Azure Cloud Billing Wiki

Azure Billing Basics

Understanding Azure's Billing Model

Microsoft Azure uses a consumption-based billing model where you pay for what you use. For MSPs reselling through the Cloud Solution Provider (CSP) program, understanding these fundamentals is essential to managing client costs and maintaining healthy margins.

The Azure Billing Cycle

Monthly Billing Period

Azure operates on a monthly billing cycle that typically runs from the 1st to the last day of each calendar month. However, for CSP partners:

  • Billing date: Microsoft generates invoices between the 6th and 8th of each month
  • Usage period: Invoices cover the previous month's consumption
  • Payment terms: Typically 60 days from invoice date for CSP partners
  • Reconciliation files: Available shortly after invoice generation

Real-Time Consumption

Azure meters track resource usage in real-time. While invoices are monthly, you can monitor costs daily or hourly through the Azure portal and Cost Management tools.

How Azure Measures Usage

Azure uses meters to measure resource consumption. Each service has specific meters, such as:

  • Compute: VM hours, CPU cores, memory
  • Storage: GB stored per month, transactions, data transfer
  • Networking: GB of data transferred, VPN gateway hours
  • Databases: DTUs (Database Transaction Units), vCore hours
  • Services: API calls, function executions, message throughput

Meter Example: Virtual Machines

A Standard_D4s_v3 VM in East US might have meters for:

  • Compute hours (charged per hour of operation)
  • Disk storage (charged per GB per month)
  • Disk operations (charged per 10,000 transactions)
  • Network egress (charged per GB transferred out)

Invoice Structure

Azure CSP Invoices Include

Header Information

  • Partner information and billing address
  • Invoice number and date
  • Billing period covered
  • Payment terms and due date

Line Items

  • Customer name (if reconciliation file)
  • Subscription ID
  • Resource/service consumed
  • Quantity and unit of measure
  • Unit price and extended amount
  • Any discounts or credits applied

Summary Sections

  • Subtotal by customer
  • Total charges for the billing period
  • Previous balance (if applicable)
  • Total amount due

Understanding Azure Usage Files

Azure provides detailed usage data through CSV files:

Daily Usage Files

  • Available in the Azure portal and via API
  • Show usage broken down by subscription and resource
  • Include meter details, quantities, and estimated costs
  • Updated daily with previous day's consumption

Reconciliation Files (CSP)

  • Provided by Microsoft for CSP partners
  • Map usage to customers and subscriptions
  • Essential for accurate client billing
  • Include partner earned credit (PEC) information

Key Billing Concepts

Subscriptions

An Azure subscription is a logical container for resources and a billing boundary. MSPs typically:

  • Create separate subscriptions per client or per environment
  • Use subscriptions to isolate billing and apply access controls
  • Map subscriptions to internal cost centers or client contracts

Resource Groups

Resource groups organize related Azure resources. They:

  • Don't directly affect billing (subscriptions do)
  • Can be tagged for cost allocation and reporting
  • Simplify resource lifecycle management

Regions

Azure services are deployed in specific geographic regions. Pricing varies by region based on:

  • Local infrastructure costs
  • Regional demand
  • Currency exchange rates
  • Data sovereignty requirements

MSP Tip: Default to cost-effective regions unless clients have specific compliance or latency requirements.

Credits and Discounts

Partner Earned Credit (PEC)

CSP partners earn credits (typically 15%) on Azure consumed revenue when they provide qualifying managed services. Requirements include:

  • Partner Admin Link (PAL) association
  • Active management of customer subscriptions
  • Compliance with CSP program terms

Azure Hybrid Benefit

Allows customers to use existing Windows Server and SQL Server licenses on Azure, reducing compute costs by up to 55%. MSPs should:

  • Verify clients have eligible licenses with Software Assurance
  • Enable this benefit in VM configuration
  • Document license usage for compliance

Reserved Instances

Purchasing 1-year or 3-year commitments provides significant discounts (up to 72%) compared to pay-as-you-go. See Azure Pricing Models for details.

Common Billing Scenarios

Scenario 1: Monthly Compute Charges

A client runs 10 Standard_D2s_v3 VMs 24/7:

  • 10 VMs × 730 hours/month × $0.096/hour = $700.80/month
  • Plus managed disk costs, networking, etc.

Scenario 2: Storage Growth

100GB storage grows to 500GB during the month:

  • Azure charges based on average daily storage
  • Not just end-of-month snapshot

Scenario 3: Bandwidth Charges

First 100GB of outbound data transfer per month is often free, then:

  • 10TB: $0.087/GB
  • 50TB: $0.083/GB
  • 150TB+: $0.070/GB (example pricing, varies by region)

Monitoring Costs

MSPs should establish processes to:

  1. Review costs daily using Azure Cost Management
  2. Set budget alerts at subscription and resource group levels
  3. Analyze trends to identify anomalies early
  4. Reconcile Azure invoices against client billing monthly

Next Steps

  • Learn about Azure Cost Management Tools for monitoring and optimization
  • Explore Azure Pricing Models to understand Reserved Instances and Savings Plans
  • Review CSP Program Overview for partner-specific billing details

Understanding these fundamentals is crucial before diving into optimization strategies and automated billing workflows.