When you want to get serious about controlling your costs, the place to go is Azure Cost Management. It provides four key features: cost analysis, budgets, alerts, and recommendations. The recommendations module is actually provided by Azure Advisor, which we covered in the previous lesson, so I won’t go over it again here.

The cost analysis module lets you drill down into your costs to find out where your organization is spending the most on Azure. You can break down your costs by service, region, and subscription, and you can see how these costs have changed on a daily or monthly basis. The data is displayed in charts and tables, which makes it much easier to analyze. It also shows you a forecast of how much you will spend if you continue using Azure resources at the same pace for the rest of the month.

As nice as the cost analysis module is, most people wouldn’t want to go into it every day to keep costs under control. A better approach is to create a budget and some alerts. Setting up a budget is very simple. You just need to say how much you expect to spend on a monthly basis.

Then you can set alerts to warn you when your costs are approaching the budgeted amount. You can set multiple alerts at different levels. For example, you can set alerts to email you when your spending in the current month has reached 75%, 90%, and 100% of your budgeted amount. Alternatively, you can set alerts to tell you when the forecast for the current month reaches a particular percentage of your budget. That would give you more warning, but it could end up sending a lot of unnecessary alerts if you have frequent temporary spikes in usage.

The examples I’ve given so far have assumed that all of your organization’s costs would be lumped together, but for larger organizations, that’s not feasible. So Azure provides three levels of management that you can use to make it easier to track costs separately: management groups, subscriptions, and resource groups. 

Individual resources, such as VMs or SQL Database instances, that are related to each other in some way, are put into a resource group. For example, you might put all of the services used by a particular application in the same resource group. Related resource groups are part of a subscription. For example, you might have a separate subscription for each team in a department. Related subscriptions can be put into a management group. One common approach is to have a separate management group for each department.

Once you have this structure in place, you can use cost analysis, budgets, and alerts for any element in the hierarchy. For example, you could set separate budgets for a management group, a subscription, and even a specific resource group.

Before we go, I should also mention that there’s an additional mechanism you can use for tracking costs: tags. If you apply the same tag to a bunch of different Azure resources, then you can see the total cost of all of those resources in Azure Cost Management.

And that’s it for this lesson.