Azure VM pricing glossary
The pricing models and terms behind every number in the Azure explorer, in plain English. Not sure whether you want a Reserved Instance or a Savings Plan, or how Azure Hybrid Benefit changes the Windows price? Start here.
On-Demand (Pay-As-You-Go)
Per-second billing with no commitment — the baseline every Azure discount is measured against.
Reserved VM Instance (RI)
A 1- or 3-year commitment to a VM size in a region, prepaid for the term, in exchange for a large discount.
Savings Plan for Compute
A commitment to a fixed hourly spend for 1 or 3 years that flexes across VM series, sizes, and regions.
Azure Hybrid Benefit (AHB)
Reuse existing Windows Server (or SQL Server) licenses with Software Assurance so Windows VMs are billed at the Linux compute rate.
Spot Virtual Machines
Spare Azure capacity at a deep, variable discount — reclaimed (evicted) with 30 seconds’ notice when Azure needs it back.
Spot eviction & eviction policy
How Azure reclaims a Spot VM: by capacity or by price, then either deallocate or delete.
Dev/Test pricing
Discounted rates for non-production workloads under an Enterprise Dev/Test or Pay-As-You-Go Dev/Test subscription.
ARM region name
The machine-readable region id (eastus, westeurope) used by the Azure API and CLI — what practitioners actually type.
Meter & SKU
Azure bills usage against meters; an armSkuName (Standard_D4s_v6) identifies the VM size a meter prices.
VM series naming (D, E, F, B and s/a/p)
Azure size names encode family, vCPU count, features, and generation — e.g. Standard_D4as_v6.
Constrained-vCPU sizes
Sizes with vCPUs capped but full memory/IO, sold to cut per-core software licensing costs.
B-series burstable & CPU credits
Low-cost VMs that bank CPU credits while idle and spend them to burst above a baseline.
Ephemeral OS disk
An OS disk stored on the VM’s local/cache storage — free of managed-disk cost, but wiped on deallocate.
Cobalt & Ampere (Arm on Azure)
Azure’s Arm64 VMs run on either Microsoft’s Cobalt 100 or the Ampere Altra processor.
vCPU
A virtual CPU — the unit of compute Azure allocates to a VM, usually one hyperthread of a physical core.
Effective hourly rate
A single $/hr for commitment options — a Reserved Instance’s term total spread across its hours.
Windows vs Linux pricing
Windows VM prices bundle a Windows Server license on top of the Linux compute rate.
Max saving %
The deepest discount versus Linux On-Demand across all Reserved and Savings Plan options for a size.
Best price region
The cheapest launch-set region for a size and the saving versus the region you are viewing.
Normalized pricing ($/vCPU, $/GB)
On-Demand price divided by vCPU or by GiB of RAM, so sizes of different shapes compare fairly.
Other glossaries: AWS EC2 pricing →GCP Compute pricing →