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Time to revisit your Reserved Instances

Microsoft allows you to commit to specific workloads for 1 or 3 years in exchange for a rebate. This article will focus on Reserved Instances for Compute, which cover your Virtual Machines, VM Scale Sets, AKS Nodes, etc.

Savings Plans and Reserved Instances

In October 2022, Microsoft introduced Savings Plans. These offer significant advantages over Reserved Instances but come with lower rebate levels. We generally recommend Savings Plans, although Reserved Instances still have their place.

From this point, we anticipate them coexisting—Savings Plans covering a large share of eligible workloads and Reserved Instances serving specific, tactical needs.

Key Properties of Reserved Instances

Reserved Instances are linked to an Azure Region and an Azure VM Family. You commit for 12 (RI1) or 36 (RI3) months. Until Dec 31st, 2023, Microsoft permits you to exchange Reserved Instances, provided the returned RI is of lower value than the new one.

The importance of Jan 1st, 2024, for Reserved Instances

Upon launching Savings Plans, Microsoft declared that Reserved Instances for Compute, bought from Jan 1st, 2024, could NOT be exchanged.

When that news came out, we reasoned that Reserved Instances purchased before Jan 1st, 2024, could still be exchanged one last time even after Jan 1st, 2024. Microsoft has, in the meantime, explicitly confirmed our assumption:

Compute reservations purchased prior to the end of the grace period will reserve the right to exchange one more time after the grace period ends.


Jul 1st, 2024 is the new Jan 1st, 2024

Microsoft recently announced a Grace Period, extending the date for exchanging newly acquired Reserved Instances for Compute to Jul 1st, 2024:

Through a grace period, you will have the ability to exchange Azure compute reservations (Azure Reserved Virtual Machine Instances, Azure Dedicated Host reservations, and Azure App Services reservations) until at least July 1, 2024. In October 2022 it was announced that the ability to exchange Azure compute reservations would be deprecated on January 1, 2024. This policy’s start date remains January 1, 2024 but with this grace period you now have until at least July 1, 2024 to exchange your Azure compute reservations. Compute reservations purchased prior to the end of the grace period will reserve the right to exchange one more time after the grace period ends.


Call to Action

Utilise this extended period to review your current Azure Compute workloads and your Reserved Instances for Compute. Unless you transition to Savings Plans, exchange your existing RIs for new ones before Jul 1st, 2024.

Why Act?

Given the release cycles for major new VM versions, we expect Microsoft to launch Dv6 and Ev6 within the next 18-24 months. The Mv3 Series is currently in Preview. You don't want to be stuck on a (then final) reservation that is renewed just before a new major version for your core workloads becomes available. Avoid being locked into an outdated reservation.

Need help?

We're here to help you fine-tune your Reserved Instance and Savings Plan strategy. Contact our Azure expert to arrange a call.