Demystify your Azure costs: Starting with the basics

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Learn how the organization of your Azure environment and your resource usage is affecting your cloud costs.

I’ve been working at Sharegate for almost five years, and despite how fast-paced this industry is, I’m confident in my SharePoint and Office 365 skills. But I realized I still had a lot to learn when it comes to Azure and cloud infrastructure as a whole. I was starting to feel overwhelmed by all the new terms I was reading and struggled to understand what experts were developing now that they had access to this myriad of new cloud-based resources.

At ShareGate, we’ve been particularly focused on Azure costs ever since we launched ShareGate Overcast, a new tool to help cloud engineering teams, IT admins, and anyone working with cloud resources to better understand and reduce their Azure bills.

Luckily, I wasn’t the only one on my team having a hard time wrapping my head around all this cloud speak. Chris, one of the minds behind ShareGate Overcast, came to our rescue with some training on Azure basics last week. I thought I’d share what I learned in this blog post to help other beginners like me get up to speed on the subject.

If you’re already familiar with Azure, you might want to check out our actionable guide to cloud cost control instead!

Learn how any organization can tap into the power of the cloud, and get a feel for the hands-on side of bringing your IT infrastructure to Azure in this eBook by Azure pro Jussi Roine.

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See how to bring your IT infrastructure to the Azure cloud

How does Azure work? An intro to resources, resource groups and meters in Azure

Azure offers dozens upon dozens of resource types. The most popular ones include:

  • Virtual machines
  • Storage accounts
  • Web apps
  • Databases
  • Virtual networks

You can think of resources as the building blocks for all of the solutions you could deploy in the cloud, from simple websites all the way to complex IoT applications and beyond.

Resources in Azure are organized hierarchically, and the first level of that hierarchy is the resource itself.

‘Groupify’ your resources with resource groups

When you start to have a lot of resources within a given Azure subscription, grouping them into logical containers makes them much easier to manage. Take a simple website for example: to build it, you’ll need a few different types of resources—a database, some storage, and the website itself. In Azure, such collections of resources that share a common purpose can be linked together in what’s known as a resource group and managed as a unit.

Microsoft’s documentation provides a nice, straightforward definition of a resource group:

A container that holds related resources for an Azure solution.

Meters determine Azure costs with data

For our website to run, each resource has a specific role to play at a specific moment; how those roles are executed will have an impact on pricing.

But how does Azure keep track of each individual resource’s effect on your overall bill? With what we call meters. Azure resources are linked to a variety of different meters, which record and measure data on different aspects of that resource’s consumption: database writes, uploads, downloads, etc. This data is what determines the total amount of your invoice.

Suggested read: How does Azure VM pricing work?, by Leigh Ryan

Beyond resources and resource groups: subscriptions, management groups and tenants


Subscriptions in Azure are yet another way to structure your overall environment and track costs. There are many different ways businesses can organize their subscriptions, such as:

  • Modelling subscriptions on corporate departmental structure (one subscription = one department)
  • Modelling subscriptions according to resource lifecycle (e.g. one for production, another for development)

A subscription comprises the elements we discussed above (resources, resource groups and meters) as well as a price list. These prices vary depending on your subscription type, meaning that a database in subscription ABC might cost you more or less than that same database in subscription XYZ.

The data collected by resource meters within a subscription, combined with that subscription’s price list, determine how much each subscription’s consumption will end up costing you.

Get even more organized with management groups

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Save time and money in Azure with ShareGate Overcast

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Just as resource groups are designed to help admins manage related resources, management groups were introduced at Ignite 2018 as a new way to organize subscriptions. A management group can span multiple subscriptions, allowing admins to apply bulk permissions and policies to the resources within.

You can learn about querying resources and testing policies across multiple subscriptions in this recap and recording of our in-house Azure MVP’s webinar on Azure Resource Graph.

Your tenant ties it all together

A tenant contains everything we’ve been discussing so far. When a company signs up for any of Microsoft services, it gets a tenant. A tenant holds all your subscriptions (Office 365 being one of them), on top of the lists of your users and domains, a bit like a company directory.

As you’re reading this, you might be wondering: “I’ve been managing my Office 365 subscription for a while and I have a tenant. Is it the same thing as a tenant in Azure?” For once, the answer is yes! They have the same ID.

In a nutshell, your tenant allows you to deploy and set up both your Microsoft productivity cloud environment (i.e. Office 365) and your Microsoft infrastructure cloud (i.e. Azure).

Fire up your Azure Cost Management portal and start exploring

After reading this article, you should understand the basic structure of an Azure environment, the hierarchical relationships between each level, and how each element factors into your monthly bill. At the bottom you have your individual resources, which can be grouped into resource groups. Resource groups are part of a subscription; subscriptions are organized into management groups; and all of that put together lives within your tenant. This diagram sums it up nicely:

Overview of Azure tenant structure diagram

If you’d like to further your understanding of cloud costs, a good next step would be to familiarize yourself with the different plans and licensing options available for Azure (e.g. pay-as-you-go vs. Enterprise Agreements) and how they might relate to your operational needs.

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