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Microsoft Azure Virtual Desktop
Introduction
Ultimately, budgeting for fluctuating AVD demand requires a hybrid model using Reserved Instances for baseline costs and autoscaling for variable user loads.
This is because Azure Virtual Desktop (AVD) operates on a consumption-based model, meaning you pay for the Azure resources your users consume. The primary challenge is forecasting these costs when user demand is unpredictable, making it difficult to balance a responsive user experience with strict IT budgets.
What are the primary cost drivers in an AVD environment?
To build an accurate budget, you first need a granular understanding of every component that contributes to your monthly Azure bill. For many organizations, the choice between virtual desktop solutions depends on the pricing model; AVD's consumption-based pricing is often more cost-effective for shared, multi-session scenarios or fluctuating workloads, while the fixed per-user cost of Windows 365 offers budget predictability for dedicated, full-time users.
These costs go far beyond the virtual machines themselves and include storage, networking, and specific licensing considerations. The table below identifies the four main AVD cost drivers and shows how much compute costs can decrease between an unoptimized and fully optimized environment:
| Cost Category | Unoptimized Environment | Moderately Optimized Environment | Highly Optimized Environment |
|---|---|---|---|
| Compute | 65 - 75% | 45 - 55% | 35 - 45% |
| Storage | 15 - 20% | 20 - 30% | 25 - 35% |
| Networking | 5 - 10% | 10 - 20% | 15 - 25% |
| Licensing & Management | 3 - 8% | 5 - 15% | 10 - 20% |
What are AVD compute costs?
Compute costs are for the virtual machines (VMs) that run your AVD session hosts and are typically the largest part of your bill. The primary factors influencing this cost are:
- Pricing Model: You can choose between Pay-As-You-Go (PAYG), which offers maximum flexibility for fluctuating workloads, or Azure Reserved Instances (RIs), which provide significant discounts (up to 72%) in exchange for a one- or three-year commitment. A successful strategy often involves a mix of both.
- VM Size and Family: The "family" (e.g., D-series for general purpose, E-series for memory-intensive, NV-series for GPU-accelerated) and size of the VM directly determine its hourly cost and performance capabilities.
What are AVD storage costs?
Storage costs are generated by the data your AVD environment requires, which falls into two main categories:
- OS Disks: Every session host VM has an operating system disk. You can choose between Standard HDDs, Standard SSDs, and Premium SSDs, each offering different performance and cost levels.
- User Profiles: For non-persistent desktops, user profiles are typically stored externally using FSLogix Profile Containers. These containers reside on a file share, most commonly Azure Files or Azure NetApp Files, and their size directly contributes to your monthly storage costs.
What are AVD networking costs?
Networking costs can be less predictable but are critical to budget for. The main driver here is data egress.
- Data Egress: You are charged for data that leaves an Azure region. For AVD, this can include large file transfers to an on-premises location or traffic between different Azure regions.
- Connectivity: If you use optional services like Azure VPN Gateway or ExpressRoute to connect your on-premises network to Azure, these components have their own fixed monthly costs.
How do user licenses affect the total AVD cost?
This is a common point of confusion. Many existing Microsoft 365 and Windows enterprise licenses include the access rights for AVD, meaning you don't pay extra for the Windows license itself. However, these licenses do not cover the Azure infrastructure costs (compute, storage, networking) detailed above, which are billed separately based on consumption.
Know the TCO
This step-by-step wizard tool gives you the total cost of ownership for AVD in your organization.
What is a strategic framework for AVD budget forecasting?
A reactive "wait and see" approach to AVD costs can lead to significant budget overruns. To gain control, you need a proactive, strategic framework that allows you to model expenses and make data-driven decisions, even when faced with volatility. Here we answer top questions we hear from customers.
How do I budget for fluctuating demand in AVD services?
You budget for fluctuating Azure Virtual Desktop (AVD) demand by creating a hybrid cost model. First, establish a baseline cost for your minimum required users with discounted Azure Reserved Instances, then use pay-as-you-go pricing with autoscaling to handle variable demand. It's also wise to include a contingency fund of 10-15% in your budget to cover unexpected usage spikes.
To budget effectively, you should also model costs based on different user personas (e.g., task worker vs. power user) to create a more accurate forecast. You'll also want to use tools like Azure Cost Management with consistent resource tagging to actively monitor spending and set up alerts for unexpected AVD cost spikes. This data-driven approach allows you to spot trends and adjust your strategy proactively instead of reactively, often by leveraging both these native tools and third-party automation platforms for monitoring AVD costs.
How do I establish a baseline for AVD costs?
You can't forecast without a starting point. The most reliable way to get one is to run a pilot program with a representative sample of users for a set period (e.g., 30-60 days). This real-world data is far more accurate than any on-paper estimate and will form the foundation of your entire budget model.
How can I model different user personas to predict costs?
Not all users have the same resource needs. By segmenting your users into personas, you can create a highly accurate cost model that scales with your organization. This avoids the trap of over-provisioning for everyone or under-powering your most demanding users.
| Persona | Example Role | Typical Applications | Recommended VM Series |
|---|---|---|---|
| Task Worker | Call Center Agent, Data Entry | Microsoft 365, Web Browser, 1–2 Line-of-Business Apps | Dsv5-series |
| Knowledge Worker | Marketing Manager, Analyst | Full Microsoft 365 Suite, Teams, Power BI, Web Conferencing | Dsv5 or Esv5-series |
| Power User | Software Developer, IT Admin | IDEs (Visual Studio), Docker, Multiple Browsers, Admin Tools | Dsv5 or Esv5-series |
| Engineer / Designer | CAD Engineer, Graphic Designer | AutoCAD, Revit, Adobe Creative Suite | NVv4 or NVadsA10 v5-series (GPU-enabled) |
How should I account for seasonality and business cycles?
