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How to Increase Your Margins with Azure Reserved Instances (RIs) and Hybrid Use Benefits

Tony Cai
Tony CaiPartner Sales Executive
0 commentsNovember 26, 2019Articles

At Nerdio, we teach our partners to commit to 3-year Azure Reserved Instances and to take advantage of Azure Hybrid Usage when it makes sense. But when does it make sense? Well, in every scenario! Why? Because the cost of getting out of the 3-year commitment and paying a small penalty (no more than 12% of the unused consumption) is usually well worth it compared to the higher margins you are going to get by making a reservation in the first place.

Click here to read more on Reserved Instances and Azure Hybrid Use in our How to Make Money Selling Azure article. 

From my experience, most partners forget to commit to the Reserved Instances and to purchase licenses after their deployment. If you don’t commit to RIs and purchase those licenses, you’re essentially still Pay-as-you-Go in Azure, which can be quite expensive. 

 

How to Achieve the Best Azure Margins on Every Deal: 

  • Always purchase a 3-year RI for ANY size VM (A series VM’s do not qualify for RI’s)  
  • Always take advantage of Azure Hybrid Usage for all VM’s EXCEPT for B series VMs and WVD Hosts 
  • Always purchase SQL Licensing through the CSP Software Subscription model, sold in packs of 2, and a minimum of 4 cores 

 

Here’s how to take advantage of Reservations and Azure Hybrid Use Benefits. 

Contact your Cloud Solutions Provider (Ingram, Pax8, SherWeb, D&H, etc).

Reservations  

Email your cloud team at your distributor and make sure to communicate to them that you’d like to take advantage of Reserved Instances and Azure Hybrid Use. Make sure to include the following in your communications: 

  • Each VM SKU (D2sv3, B2ms, E4sv3, etc.) you need to make a reservation on
  • The quantity of each VM SKU 
  • The term of your reservation (1-year or 3-year) 
  • The Azure region you wish to reserve them in 
  • Azure AD Tenant 

Please be sure to triple check the accuracy of your commitment. If you get this wrong, not only did you commit to a VM you can’t use, but you’ll still be paying for that VM at its Pay-as-you-Go rate. 

 

Azure Hybrid Usage Benefits

Tell your distributor that you want a quote for CSP Software Subscriptions, and please be sure to specify clearly: 

  • The quantity of each license 
  • The term of your license 
  • The license you intend to purchase 

The alternative to CSP Software Subscriptions that will still qualify you for the Azure Hybrid Usage benefits are OPEN Volume Licensing with Software Assurance. 

 

Email Template to Send to Distributor 

Use the following template to request Reserved Instances and Azure Hybrid Use benefits – be sure to change the values to what you need. 

 

"Dear XXXXX, 

I would like to commit to Reserved Instances for the following VM’s in US East: 

We have: 

  • QTY 1 of D2sv33-years 
  • QTY 1 of B2MS3-years 
  • QTY 2 of E4sv33-years 

 

The client’s tenant is WXYZ.onmicrosoft.com 

We also want to purchase CSP Software Subscription licenses for: 
 

  • QTY 1 of Windows Server 2019 Standard – 8-Core Pack – 3-years 
  • QTY 2 of SQL Server Standard 2-Core Pack – 3-years 

 

Thanks, 
Your Name"

 

 

CSP Software Subscription Part Numbers for Reference 

Vendor SKU 

SkuTitle 

Msrp 

DG7GMGF0DWBM:0003 

SQL Server Standard - 2 Core License Pack - 1 year 

$1,559.00  

DG7GMGF0DWBM:0005 

SQL Server Standard - 2 Core License Pack - 3 year 

$4,254.00  

DG7GMGF0DVSV:000G 

Windows RDS CAL - 1 User CAL – 1 year 

$60.00  

DG7GMGF0DVSV:000P 

Windows Server RDS CAL - 1 User CAL – 3 year 

$153.00  

DG7GMGF0DVT9:000B 

Windows Server 2019 Standard - 8 Core - 1 year 

$291.00  

DG7GMGF0DVT9:000C 

Windows Server 2019 Standard - 8 Core - 3 year 

$582.00  

 

How to Check to See if Reserved Instances are Being Applied

Once your distributor successfully completes your order, you’ll want to check to see if it's being applied correctly. Reserved Instances are automatically applied. Follow the instructions below to check: 

 

View reservation use in the Azure portal 

  1. Sign in to the Azure portal.
  2. On the search bar on the top, search for Reservations and note the Utilization (%) for a reservation. 100% utilization is good. 

azure reserved instance 

 

How to Activate Azure Hybrid Use Benefits 

While reservations or Reserved Instances are automatically applied once they are ordered, Azure Hybrid Usage licenses are not! After you’ve purchased those licenses from your distributor, make sure you turn AHU on for each VM that you have purchased licensing for in the Azure portal. 

  1. Sign in to the Azure portal.
  2. View All VM’s, click on a specific VM, then go to the VM’s Configuration page, and select Yes to Azure Hybrid Benefit and click Save.
  3. 3. Do this for each VM that you have purchased licenses for. This should be all VM’s except for B-series VMs and WVD hosts.

azure reserved instance 

 

You should be all set to enjoy the full benefits of Azure while knowing you are paying the lowest cost possible! Don’t forget to renew every 3 years to keep the savings consistent. We recommend adding these assets to your renewals management system in your PSA tool. 

 

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