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Nerdio Manager for Enterprise
AVD vs Windows 365 costs
This guide is for IT professionals and decision-makers who need to make a financially sound choice between these two powerful Microsoft solutions.
The choice between Azure Virtual Desktop (AVD) and Windows 365 hinges on a trade-off between flexible, usage-based pricing and fixed, predictable costs. AVD is typically more cost-effective for organizations with variable user schedules and high user density by leveraging resource pooling and scaling. In contrast, Windows 365 is often more cost-effective for predictable, full-time usage patterns where its fixed per-user cost and management simplicity reduce the total cost of ownership.
What is the difference between AVD and Windows 365?
In short, Azure Virtual Desktop (AVD) is a flexible VDI platform that offers deep customization and pay-as-you-go pricing, giving you full control over the underlying Azure infrastructure. In contrast, Windows 365 is a simplified SaaS solution that provides a dedicated "Cloud PC" for a fixed monthly fee, with Microsoft managing the infrastructure for ultimate ease of use. The choice is between AVD's granular control and potential cost savings versus the predictability and simplicity of Windows 365.
As you can see in the table below. one offers you granular control over a flexible environment, while the other provides a simplified, pre-packaged desktop experience.
| Feature | Azure Virtual Desktop (AVD) | Windows 365 Cloud PC |
|---|---|---|
| Pricing Model | Consumption-Based (PAYG) | Fixed Per-User/Per-Month |
| Best For | Variable Usage & High Density | Predictable Usage & Simplicity |
| User Experience | Pooled (Multi-Session) or Personal | Always Personal & Persistent |
| Management | Customer-Managed (Full Control) | Microsoft-Managed |
| Cost Structure | Variable OpEx | Predictable OpEx |
| Customization | High (Custom Images, GPU VMs) | Limited to SKU Selection |
What defines Azure Virtual Desktop (AVD)?
Azure Virtual Desktop is a highly flexible desktop and application virtualization service that runs on your Azure subscription. This flexibility means you can deliver a full desktop experience or choose to stream individual remote apps to a user's local device, making them feel as if they are running locally. Think of it as a toolkit that gives you full control to build and manage a virtual desktop infrastructure (VDI) tailored to your exact needs.
- Pricing Model: Azure Virtual Desktop operates on a consumption-based, "pay-as-you-go" pricing model. You are billed for the specific Azure resources you use, with the primary costs being virtual machine compute (billed only when running), storage for disks and user profiles, and networking bandwidth. This means costs vary based on usage, making optimization strategies like autoscaling essential for managing your monthly bill.
- Core Feature: Its key advantage is support for Windows 10 and Windows 11 Enterprise multi-session, which allows multiple users to share a single virtual machine (VM).
- Management: You are responsible for managing the entire environment, including VMs, operating system images, user profiles, and networking.
What defines Windows 365 Cloud PC?
Windows 365 is a Software-as-a-Service (SaaS) solution that delivers a complete, dedicated Cloud PC to each user. It's designed for simplicity and predictability, abstracting away the underlying infrastructure management.
- Pricing Model: It operates on a fixed-cost, per-user, per-month license model. Your cost is predictable, regardless of usage hours.
- Core Feature: Its primary value is simplicity. Each user receives a persistent, one-to-one Cloud PC that is their personal, dedicated Windows experience in the cloud.
- Management: The underlying infrastructure is fully managed by Microsoft. Your IT team manages user access and policies through familiar tools like Microsoft Intune.
What are the primary factors that determine the cost of each service?
Calculating the Total Cost of Ownership (TCO) requires looking beyond the headline price to understand all the contributing variables for each platform. Windows 365 costs are straightforward and based on licenses, while AVD costs are dynamic and based on resource consumption.
How is the cost of Windows 365 calculated?
The cost of a Windows 365 Cloud PC is simple to calculate, making it ideal for predictable budgeting.
- Primary Cost: The fixed monthly license fee for each user. This fee is determined by the SKU you choose, which specifies the vCPU, RAM, and storage for the Cloud PC.
- Additional Costs: While mostly all-inclusive, be aware of potential extra costs for significant network data transfer if you connect your Cloud PCs to an Azure virtual network. You also need to ensure users have the required prerequisite licenses (like Microsoft 365).
How is the cost of Azure Virtual Desktop (AVD) calculated?
Calculating AVD's cost is more complex because it’s based entirely on what you use. The main components you pay for are:
- Compute: This is the hourly cost of your virtual machines and is the largest and most variable expense. You only pay for VMs while they are running.
- Storage: This includes the cost of the OS disks attached to your VMs and the storage for user profiles, which is often managed with FSLogix containers on Azure Files or Azure NetApp Files.
- Networking: This covers bandwidth used for data transfers, any VPN gateways, and other networking components you deploy.
- Management Overhead: This is the indirect "soft cost" of your IT team's time spent deploying, monitoring, and optimizing the AVD environment.
