Question 805 of 981
AZ-900 Describe Azure management and governance Practice Question
Which Azure pricing model allows customers to pay less per hour by committing to a 1-year or 3-year term for Azure services like VMs and SQL Database?
⚠ Common exam trap
Many exam-takers confuse Azure Reservations with Pay-as-you-go, thinking that any discount requires a long-term commitment, but Pay-as-you-go has no commitment and charges the highest per-hour rate, while Reservations specifically require a 1- or 3-year term for the discount.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Azure Reservations
Azure Reservations (also known as Reserved Instances) allow customers to commit to a 1-year or 3-year term for specific Azure services, such as VMs and SQL Database, in exchange for a significant discount (up to 72%) on the pay-as-you-go hourly rate. This pricing model is ideal for workloads with predictable usage, as the upfront commitment lowers the per-hour cost compared to on-demand pricing.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Pay-as-you-go
Why it's wrong here
Pay-as-you-go is the default pricing model with no upfront commitment or term, so you pay the full list price for each consumed resource. While it offers flexibility to scale up/down or deallocate resources at any time, it does not include the steep discount that a 1- or 3-year commitment via Azure Reservations provides. This makes it costlier for predictable, steady-state workloads.
- ✓
Azure Reservations
Why this is correct
Azure Reservations is the correct answer because you prepay or commit to a 1- or 3-year term for virtual machines, SQL Database, Cosmos DB, or other eligible services and receive a substantial discount—up to 72% compared with pay-as-you-go pricing. The discount is automatically applied to matching resource usage, and you can choose full prepayment or monthly billing for the committed term. This commitment-based model is ideal for consistent, production workloads where price predictability and financial planning are required.
- ✗
Azure Spot pricing
Why it's wrong here
Azure Spot pricing lets you purchase unused Azure compute capacity at deeply discounted rates, but the resources are non-resilient and can be evicted whenever Azure needs the capacity back for normal-priority workloads. Because eviction can occur with very short notice, Spot VMs are ill-suited for production or failure-tolerant workloads, whereas an Azure Reservation is a guaranteed-term commitment that never causes eviction. Spot pricing is essentially an interruptible surplus-capacity model, not an alternative to reservation pricing.
- ✗
Azure Dev/Test pricing
Why it's wrong here
Azure Dev/Test pricing offers discounted rates for virtual machines and other services specifically used in non-production development and testing scenarios, and it typically requires a Visual Studio/MSDN subscription to activate. This benefits short-lived, non-mission-critical workloads but cannot be applied to production environments or formal capacity commitments. Azure Reservations instead target production-grade workloads with an explicit 1- or 3-year term commitment, which is a fundamentally different cost-management lever.
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Last reviewed: Jun 11, 2026
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