Much the Cloud Will Cost You?

For the results in the Azure Calculator to make sense, the cost calculation should not take place in isolation but in the context of the entire process of transitioning to the cloud (CAF – Cloud Adoption Framework), specifically after defining what exactly you want in the cloud, what services you will be using and in what configuration – for example, how much data and computational power you need, what redundancies are required, etc.

“The cost should be calculated by someone who has the necessary knowledge and all the required information within the framework of transitioning to the cloud using CAF – usually a Cloud Solution Architect. Someone who understands services and pricing models and knows what will be moved to the cloud or newly created, in what setup, what level of need there will be, what infrastructure, etc.,” recommends Vašek. “Such a person will find the Azure Calculator a useful tool. If you don't have one in your company, the easiest thing for you will be to consult with an expert,” he concludes.

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