What is the most critical strategy for controlling AVD costs?
The single most effective method for reducing AVD costs is leveraging its inherent scalability through an intelligent autoscaling policy. By automatically turning VMs off during evenings, weekends, or other non-business hours, you stop paying for unused compute resources. While Azure provides native tools for this, third-party management platforms like Nerdio Manager offer more advanced, automated scaling logic that can more aggressively shut down unused resources to maximize savings.
In which specific scenarios is AVD the more cost-effective choice?
AVD's pay-as-you-go model makes it the clear financial winner in scenarios where you can capitalize on variable usage and resource sharing. If your organization fits one of the following profiles, AVD will likely offer a lower TCO.
- When you have variable or part-time usage: For organizations with shift workers, students, developers, or contact centers with peak hours, paying for a desktop that sits idle 16 hours a day is inefficient. With AVD, you only pay for the hours a desktop is in use, drastically cutting costs compared to a fixed 24/7 license.
- When you need high user density: If you need to support a large number of task workers who use only a few applications, AVD's multi-session capability is a game-changer. By having dozens of users share the resources of a single large VM, you can achieve a per-user cost that is impossible to match with the one-to-one model of Windows 365.
- When you need to support specialized applications: AVD gives you the flexibility to use any VM in the Azure catalog, including powerful GPU-enabled VMs for CAD, video editing, or scientific modeling. This allows you to provide high-end performance on demand and pay for it only when needed, which is far more economical than paying a premium fixed price for a top-tier Cloud PC.
And, while we’re focused on AVD, let’s also ask…
What are the disadvantages of Azure Virtual Desktop?
The primary disadvantage of AVD is its management complexity, as it requires significant Azure expertise to configure, deploy, and optimize effectively. This complexity can lead to unpredictable costs if its pay-as-you-go model is not carefully controlled with autoscaling and monitoring. The required management overhead represents a significant operational cost in terms of IT staff time and training.
Know the TCO
This step-by-step wizard tool gives you the total cost of ownership for AVD in your organization.
In which specific scenarios is Windows 365 the more cost-effective choice?
Windows 365 shines where simplicity and predictability deliver more business value than granular control, leading to a lower overall TCO. For many organizations, avoiding complexity is a cost-saving measure in itself.
- When you need predictable, fixed operational expenses (OpEx): If your finance department requires a stable, predictable monthly bill for IT services, Windows 365 is the ideal choice. The fixed license cost per user eliminates the risk of surprise Azure consumption bills, simplifying budgeting and financial management.
- When you have consistent, full-time users: For standard knowledge workers who use their desktop 40 or more hours per week, the cost of running a dedicated AVD personal desktop can easily meet or exceed the fixed cost of a Windows 365 Cloud PC. In these cases, the simplicity and lower management overhead of Windows 365 make it the more cost-effective option.
- When your IT team has limited Azure or VDI expertise: The "soft cost" of management is a major factor in TCO. Windows 365 is designed to be managed like a physical PC through Microsoft Intune, eliminating the need for specialized Azure skills. This reduces training costs and frees up your IT team to focus on other strategic initiatives.
And, to be fair, let’s also ask…
What are the disadvantages of Windows 365?
A primary disadvantage of Windows 365 is its fixed monthly cost, which can be financially inefficient for organizations with part-time or shift-based workers since you pay for the service 24/7 regardless of usage. Additionally, it offers less flexibility and administrative control compared to Azure Virtual Desktop, as you are limited to pre-defined hardware configurations and cannot utilize cost-saving features like multi-session hosts. This makes it less suitable for specialized workloads or scenarios demanding high user density on shared resources.
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How can I quickly choose the right service for my users?
To simplify this complex decision, we've created a decision tree to help you quickly identify the most logical starting point. Follow the questions based on your organization's primary goals, user behavior, and technical requirements. This flowchart provides a high-level recommendation to guide your final analysis and help you focus on the solution that best fits your needs.
And here’s a step-by-step walkthrough of the decision-making process above.
Step 1: Evaluate Your Core Financial and Management Priorities
- Ask yourself: Is our primary goal a predictable, fixed monthly cost with minimal IT management overhead?
- If YES: Your organization values budget stability and simplicity above all else. Proceed to the follow-up question below.
- Follow-up Question: Are your users primarily full-time employees who need a persistent, personal desktop?
- If YES, your recommendation is WINDOWS 365. Its fixed cost and low management TCO are a perfect match.
- If NO, but predictability is still your top priority, WINDOWS 365 is still valid, but you will pay for idle time.
- Follow-up Question: Are your users primarily full-time employees who need a persistent, personal desktop?
- If NO: Your organization is willing to manage a consumption-based model to achieve the lowest possible cost. Proceed to Step 2.
- If YES: Your organization values budget stability and simplicity above all else. Proceed to the follow-up question below.
Step 2: Analyze Your User Work Patterns
- Ask yourself: Do we have a large number of part-time, shift-based, or concurrent task workers?
