What is Azure cost management?
Azure Cost Management is a native tool that helps monitor, allocate, and optimize your Azure cloud spending. It provides detailed insights into cost patterns, budgets, and forecasts to keep expenses under control.
You can track spending across subscriptions, set budget alerts, and view cost breakdowns by resource group, region, or service. It’s essential for teams using FinOps to drive accountability and prevent overspend.
Significance of Azure cost management
Azure’s promise of instant scalability and agility comes with a hidden trap: costs that can explode overnight without warning.
While traditional IT infrastructure required careful planning and budget approval, Azure services can be spun up by any team member with a few clicks; a perfect storm for runaway costs. What starts as a small dev environment can quickly snowball into thousands of dollars in wasted spend that no one saw coming. That’s exactly what’s happening to organizations worldwide.
This isn’t just theoretical. The numbers prove how widespread the problem is. Organizations are exceeding their cloud budgets by 17% while wasting 27% of their cloud spend, according to Flexera’s 2025 State of the Cloud Report. Managing cloud spend has overtaken even security as the top challenge facing IT teams (84% cite it as their primary concern). With cloud spending expected to jump 28% this year alone, the stakes have never been higher.
That’s where Azure cost management tools become essential. This guide will cover managing Azure costs in detail, covering the benefits and common pitfalls of Azure cost management, how to overcome cost challenges, using both native and third-party tools to manage spend, and best practices for success you can use to turn runaway costs into a strategic advantage.
5 ways to achieve savings with native Azure cost management tools
The information below was obtained straight from Azure, displaying the precise units used to calculate your Azure bill. Here are the multiple ways and tools you can use to optimize costs in Azure:
Azure Cost Management + Billing
Azure Cost Management + Billing serves as the central hub for monitoring and analyzing your Azure spending. The platform provides real-time cost tracking, historical analysis, and multi-cloud support for Azure, AWS, and Google Cloud environments.
Key Features: Cost allocation and chargeback capabilities, integration with Azure Advisor, API access for automation, and role-based access control for cost data.
Setup Process: Access through the Azure portal, configure appropriate scopes (subscription or resource group level), set up cost allocation rules for organizational chargeback, and enable detailed billing for granular analysis.
Limitations: Data refreshes occur daily rather than real-time, historical data is limited to 13 months for Pay-as-you-go subscriptions, and some advanced features require specific subscription types.
Azure Cost Analysis
Source: Microsoft Azure Cost Analysis
Cost Analysis provides the analytical engine for understanding spending patterns through advanced filtering, grouping, and reporting capabilities.
Advanced Filtering: Filter by time periods, specific services, resource groups, tags, or Azure regions to identify exact cost drivers and spending patterns.
Grouping Strategies: Group costs by service name for high-level views, resource groups for project-level tracking, tags for business alignment, or meters for granular billing analysis.
Reporting Features: Create custom views for different stakeholders, share dashboards across teams, analyze trends over time, and leverage built-in forecasting for budget planning.
Azure Budgets and Alerts
Azure Budgets enables proactive cost management through automated alerts and actions when spending approaches defined thresholds.
Budget Types: Cost budgets track actual spending, usage budgets monitor resource consumption, and forecast budgets provide early warnings based on projected costs.
Alert Configuration: Set progressive thresholds (50%, 75%, 90%, 100%) with different notification groups, configure automated responses through webhooks or Azure Functions, and create action groups for escalation procedures.
Best Practices: Implement hierarchical budgets at subscription and resource group levels, align budgets with project timelines, and integrate alerts with existing ITSM or project management systems for comprehensive cost control.
Azure Pricing Calculator
The Azure Pricing Calculator enables pre-deployment cost estimation and workload planning through comprehensive modeling of Azure services and configurations. This web-based tool helps organizations validate architectural decisions and create accurate budget projections before resource deployment.
Key Features: Cost modeling for 200+ Azure services, scenario comparison capabilities, Reserved Instance and Hybrid Benefit calculations, and export functionality for budget planning.
Setup Process: Access through web browser without Azure account requirements, select specific services and configurations, adjust parameters like region and performance tiers, and save estimates for team collaboration.
Limitations: Estimates reflect list pricing rather than enterprise agreements, assumes consistent usage patterns, and lacks integration with actual usage data for validation.
Azure Advisor
Source: Microsoft Azure Advisor
Azure Advisor provides intelligent recommendations for cost optimization, performance, security, and operational excellence through continuous analysis of your Azure environment using machine learning algorithms.
