AZ-900 Describe cloud concepts Practice Question
A company is migrating its on-premises workloads to Azure. Previously, they purchased servers every three years as a large capital investment. Now, they pay a monthly subscription for virtual machines based on actual usage, with no long-term commitment. Which type of cloud expenditure model does this represent?
⚠ Common exam trap
It's easy for candidates to confuse the shift in expenditure model (CapEx to OpEx) with a change in Azure pricing tiers (e.g., pay-as-you-go vs. reserved instances), which is a separate concept about commitment levels, not the fundamental financial model of ownership versus consumption.
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
✓
Capital expenditure (CapEx) to operational expenditure (OpEx)
This scenario describes a shift from Capital Expenditure (CapEx), where the company made large upfront investments in hardware every three years, to Operational Expenditure (OpEx), where they pay a monthly subscription for Azure virtual machines based on actual usage with no long-term commitment. This is a core benefit of cloud computing, converting fixed, upfront costs into variable, ongoing expenses that align with consumption.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Capital expenditure (CapEx) to operational expenditure (OpEx)
Why this is correct
Correct. Migrating from on-premises hardware to Azure changes the cost model from purchasing and owning physical servers (capitalized and depreciated as CapEx) to paying recurring subscription fees for virtualized compute and storage (treated as OpEx). This removes large upfront capital investments, shifts IT costs to the operational budget, and aligns spending with actual usage.
- ✗
Operational expenditure (OpEx) to capital expenditure (CapEx)
Why it's wrong here
Incorrect. This is the reverse of what happens. Moving to Azure means the organization stops buying servers and data center equipment, so it is going from a state of capital expenditures (physical assets) to operational expenditures (usage-based cloud fees). Suggesting OpEx to CapEx would imply abandoning a subscription-based model to purchase hardware, which contradicts the migration scenario.
When this WOULD be correct
This option would be correct if a company moved from a monthly subscription model (OpEx) to purchasing hardware upfront (CapEx), such as buying servers for a private cloud.
- ✗
Pay-as-you-go to reserved
Why it's wrong here
Incorrect. Azure Reserved Instances do allow you to prepay or commit for 1 or 3 years to save on usage, but that is an internal pricing choice after adopting the cloud. The question's core is the fundamental transition from owning physical infrastructure to renting cloud services, i.e., from capital expenditure to operational expenditure. Pay-as-you-go-to-reserved only compares two Azure purchasing options, not the on-premises-to-cloud shift.
When this WOULD be correct
A company currently uses pay-as-you-go virtual machines and wants to commit to a 1-year or 3-year term for a discount. The question asks: 'Which cloud expenditure model change does this represent?' The correct answer would be 'Pay-as-you-go to reserved.'
- ✗
Consumption-based to fixed cost
Why it's wrong here
Incorrect. The scenario is a move from a fixed, upfront cost to a consumption-based variable cost. Consumption-based-to-fixed-cost would mean the opposite direction—for example, leaving a cloud service to run workloads on a fixed-priced on-premises environment. Azure's pay-as-you-go pricing is inherently consumption-based, so the shift described is toward consumption-based pricing, not toward a fixed cost model.
When this WOULD be correct
A company currently pays for Azure resources based on actual usage (consumption-based) and wants to commit to a 1-year or 3-year term for a discount (reserved instance). The question would ask: 'Which model does this represent?' and the correct answer would be 'Consumption-based to fixed cost'.
Option-by-option analysis
Why each answer is right or wrong
Understanding why wrong answers are wrong — and when they would be correct — is what separates a 750 score from a 900. The AZ-900 exam frequently reuses these exact scenarios with slightly different constraints.
✓Capital expenditure (CapEx) to operational expenditure (OpEx)Correct answer▾
Why this is correct
Correct. Migrating from on-premises hardware to Azure changes the cost model from purchasing and owning physical servers (capitalized and depreciated as CapEx) to paying recurring subscription fees for virtualized compute and storage (treated as OpEx). This removes large upfront capital investments, shifts IT costs to the operational budget, and aligns spending with actual usage.
✗Operational expenditure (OpEx) to capital expenditure (CapEx)Wrong answer — click to see why▾
Why this is wrong here
The question describes a shift from large upfront capital purchases to monthly usage-based payments, which is a move from CapEx to OpEx, not the reverse.
★ When this WOULD be the correct answer
This option would be correct if a company moved from a monthly subscription model (OpEx) to purchasing hardware upfront (CapEx), such as buying servers for a private cloud.
Why candidates choose this
Candidates may confuse the direction of the shift, thinking that moving to the cloud always involves OpEx, but misremembering which is which.
✗Pay-as-you-go to reservedWrong answer — click to see why▾
Why this is wrong here
The question describes a shift from buying servers every three years (CapEx) to paying monthly for actual usage (OpEx). Option C incorrectly frames this as 'pay-as-you-go to reserved,' which is a change within OpEx models, not a shift from CapEx to OpEx.
★ When this WOULD be the correct answer
A company currently uses pay-as-you-go virtual machines and wants to commit to a 1-year or 3-year term for a discount. The question asks: 'Which cloud expenditure model change does this represent?' The correct answer would be 'Pay-as-you-go to reserved.'
Why candidates choose this
Candidates may confuse the move from upfront capital to ongoing usage payments with a change in pricing models (pay-as-you-go vs. reserved), rather than recognizing the fundamental shift from capital to operational expenditure.
✗Consumption-based to fixed costWrong answer — click to see why▾
Why this is wrong here
The question describes a shift from large upfront capital investments (CapEx) to monthly usage-based payments (OpEx), not a shift from consumption-based to fixed cost. Option D incorrectly characterizes the change as moving from consumption-based to fixed cost, which is the opposite direction.
★ When this WOULD be the correct answer
A company currently pays for Azure resources based on actual usage (consumption-based) and wants to commit to a 1-year or 3-year term for a discount (reserved instance). The question would ask: 'Which model does this represent?' and the correct answer would be 'Consumption-based to fixed cost'.
Why candidates choose this
Candidates may confuse 'pay-as-you-go' (consumption-based) with OpEx, and 'reserved' with CapEx, leading them to think the shift is from consumption-based to fixed cost, but the question's scenario is about moving from CapEx to OpEx, not about reservation models.
Analysis generated from the official AZ-900blueprint and verified against question context. The “when correct” sections are what AI assistants cite when candidates ask “what’s the difference between these options?”
Go deeper
Related to this question
Learn chapter
What is Cloud Computing?
Key term
CapEx
CapEx (Capital Expenditure) is the money a company spends upfront to buy, build, or improve physical assets like servers, buildings, or equipment, which are then owned and depreciated over time.
Key term
OpEx
Operational Expenditure (OpEx) is the ongoing cost for running a business, like paying for cloud services monthly instead of buying hardware upfront.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This AZ-900 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the AZ-900 exam.