Your business isn't static, and your AVD budget shouldn't be either. Identify and plan for predictable fluctuations in user demand. Examples include:
- Retail: Scaling up compute resources to handle temporary staff during the holiday shopping season.
- Accounting: Ensuring performance for more users during tax season or end-of-quarter reporting.
- Education: Planning for peak usage during mid-terms and final exams, and scaling down during summer break.
What is the role of a contingency fund in AVD budgeting?
Even the best models can't predict everything. It is a financial best practice to build a contingency fund into your AVD budget, typically 10-15% of your total projected cost. This fund covers unforeseen events like urgent M&A activity requiring rapid user onboarding, a sudden large-scale shift to remote work, or unexpected project demands.
What technical strategies can I use to actively control AVD costs?
Once you have a budget, the key is using technical strategies like automation and auto-scaling to manage AVD cost and performance effectively. These are the active, hands-on levers you can pull within your AVD environment to align real-time spending with your forecast.
How does autoscaling help manage unpredictable demand?
Autoscaling is your most powerful tool for managing unpredictable demand. It automatically adjusts the number of available session host VMs based on user load, ensuring you only pay for what you need. Key strategies include:
- Scaling based on time of day: Powering on VMs just before the workday starts and shutting them down after it ends.
- Scaling based on user sessions: Dynamically adding VMs when the number of users passes a certain threshold and removing them as users log off.
- Start VM on Connect: A feature that keeps VMs deallocated until a user attempts to connect, at which point it powers on a VM for them. This is ideal for users with infrequent or off-hours access patterns.
When should I use Reserved Instances versus pay-as-you-go?
The most cost-effective AVD environments use a hybrid approach. The goal is to cover your predictable, baseline workload with RIs and handle everything else with the flexibility of PAYG.
- Use Reserved Instances for: The minimum number of session hosts you need running during core business hours. This covers your predictable, everyday workload at a significant discount.
- Use Pay-As-You-Go for: The variable capacity needed to handle peaks in demand. This is the portion of your environment that your autoscaling rules will manage.
How can I optimize session host images and configurations?
An inefficient session host is a constant drain on your budget. "Right-sizing" is the process of matching VM resources to actual user requirements to avoid paying for unused capacity. Advanced strategies can even automate the process of right-sizing AVD images based on performance data, ensuring resources continually match user needs without manual intervention. Key optimizations include:
- Golden Image Management: Maintaining a single, optimized "golden image" with all necessary applications and configurations ensures that every deployed VM is efficient and secure.
- Ephemeral OS Disks: For pooled host pools, you can use ephemeral OS disks which are created on the local VM storage and are re-imaged when the VM is deallocated. This can eliminate the storage costs for the OS disks entirely.
Why is resource tagging essential for accurate cost allocation?
Resource tagging is a critical governance practice. By applying tags (e.g., Department:Finance, Project:Q4-Audit) to your AVD resources, you can filter and group costs within Azure Cost Management. This allows you to perform accurate showback or chargeback to business units, transforming IT from a cost center into a strategic partner.
How can automation platforms simplify AVD cost management and budgeting?
While Azure provides a powerful set of native tools, manually implementing all of the strategies above requires deep expertise, custom scripting, and constant monitoring. A unified AVD management and automation platform eliminates this complexity by providing a single interface to control costs, manage infrastructure, and optimize performance.
For example, a platform like Nerdio Manager for Enterprise is built specifically to operationalize these best practices. It directly addresses the challenges of budgeting for unpredictable demand by providing factual, verifiable automation capabilities:
- Advanced, Predictive Autoscaling: Nerdio uses historical usage data to predict demand and pre-stage hosts, ensuring resources are ready for users while minimizing waste. It offers far more granular control over scaling logic than native tools.
- Built-in Cost Estimator: You can model the exact AVD costs of different host pools, user personas, and autoscaling rules before deploying a single VM, integrating directly with the Azure Pricing API for real-time accuracy.
- Automated Image Management: Streamlines the process of updating and deploying your golden images across all host pools, ensuring consistent performance and security.
- Reserved Instance Automation: Provides clear analysis on your compute usage and recommends an optimal RI purchasing plan to maximize savings.
- FSLogix Cost Optimization: Includes features to automatically shrink oversized FSLogix profile containers, reclaiming unused disk space and directly reducing your Azure Files or Azure NetApp Files storage costs.
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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What are the key takeaways for effective AVD budgeting?
Achieving financial control over a dynamic AVD environment is entirely possible with the right strategy and tools. A successful approach moves beyond simple monitoring to active, intelligent management of your resources.
- Understand Your Costs: Begin by identifying every cost driver in your environment, from compute and storage to networking.
- Model Everything: Use user personas, pilot groups, and business cycles to build a flexible financial forecast that anticipates change.
- Optimize Actively: Implement a hybrid RI/PAYG model and use autoscaling to match resources to real-time demand.
- Govern and Monitor: Enforce resource tagging for all AVD components to enable granular cost analysis and departmental chargeback.
- Leverage Automation: Evaluate a unified management platform like Nerdio to automate complex optimization tasks, reduce administrative overhead, and unlock advanced cost-saving features.
Know the TCO
This step-by-step wizard tool gives you the total cost of ownership for AVD in your organization.
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