- If YES, your recommendation is AZURE VIRTUAL DESKTOP (AVD) WITH MULTI-SESSION HOSTS. This is the most cost-effective model for variable and high-density workloads, as you can pool resources and only pay for what you use.
- If NO: Your users are likely full-time, but you are still exploring ways to reduce costs beyond a fixed license. Proceed to Step 3.
Step 3: Assess Your Technical and Application Needs
- Ask yourself: Do we require deep technical customization, such as GPU-enabled VMs, specific hardware, or complex custom OS images?
- If YES, your recommendation is AZURE VIRTUAL DESKTOP (AVD). Its flexibility is required to meet these advanced technical needs, making it the only viable option.
- If NO: Your users have standard desktop needs. The final decision comes down to your IT team's operational capacity. Proceed to Step 4.
Step 4: Evaluate Your IT Team's Capacity and Expertise
- Ask yourself: Does our IT team have strong Azure VDI expertise and the capacity to actively manage and optimize the environment?
- If YES, your recommendation is AZURE VIRTUAL DESKTOP (AVD) WITH PERSONAL HOSTS. A skilled team can leverage autoscaling and efficient management to make the raw consumption cost lower than a comparable Windows 365 license.
- If NO, your recommendation is WINDOWS 365. The "soft costs" of managing a complex AVD environment without dedicated expertise would likely exceed any potential savings, making the simplicity of Windows 365 the more cost-effective choice overall.
How can our organization model the costs for our specific environment?
To make a final decision, you must move from general scenarios to a specific cost model based on your organization's data. A proper TCO analysis requires gathering key information and using the right tools for estimation.
What variables must be included in a cost model?
Use this checklist to gather the data needed for an accurate cost comparison:
- User Personas: Define your user types (e.g., knowledge worker, task worker, power user).
- Usage Patterns: For each persona, document the average daily and weekly hours of active work.
- Compute Needs: Determine the vCPU, RAM, and storage requirements for each user persona.
- Licensing: Audit your existing Microsoft 365 licenses to see what AVD or Windows 365 entitlements you already have.
- IT Labor: Estimate the hours your IT team would spend on management tasks for each platform.
What tools are available for cost estimation?
- Azure Pricing Calculator: This is the official tool for estimating AVD costs. It allows you to input your specific VM, storage, and networking requirements to build a detailed cost projection.
- Windows 365 Pricing Page: Microsoft provides a straightforward pricing list for all available Windows 365 Cloud PC SKUs.
- Third-Party Estimators: The complexity of AVD consumption, especially when modeling the savings from autoscaling, can be challenging. Management platforms like Nerdio often include sophisticated cost estimators that can help you model different usage scenarios and predict your true AVD costs more accurately.
Know the TCO
This step-by-step wizard tool gives you the total cost of ownership for AVD in your organization.
How does a management platform like Nerdio affect the cost comparison?
While AVD and Windows 365 provide the core technology, a third-party management and automation platform can fundamentally change the operational and financial equation for both. These platforms are not a third choice, but rather a layer that enhances the native Microsoft services.
What is the role of a third-party automation and management platform?
Platforms like Nerdio Manager for Enterprise sit on top of AVD and Windows 365 to dramatically simplify deployment, reduce ongoing management costs, and actively optimize your Azure spending. They are designed to bridge the gap between the powerful but complex capabilities of AVD and the simplicity of Windows 365.
How does Nerdio help reduce AVD costs?
For AVD, the primary value is direct cost reduction. Nerdio's advanced autoscaling technology is the key driver, delivering savings that typically reduce Azure compute and storage costs by 50-75% compared to an unoptimized environment. It achieves this through sophisticated logic that goes beyond native tools by:
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Scaling session hosts based on active sessions, CPU, or RAM usage.
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Pre-staging hosts just before business hours to ensure availability.
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Handling drained session hosts and ensuring user sessions are logged off properly to maximize savings.
This automation directly reduces your Azure bill and also lowers the "soft cost" of IT management by automating complex tasks like image management and host pool creation.
How does Nerdio add value to Windows 365 and hybrid environments?
For Windows 365, the value is in operational efficiency and unified management. As enterprises adopt a mix of AVD and Windows 365 for different user types, managing them in separate portals becomes inefficient. Nerdio provides a single pane of glass to:
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Deploy, manage, and monitor both AVD hosts and Windows 365 Cloud PCs from one console.
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Streamline user provisioning and policy management across both platforms.
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Provide a holistic view of your entire virtual desktop estate, simplifying troubleshooting and reporting.
Ultimately, a platform like Nerdio doesn't change the fundamental pricing of Microsoft's services. Instead, it allows you to fully realize the cost-saving potential of AVD and unify the management of your entire virtual desktop environment, reducing the TCO through both aggressive optimization and operational efficiency.
See this demo to learn how you can optimize processes, improve security, increase reliability, and save up to 70% on Microsoft Azure costs.
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