# Azure Reserved Instances > Chapter 68 of the Courseiva AZ-900 curriculum — https://courseiva.com/learn/az-900/azure-reserved-instances **Official objective:** 2.2 — Azure Architecture Services ## Introduction This chapter covers Azure Reserved Instances, a pricing option for workloads with predictable, long-term usage patterns. AZ-900 tests this under objective 2.2, alongside other compute pricing options. ## Buying in Bulk to Get a Discount A store might offer a discount if you commit to buying a certain item regularly — say, 20% off if you pre-commit to buying 100 items a month for the next year. Azure Reserved Instances work similarly: commit to using a virtual machine for a fixed period (1 or 3 years), and get a significant discount off the standard pricing in exchange. ## Core explanation ### What Reserved Instances are Reserved Instances are a pricing option where you pay upfront (or over a fixed period) for a 1-year or 3-year commitment to use a specific VM size in a specific region, and receive a significant discount (typically 30-70% off standard pricing) in exchange. ### Who they fit Reserved Instances fit organizations with predictable, long-term workloads — for example, a steady-state production application that's always running. The longer the commitment and the more upfront you pay, the bigger the discount. ### The tradeoff You save money if your usage patterns match the commitment, but you're locked into that commitment — if your needs change or you no longer need the resources, you've already paid and might lose money compared to pay-as-you-go. ### How they compare to other options Spot Instances offer the biggest discounts but with the risk of interruption. Reserved Instances offer a smaller discount without interruption risk, requiring a long-term commitment instead. Standard, pay-as-you-go instances have no discount but maximum flexibility. ## Real-world context A company with a steady-state production environment that runs 24/7 purchases 3-year Reserved Instances for those VMs, saving 60% compared to pay-as-you-go pricing, confident the production environment will continue for years. ## Exam focus Objective 2.2 expects candidates to understand Reserved Instances as a cost-saving option for long-term, predictable workloads, alongside other pricing options. A common wrong answer is assuming Reserved Instances are always the right choice — they only save money if your actual usage matches the commitment. Unexpected downsizing or workload migration can make them a poor choice. Stable terms: **Reserved Instances**. Memory trick: Reserved Instances = big discount (30-70%) for long-term commitment — great if usage is predictable, risky if needs might change. ## Step by step 1. **Confirm long-term, predictable usage** — Reserved Instances only make sense for workloads you're confident will run consistently for the full commitment period. 2. **Choose commitment length** — 1-year or 3-year commitments are available — longer commitments typically offer bigger discounts. 3. **Choose payment option** — Upfront, partial, or spread-over-time payment options affect the discount — upfront payment generally means the biggest discount. 4. **Reserve the appropriate capacity** — Reserve the specific VM size and region matching your expected needs. ## Comparisons ### Pay-as-You-Go vs Reserved Instances **Pay-as-You-Go:** - No upfront commitment - Maximum flexibility - Standard pricing, no discount - Best for unpredictable or short-term usage **Reserved Instances:** - 1 or 3-year commitment required - Significant discount (30-70%) - Best for predictable, long-term workloads ## Common misconceptions - **Misconception:** Reserved Instances are always cheaper than pay-as-you-go. **Reality:** They're cheaper only if your actual usage matches the commitment — if your needs change, you could end up paying more. - **Misconception:** Reserved Instances are suitable for all workloads. **Reality:** They're most suitable for long-term, predictable workloads with stable capacity needs — workloads with fluctuating or uncertain long-term demand are better suited to pay-as-you-go or Spot Instances. ## Key takeaways - Azure Reserved Instances offer significant discounts (typically 30-70%) for committing to 1 or 3-year usage of specific VM sizes. - They're suitable for long-term, predictable workloads with stable capacity needs. - The longer the commitment and more upfront the payment, the bigger the discount. - They're less suitable for workloads with uncertain or fluctuating long-term demands. ## FAQ **What are Azure Reserved Instances?** They're a pricing option where you commit to using a specific VM size in a specific region for 1 or 3 years, receiving a significant discount (typically 30-70% off) in exchange for that commitment. **Are Reserved Instances always cheaper than pay-as-you-go?** Only if your actual usage matches the commitment — if your needs change and you no longer need the reserved capacity, you could end up paying more than if you'd used pay-as-you-go instead. **What workloads are suitable for Reserved Instances?** Long-term, predictable workloads with stable capacity needs — for example, a steady-state production application expected to run for years with consistent resource requirements. --- Interactive version with quiz and diagrams: https://courseiva.com/learn/az-900/azure-reserved-instances