April 19, 2023

AWS vs. Azure Pricing: A 2023 Guide

By Gilad David Maayan

What Are AWS and Azure?

AWS (Amazon Web Services) and Azure are two of the most popular cloud computing platforms currently available in the market.

AWS is a cloud computing platform offered by Amazon that provides a wide range of cloud-based services such as computing power, storage, and databases to businesses and individuals. It offers an extensive range of services, including EC2 (Elastic Compute Cloud), S3 (Simple Storage Service), and RDS (Relational Database Service), among others. AWS offers a pay-as-you-go pricing model, making it a popular choice for businesses of all sizes.

Azure is Microsoft’s cloud computing platform that provides similar services to AWS. It offers a range of cloud-based services such as virtual machines, databases, storage, and application services. One of the key advantages of Azure is its integration with Microsoft’s existing suite of products and services, such as Office 365 and Active Directory. Azure also offers a hybrid cloud solution, allowing businesses to run their applications on both on-premises servers and the cloud.

Both AWS and Azure offer scalable and flexible cloud computing solutions that can be tailored to meet the specific needs of businesses. While AWS is considered to be the market leader, Azure has been steadily gaining popularity due to its seamless integration with Microsoft’s products and services. Both platforms offer PaaS, SaaS, and IaaS models, although Azure also offers serverless functions.

AWS vs. Azure: Free Tier Offerings

AWS

With the AWS Free Tier, you can access 85 AWS cloud products and services that span across categories such as storage, compute, database, artificial intelligence, and IoT, among others. The AWS Free Tier comprises three types of free offerings:

  • Always free: The service is free and available to all AWS customers without any time limitation.
  • 12 months free: When you sign up for AWS for the first time, you can use the service for the first 12 months for free. However, you’ll need to pay regular service prices after.
  • Free trial: For a specified period after activation, services become free for you to try.

For new AWS users seeking to optimize costs, it is recommended to check out the compute and storage options that are available as part of the 12 month free tier. For example, you can use a T2 or T3 micro instance of Amazon EC2 for 750 hours per month, or obtain 5 GB of object storage via Amazon S3 Standard Tier, along with 20,000 reads and 2,000 writes.

It’s important to note that the free tier has some restrictions, such as the option to switch from free to pay-as-you-go and geographical availability of different services.

Azure

Upon creating an Azure account, you’ll receive a $200 credit that you can utilize within 30 days of registration. You’ll also have free access to 54 services and products offered by the Azure cloud, which span categories such as compute, database, storage, security, and AI.

There are two free models available with an Azure account:

  • Always free: You can use specified cloud products for an unlimited period of time (currently 29 offerings support this model). However, there are restrictions on the amount of usage allowed.
  • 12 months free: You can use some products (currently 25) for free during the first 12 months of opening your account.

Similar to AWS, it is recommended to make use of Azure’s free storage and compute services during the first year. For instance, you can receive 750 hours per month for instances in the B1S Standard Tier running on Windows or Linux, or obtain 5 GB of Azure Blob Storage with 20,000 each of reads and writes.

Note that there are limitations on certain services and usage when utilizing the free offers on Azure, and it’s important to be aware of them. AWS vs. Azure: Pricing Models

To optimize costs, it’s important to choose the pricing model that suits your workload best. For example, for long-term cloud workloads, it’s recommended to purchase reserved instances to reduce expenses. On the other hand, fault-tolerant workloads can utilize spot instances to avail even larger discounts.

AWS provides four primary pricing models:

  • On-demand: This pricing model allows you to use the services you require whenever needed. The services are billed by the hour or second of actual usage, with no upfront payments. While it offers great flexibility, it’s also the most expensive pricing model.
  • Savings Plans: A flexible pricing model that allows you to use Amazon EC2, AWS Lambda, and AWS Fargate at a low cost by committing to a certain level of spend on all services for a term of one or three years.
  • Reserved Instances: This model can offer discounts of up to 72% if you commit to using a given compute instance for a one- or three-year term. You can pay some or all of the amount upfront, which will affect your discount level.
  • Spot Instances: This pricing model enables you to purchase spare Amazon compute capacity at a discount (up to 90% compared to on-demand prices). There’s no upfront commitment but it’s important to be aware that a spot instance can be interrupted with as little as two minutes’ notice.

Azure provides four primary pricing options for cloud resources such as Azure VMs:

  • Pay-as-you-go: Similar to Amazon’s on-demand model, services are billed per second based on actual usage, with no upfront costs or long-term commitments.
  • Reserved VMs: Azure offers reserved virtual machine instances (RVMIs), which provide discounts of up to 72% in exchange for a long-term commitment for one or three years.
  • Azure Hybrid Benefit: This is a BYOL (bring your own license) model that allows you to use existing licenses for Microsoft products such as Windows Server and Microsoft SQL Server to avail discounts for Azure services that include the same software.
  • Spot VMs: This option enables you to purchase spare compute capacity on Azure at a discount of up to 90% compared to pay-as-you-go rates. However, Azure spot VMs have less advanced capabilities than Amazon’s, as they only guarantee advanced notice of 30 seconds before they are pulled, and Amazon offers fewer options to combine spot instances with reserved or pay-as-you-go instances.

AWS vs. Azure: Storage and Compute Pricing

Here are some comparisons of similar offerings from AWS and Azure.

Cloud-based storage prices

The following Regions cover similar areas:

  • US East/N. Virginia (AWS): $0.023 per GB/month
  • East US (Azure): $0.021 per GB/month

While these prices are similar, Azure is clearly more cost-efficient. However, it’s also important to consider additional costs, such as data transfer fees.

Compute prices

Here is a comparison of the two provider’s pricing for virtual machines in similar regions (East US and US East) based on the Linux operating system. This example setup has four vCPUs to run the following services using general-purpose instances or VMs:

    • Amazon EC2 (Elastic Compute Cloud): t4g.xlarge general (16GB RAM) – $0.1344 on-demand
  • Azure VMs: B4ms instance – $0.166 on-demand

Here is the pricing comparison for the equivalent compute-optimized instances and VMs:

  • Amazon EC2: c6a.xlarge (8GB RAM) – $0.153
  • Azure VMs: F4s v2 – $0.1690

Thus, Azure may be the cheaper option depending on the instance type, being less cost-effective for general-purpose instances but cheaper for many applications.

Conclusion

Understanding the pricing models of AWS and Azure is critical in optimizing cloud infrastructure costs. AWS and Azure offer similar pricing models such as on-demand, reserved instances, and spot instances, but there are subtle differences in terms of features, pricing, and discounts. For instance, Azure’s hybrid benefit allows customers to bring their own licenses, while AWS offers a flexible pricing model in the form of Savings Plans.

Additionally, AWS’s Spot Instances provide greater flexibility with advanced notification options compared to Azure’s Spot VMs. Ultimately, the choice of cloud provider and pricing model depends on the specific needs and requirements of the business.

Therefore, businesses should conduct a thorough analysis of their workloads, application requirements, and budget before selecting the most cost-effective pricing model offered by either AWS or Azure.

By Gilad David Maayan

Gilad David Maayan

Gilad David Maayan is a technology writer who has worked with over 150 technology companies including SAP, Imperva, Samsung NEXT, NetApp and Check Point, producing technical and thought leadership content that elucidates technical solutions for developers and IT leadership. Today he heads Agile SEO, the leading marketing agency in the technology industry.
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