Cost Optimization Features: Identifies underutilized virtual machines with rightsizing recommendations, suggests Reserved Instance purchases based on usage patterns, and recommends deletion of unused resources like unattached disks.
Implementation Process: Advisor monitors resource utilization continuously, generates daily updated recommendations with potential savings amounts, and offers one-click implementation for many suggestions.
Best Practices: Review recommendations weekly to maintain cost efficiency, prioritize high-impact suggestions first, and integrate Advisor insights with existing change management processes for systematic optimization.
Common Azure Cost Management Pitfalls (+ Solutions)
Even with the best intentions, organizations frequently fall into predictable cost management traps that can significantly impact their Azure spending.
Here are the most common pitfalls and how to overcome them:
| Pitfall | Solution |
| Ignoring Non-Production Environments | Implement automated start/stop schedules for dev/test environments, use Azure Dev/Test pricing, and establish policies that default to standard storage and smaller VM sizes unless justified. |
| Over-Provisioning for Peak Capacity | Design for baseline capacity with auto-scaling enabled, use Azure Monitor metrics to right-size based on actual usage patterns, and consider spot instances for variable workloads. |
| Neglecting Resource Lifecycle Management | Implement mandatory expiration tags on temporary resources, establish regular cleanup schedules, and use Azure Resource Manager policies to automatically delete resources after specified periods. |
| Misunderstanding Reservation Commitments | Start with shorter-term reservations, analyze usage patterns for at least 3-6 months before committing, and maintain flexibility by purchasing reservations for resource families rather than specific sizes. |
| Inadequate Cost Visibility and Attribution | Enforce mandatory tagging policies through Azure Policy, establish consistent naming conventions, and automate tag application through deployment templates and CI/CD pipelines. |
| Focusing Solely on Compute Costs | Conduct comprehensive cost analysis across all Azure services, optimize data transfer patterns, implement storage lifecycle policies, and regularly review networking configurations for cost efficiency. |
| Lack of Governance and Approval Processes | Implement Azure Policy to restrict expensive resource types, establish approval workflows for high-cost deployments, and use role-based access control to limit who can deploy premium services. |
When Native Azure Tools Aren’t Sufficient: Choose an Enterpirse-Grade Solution
While Azure’s native cost management tools provide solid foundational capabilities, many enterprise organizations discover significant limitations as they scale their cloud operations. The most pressing issue is multi-subscription complexity, where native tools struggle with unified reporting across dozens or hundreds of subscriptions. This makes it difficult to gain consolidated views of spending patterns and optimization opportunities.
Additionally, organizations running significant workloads across Azure, AWS, and Google Cloud platforms find that Azure Cost Management lacks the deep cross-cloud integration and unified analytics they require.
The basic alerting and budgeting capabilities fall short of sophisticated automation requirements for dynamic resource optimization and proactive cost management, while standard cost allocation features can’t meet complex enterprise chargeback and showback requirements.
Finally, Azure’s daily data refresh cycles limit the real-time monitoring and immediate response capabilities that large-scale operations require for effective cost control.
This is where Turbo360 can help …
How to Reduce Your Azure Costs With Turbo360
When these enterprise limitations become barriers to effective cost management, advanced third-party solutions like Turbo360 bridge the gaps that native tools cannot address. Turbo360’s Cost Analyzer is an all-in-one integrated solution that offers a variety of features to meet enterprise-scale needs and requirements.
Cost Analyzer provides unparalleled visibility on spending with deep Azure cost analysis across Azure subscriptions, environments, and teams. Turbo360 provides an actionable Azure Cost estimation tool to maximize savings, optimize spending with better volume-based purchasing decisions, and eliminate waste.
Below are the benefits you receive out of Turbo360:
Turbo360 is an exceptional FinOps tool that makes Azure cost analysis and optimization a breeze. – James Reed, West Coast Cloud
Uncover Cost Optimization
Cost Optimization in Cost Analyzer enables you to create optimization schedules with resources associated by defining the tiers, throughput values, and the resource state concerning the Up and Down hours of a week.
You can visualize the cost spent across multiple subscriptions in a single pane and start gauging cyclic cost trends and patterns with hyper customization.
Deep Azure Cost Analysis Reports
Cost breakdown by subscription, region, tag, and resource groups level helps get a deeper analysis. Organizations can achieve team and account-level cost visibility and act immediately on any potential spikes in Azure cost.
