AZ-900 Microsoft Azure Fundamentals Exam

Overview of Azure Cost Management and Billing

The Azure Cost Management + Billing service helps organizations monitor, allocate, and optimize their cloud spending. By providing visibility into usage and charges, it empowers teams to make data-driven decisions and avoid budget overruns. This service is accessible through the Azure portal, command-line tools, and APIs to fit different workflows.

Before deploying resources, you can estimate costs using several tools. The Azure pricing calculator lets you input custom usage scenarios and see estimated costs with discounts. The Azure price sheet is downloadable from Enterprise Agreement or Customer Agreement portals. The Azure Retail Prices API provides real-time retail meter rates, and the Azure portal shows built-in cost estimates during resource creation. These tools give you an early view of estimated charges and help set realistic budgets.

Once resources are deployed, the service offers features to control and track spending. Budgets and alerts let you set spending thresholds and notify stakeholders when costs approach those limits. Tags and tag inheritance help with cost allocation and categorization. Cost analysis allows you to explore costs by service, resource, location, or custom dimensions. By combining these capabilities, teams can quickly identify anomalies and respond to overspending.

Azure Cost Management also provides strategies to reduce costs over time. Use Azure Advisor for tailored cost-saving recommendations, purchase Azure Savings Plans or Azure Reservations for compute discounts, and apply the Azure Hybrid Benefit to leverage existing licenses. Taking advantage of free services and 12-month free offerings can further lower your overall cloud bill.

For automation and integration, you can pull billing and usage data via the Billing API, Consumption API, exports, or the Query API. Automating data retrieval, budget enforcement, and alerting creates a proactive cost governance framework. Together, these tools and practices form a complete solution for managing and optimizing Azure expenditures.

Setting Up Budgets and Alerts

Cost Management in Azure includes the ability to create budgets and alerts that help you proactively monitor and control your spending. A budget is a predefined amount of money or usage that you set for a subscription or resource group, while an alert is a notification that you configure to trigger when spending approaches or exceeds that budget. By combining these features, you can stay within your financial goals and react quickly to unexpected cost spikes.

Creating a budget in Azure is straightforward through the Azure portal under Cost Management + Billing. You choose the scope—either a subscription or a resource group—and specify the budget amount (cost or usage-based), the time period (monthly, quarterly, or annually), and filters to focus on specific services, resource groups, or tags. These options let you tailor budgets to match different projects or teams, ensuring granular control over where and how money is spent.

When you set up cost alerts, you define thresholds at percentages of your budget, such as 50%, 75%, or 100%. Alerts support multiple actions, including email notifications to stakeholders, integration with Action Groups to trigger automated responses, and exporting data or logging events for auditing. These thresholds and actions ensure that you get timely warnings, allowing you to take corrective measures before costs spiral out of control.

For automation and reporting, use the Budgets API and Alerts API to programmatically manage budgets and receive notifications. With these APIs, you can automate budget creation and updates, hook alerts into your DevOps pipelines or ITSM tools, and customize reporting by integrating cost data with Power BI or custom dashboards. This approach helps maintain consistent governance across large or dynamic environments.

Analyzing Cost Data with Azure Cost Management

Azure Cost Management provides a unified set of tools to analyze, monitor, and optimize cloud spending. Using Cost analysis, you can regularly check your Azure costs to understand where charges come from. This process helps you identify cost-saving opportunities by revealing underused resources and unexpected spikes. It is a foundational practice in Azure governance to control and reduce costs over time.

In the Azure portal, navigate to Cost Management + Billing and select Cost analysis to access built-in reports. You can group costs by various dimensions to get the insights you need. Group by service to view spending by Azure service such as Virtual Machines or Storage. Group by tags to allocate expenses to specific teams or projects. Group by location to see which regions incur the most charges. You can also group by subscription and resource group to drill down into organizational or project boundaries.

You can also filter and export cost data for deeper analysis. Select Add filter to narrow charges by properties such as resource type, time span, or publisher. Once the desired view is configured, use the Download option to export the data as a CSV file. Exported data can be reviewed in Excel or Power BI to build custom cost reports and dashboards.

Visualizing your spending patterns helps you spot trends and take corrective action. Use the Scope pill to switch between management groups, subscriptions, or resource groups, and adjust the granularity (daily or monthly) of cost charts. Combine budgets and alerts to receive notifications when spending exceeds defined thresholds. By leveraging these capabilities, you are better equipped to optimize resources and drive down your overall cloud bill.

Utilizing Cost Allocation and Tagging

Cost allocation is the process of dividing and assigning Azure spending to different parts of an organization, such as departments, projects, or teams. Tags are key-value pairs that attach metadata to resources, helping to group and filter costs. By combining these practices, you can track expenses precisely and ensure each group is accountable for their cloud usage.

Azure Cost Management lets you allocate costs using several methods. You can create allocation rules that distribute costs to specific subscriptions, resource groups, or tags. You can create budgets scoped to tags or resource groups for better financial control. You can also generate chargeback reports that show how much each department or project spent.

Tagging works by applying metadata directly to resources in the Azure portal, CLI, or PowerShell. After you tag resources, Azure Cost Management includes tags in cost data for reporting, allows you to group and filter by tag in cost analysis, and supports export of tag-based cost data for further review.

To implement an effective tagging strategy, follow these best practices. Keep tag names and values consistent across all resources. Use policies to enforce tagging on resource creation. Automate tag inheritance so child resources inherit parent tags. Document your tagging taxonomy and review it regularly.

Once tagging and allocation are in place, you can use Azure's built-in tools to analyze and control costs. In the Cost Analysis blade, group by tags to see spending by project or team. You can also create budgets with tag filters, set alerts for overspending, and export data to Excel or Power BI for deeper insights.

Implementing Cost Optimization Strategies

Effective cost optimization in Azure starts with gaining visibility into spending patterns using cost analysis and Cost Management tools. By regularly reviewing dashboards, you can monitor spending and identify anomalies before they become budget issues. Setting budgets and automated alerts helps teams stay on track and prevents unexpected charges. This proactive approach lays the foundation for deeper cost-saving actions.

Azure provides several built-in services and programs to reduce cloud expenditure. Rightsizing resources based on utilization data avoids over-provisioned services. Azure Advisor recommendations analyze usage patterns and suggest idle or underutilized resources. Azure Reservations offer one- or three-year commitments and can save up to 72% on compute costs. Azure savings plans offer flexible discounts of up to 65% on consistent compute usage. Azure Hybrid Benefit lets you leverage existing on-premises Windows Server and SQL Server licenses in the cloud.

Beyond purchasing options, it is important to apply governance and resource management practices. Use tags, management groups, and custom dimensions to assign ownership and track costs across teams. Automate routine actions, like shutting down nonproduction workloads during off-hours, to cut out waste and minimize idle resource charges. Combining these practices ensures that cost controls extend across the organization.

Finally, optimize continuously by integrating APIs and automation workflows into your cost strategy. Use the Exports API, Cost Details API, and Benefit Recommendations API to programmatically retrieve data and apply recommendations. Implementing automated alerts and actions through Action Groups maintains cost discipline and aligns spending with business goals. Regularly revisiting these strategies helps you adapt to changing usage patterns and maximize your cloud investment.