This part of Azure we will learn, needs some pre-requisite of CapEx vs OpEx.

Consumption based pricing model:

You're just charged for what you use, no more, no less. 

Microsoft has provided various subscription offers to their consumers.

Fixed price:

The resources comes with some additional benefits , yet are charged irrespectively even if the resources are used or not.

Subscription Offers:

• Pay-as-you-Go: It is the most traditional classic model, where each month one only pays for the resources created, run viz, only pay for consumed for the specific pay period.
• Enterprise Agreement (EA): This is unlike the above, where the user goes in with agreement/ contract for a term of 3 years. Every end of the year under the contract user gets to go for re-negotiation of the resources and pre-pay for the whole year at once. EA has its own additional benefits such as like discounts, own management portal for reporting, managing etc.

But this has a fixed agreement due to which a specific amount of money has to be given by estimation of resources and might be the case some of the resources are not used which in-deed becomes use or lose it.

When estimating costs, it's usual to look at workloads on a peak throughput. Consumption-based pricing can be less accurate in estimating baseline costs as compared to provisioned pricing in cases of heavy use. When it comes to consumption-based pricing, PaaS and serverless solutions can assist you figure out where the economics stops.

Azure has more consumption subscription offers, yet all these prices of the subscriptions is based essentially on factor of consumption.

Consumption price tiers:

Pricing for Azure Functions is divided into three categories.

• Consumption plan: Azure offers all of the computing resources required to complete the project. Resources are managed for you, and you just pay for the time your code runs.
• Premium plan: You choose the amount of pre-warmed instances that are always up and ready to reply instantly. Azure offers any additional computing resources that are required when your function executes. Instances that are continually pre-heated are included in the cost, along with any extra instances you utilise when Azure grows your program in and out as needed.
• App Service Plan: Run your functions the same way you would a web-based application. As long as you're using App Service for other apps, you'll be able to execute your functions on the same plan at no extra cost.

 

Budgeting can be challenging:

When we are dealing with operational expenditure and consumption-based-pricing, the challenge is to budget and to calibrate, so that the resources used by the consumer are not too expensive and not very economical. Just keeping the prices right.

Capturing consumption 

Consumption has traditionally been measured in two methods, both of which have their advantages and disadvantages:

Recurring price is the only option. Hotstar is a prime example. In essence, it's a one-time payment for limitless access. Hotstar charges the same price to every client, regardless of how much they watch. Although, the hotstar is a mere example, it must totally be related to the Azure.

Usage only. As an example, consider utilities or cloud platforms that charge based on usage. Customers pay according to how much or how little they use.  Price-setting for a computing cycle is opaque. 

How is the price established for a computing cycle? 

Customers and companies alike may find it difficult to foresee. Every month, bills go up or down based on consumption, and there's no way to bargain. The price per unit is what it is, and it will remain that way. Stability and contentment aren't exactly on the menu here.

Benefits of Consumer-based-pricing model:

• Customer happiness is important. With self-serve options, clients are more likely to feel like they're getting a good deal.
• Agility in reaching the market. Recurring and consumption price combinations are flexible, allowing firms to try new things in the market and make fast adjustments.
• There is a reduction in revenue leakage. It's important to use pricing strategies that maximize product utilization and revenue generation from each client.