Intelligent Alerts for Proactive Response
Budget monitoring helps you to stick to your budgets by proactively monitoring Azure spending. Teams can also leverage the ready-to-use cost trend dashboards to forecast optimal budgets.
The calendar view facilitates access to a historical summary of alert status, which spots the accurate date and time of the cost spike.
Azure Cost Analysis offers advantages, but it also has disadvantages. Azure only offers a single subscription level’s worth of features. Enterprise firms typically operate in various environments; therefore, this constraint does not benefit them.
Visualizing many settings under one roof would be an advantageous alternative for such an enterprise user. Turbo360’s Cost Analyser eliminates all these challenges and provides a better option for cost monitoring and visualization across multiple Azure subscriptions.
Experience our Cost Analyzer feature in our 15 days trial version.
What’s the Difference Between Azure Cost Management and Azure Billing?
While these two tools are closely related, there are key differences to each that can help boost your cost management strategy:
Azure Billing
Azure Billing focuses on account administration, invoice management, and payment processing. It handles subscription management, billing profiles, and provides your monthly invoices.
Use Case: Use Azure Billing when you need to manage payment methods, view billing history, or handle account-level administrative tasks.
Azure Cost Management
Azure Cost Management concentrates on cost analysis, optimization, and operational insights. It provides detailed breakdowns of where your money is being spent, enables budget creation and monitoring, and offers recommendations for cost optimization.
Use Case: Use Azure Cost Management when you want to understand spending patterns, identify optimization opportunities, or track costs against budgets.
Key Takeaway: Azure Billing tells you how much you owe and handles payments, while Azure Cost Management helps you understand why you owe that amount and how to optimize future spending
Cost Entities, Scopes, and Hierarchy: How Azure Organizes Cost Data
Azure organizes cost data in a hierarchical structure that enables granular analysis and management:
| Hierarchy Level | Description | Scope | Primary Use Cases |
| Management Groups | Highest level of organization | Enterprise-wide visibility |
|
| Subscriptions | Individual billing units | Subscription boundary |
|
| Resource Groups | Logical containers within subscriptions | Project/application level |
|
| Resources | Individual Azure services | Most granular level |
|
| Cost Entities | Custom organizational units | Business structure alignment |
|
FAQs
1. What is the purpose of the Cost Management feature in Azure?
The main purpose of Azure Cost Management is to help you keep track of your cloud spending. It shows you where your money is going, which resources are costing the most, and how you can optimize things to save money. Think of it as a dashboard and toolkit for managing and reducing your Azure bills.
2. What do you need to use Azure Cost Management?
You just need an active Azure subscription. If you want to manage costs for multiple subscriptions or across your entire organization (like in an Enterprise Agreement or Microsoft Customer Agreement), you’ll need the right permissions—like being a Billing Account Owner or Reader.
3. What does Azure Cost Management do?
It gives you insights into your Azure usage and costs. You can:
- View and analyze spending patterns
- Set budgets and get alerts when you’re close to limits
- Forecast future spend
- See recommendations to reduce waste (like unused resources with Azure Advisor)
- Export cost data for deeper analysis Basically, it helps you understand, control, and optimize your cloud costs.
4. How to enable Azure Cost Management?
There’s usually no setup needed—it’s built into the Azure Portal by default. Just go to the Azure Portal → Search for “Cost Management + Billing” → Select your subscription, and you’ll see everything.
For budgets, recommendations, and alerts, you may need to configure a few things, but it’s all inside the portal.
5. How to use Azure Cost Management API?
If you want to automate cost tracking or pull data into your own tools, you can use the Azure Consumption APIs.
Here’s a simple flow:
- Register an app in Azure Active Directory
- Give it permissions to access billing or cost data
- Use REST APIs (like UsageDetails or Forecast) to fetch cost details
- You can schedule this via scripts to pull data daily, weekly, etc.
Microsoft provides docs and SDKs for easier integration:
https://learn.microsoft.com/en-us/rest/api/cost-management/
6. How to connect Azure Cost Management to Power BI?
To connect Azure Cost Management to Power BI, open Power BI Desktop, click “Get Data”, and search for “Azure Cost Management (Beta)” if you’re on a Microsoft Customer Agreement (MCA), or “Azure Consumption Insights” if you’re on an Enterprise Agreement (EA). Sign in with your Azure account, select the right billing scope (like subscription or billing profile), and choose the datasets you want—like actual costs, forecasts, or budgets. Once connected, you can build custom dashboards to analyze your Azure spending and track trends over time.
