The Real Cost of Azure: What Nobody Tells You About Cloud Billing

"The cloud is cheaper than on-prem."

I've heard this claim a thousand times. And it can be true. But I've also seen companies whose Azure bills are 3x what they expected. The difference isn't the technology — it's understanding how cloud billing actually works.

Why Your Bill Is Higher Than Expected

1. You're Paying for Resources You're Not Using

This is the most common issue. Teams spin up resources for testing and forget about them. A "small" VM running 24/7 for a month costs more than you think.

Quick wins:

Enable Azure Advisor cost recommendations
Set up budget alerts at 50%, 75%, and 90%
Review your resource list monthly — if you can't explain why something exists, delete it

2. You're Over-Provisioned

Coming from on-prem, the instinct is to spec for peak load. But in the cloud, you're paying for that peak capacity constantly.

The fix: Start small, monitor, scale up only when metrics prove you need it.

A D4s_v3 VM (4 vCPUs, 16GB RAM) runs about $140/month. A B2s (2 vCPUs, 4GB RAM) is about $30/month. For dev/test workloads, the B-series is often more than enough.

3. Egress Charges Sneak Up on You

Data transfer OUT of Azure costs money. Data transfer IN is free. This surprises everyone.

Downloading 1TB of data from Azure to your office? That's roughly $85. Every month. It adds up.

Strategies:

Keep data processing inside Azure when possible
Use Azure CDN for frequently accessed content
Consider ExpressRoute for high-volume hybrid scenarios

4. Storage Tiers Matter More Than You Think

Hot storage costs about $0.018/GB/month. Archive storage is $0.00099/GB/month. That's 18x cheaper.

If you're storing backups or compliance data in hot storage, you're overpaying dramatically.

The Cost Management Framework I Actually Use

Daily: Automated Alerts

Budget alerts fire automatically
Azure Advisor emails for cost recommendations
Anomaly detection for unexpected spikes

Weekly: Quick Review

Check the cost analysis blade
Look for any new resources that appeared
Verify dev/test resources are shut down

Monthly: Deep Dive

Review by resource group and tag
Compare actual vs. forecast
Identify optimization opportunities

Tags Are Not Optional

If you're not tagging resources, you have no idea where your money goes.

At minimum, tag everything with:

Environment: prod, dev, test, staging
Owner: team or person responsible
Project: business initiative or application

Then you can actually answer "why did our bill go up 40%?"

Reserved Instances: The Math

For production workloads running 24/7, reserved instances save 30-60% compared to pay-as-you-go.

But here's the catch: you're committing to 1 or 3 years. If your requirements change, you're stuck.

My rule: Only reserve resources that have been stable for 6+ months.

The Bottom Line

Cloud cost management isn't a one-time activity. It's an ongoing practice.

The companies that succeed treat cloud spending like any other budget — with visibility, accountability, and regular review.

The ones that struggle just pay the bill and hope it goes down.

Which one are you?