Azure Spot VMs vs Reserved VMs – The Real Difference
One of the most common questions I get is:
“Why does Azure offer Spot VMs at up to 90% discount while Reserved VMs only give around 72%?”
Here’s a simple explanation
Azure Spot VMs :-
Azure data centers always have some unused capacity. Instead of keeping that hardware idle, Microsoft offers it as Spot VMs at a very low cost.
The trade-off is that these VMs can be evicted anytime if Azure needs the capacity back.
When creating a Spot VM, you decide:
Eviction type – Evicted only if capacity is gone, or if capacity is gone and price goes above your set limit.
Eviction policy – After eviction, the VM can either stop/deallocate (you can try to start it again later) or be deleted.
How to create a Spot VM :-
Go to Azure Portal → Create Virtual Machine
Under Basics → Pricing options, select Spot instance
Choose eviction type and policy
Complete VM creation as usual
(You can also use Azure CLI with --priority Spot)
Best for: Test environments, batch jobs, rendering, and simulations.
Azure Reserved VMs :-
Reserved VMs work differently. Here, you commit in advance for 1 or 3 years. In return, Azure gives you a discount (up to 72%) and guarantees that your capacity will always be available.
How to purchase Reserved VM capacity :-
Go to Azure Portal → Reservations
Click Add → Select Virtual Machine
Choose Region, VM size, and term (1 year or 3 years)
Purchase the reservation.
Any running VM that matches the size and region will automatically get the discount.
Best for: Production systems, always-on workloads, and predictable environments.
Real-Life Example :-
Spot VMs are like last-minute cheap tickets – great deal, but you may lose your seat if someone else pays full price.
Reserved VMs are like booking a season pass – you pay upfront, but your seat is always guaranteed.
Final Takeaway
Spot VM = Maximum savings, but no guarantee
Reserved VM = Stable savings with guaranteed availability
Many smart companies actually combine both:
Reserved VMs for critical workloads
Spot VMs for flexible or short-lived tasks
That way, they get the best balance of cost and reliability.
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VP-Enterprise Architecture, Platforms, Data & Security. ( APD )
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