Azure Reserved VM Instances (RIs) significantly reduce your virtual machine (VM) costs compared to pay-as-you-go prices. With RIs you make an upfront commitment on compute usage for a period of one or three years to get a significant discount. To purchase an RI, you need to specify the Azure region, VM size and the term. VMs in your subscription(s) that match the attributes of the purchased RI will automatically get the billing benefit. You do not need to assign the RI to matching VMs. VMs that are already running or ones that are newly deployed matching the RI attributes will automatically get the benefit.

VMs are billed on a per minute basis. By purchasing an RI, you are pre-paying for the base VM compute charges for a period or 1 or 3 years. As soon as you buy an RI, the base compute charges that match the RI attributes are no longer charged at the pay-as-you go rates. The purchased RI is applied automatically to already running VMs or to new VMs that match the RI attributes. An RI does not cover software, networking or storage charges associated with the VM. At the end of the reservation term the billing benefit expires and the VMs are billed at the pay-as-you go price. Reservations do not auto-renew, to continue getting the billing benefit you need to purchase a new RI at the end of the term.