Azure Capacity Reservations let you “lock in” VM capacity in a specific region so you know the compute you need will always be there. Even during peak demand, your resources are guaranteed.
They’re all about availability, not discounts. However, you can combine them with Reserved VM Instances or Savings Plans so you get both reliability and cost efficiency.
One of the biggest advantages is flexibility: you can cancel or change a reservation at any time. Unlike multi-year reserved commitments, you’re not locked into a long contract. The only requirement is that the reservation stays tied to a specific VM size, region, and availability zone.
Azure Capacity Reservations are an Azure compute feature that guarantees VM availability in a specific region.
Advantages of Azure Capacity Reservations
1. Guaranteed capacity when you need it
This is the biggest reason to use capacity reservations. If you run mission-critical applications that must stay online no matter what, reservations give you confidence that Azure won’t run out of compute in your region. This is especially important for businesses with strict SLAs.
2. No long-term commitment
Unlike Reserved Instances, you don’t have to sign up for a one or three-year contract. You can cancel or adjust your reservation as you please. This makes it great for workloads that spike, are unpredictable, or are subject to frequent changes.
3. Works with cost-saving tools
On their own, reservations are billed at pay-as-you-go rates. But when paired with Reserved Instances or Savings Plans, you can get the best of both worlds:
- Guaranteed availability
- Lower long-term costs
This combination helps IT teams plan for both everyday workloads and high-demand periods.
4. Great for high availability and disaster recovery
If you need to know that compute will be available during a failover event, capacity reservations give you that assurance. You don’t have to hope resources are free, you’ve already secured them.
Disadvantages of Azure Capacity Reservations
1. They are more expensive on their own
If you don’t pair reservations with a Reserved Instance or Savings Plan, you’ll pay full pay-as-you-go rates. This can be costly, so most organisations combine them with a savings option.
2. You pay whether you use the capacity or not
Unused capacity still incurs cost. If you over-reserve, you waste money.
3. Limited flexibility
You must choose the exact VM size, region and availability zone. You don’t get size flexibility within a VM family. This can be challenging if your environment is subject to frequent change.
Real-world example
Imagine a global financial services company that runs large reporting jobs at the end of every quarter. These workloads are critical, they require a lot of compute, and downtime isn’t an option.
To prepare, the company creates a Capacity Reservation a few weeks before the peak period. This guarantees that enough E-series VMs will be available when needed.
For normal workloads, the company uses a Savings Plan to keep costs low. The capacity reservation is only used for the quarterly spike.
This hybrid approach gives them:
- guaranteed availability during critical windows
- lower ongoing costs
- compliance and reporting reliability
Recommendation:
So, when should you use Azure Capacity Reservations? Azure Capacity Reservations are perfect when availability is more important than saving money, for example:
- financial reporting
- end-of-year retail peaks
- seasonal demand
- compliance-driven workloads
- disaster recovery planning
For most everyday workloads, Reserved Instances or Savings Plans will be cheaper and more practical. But the best approach is often a mix:
- Use Reserved Instances or Savings Plans for steady, predictable workloads
- Add Capacity Reservations for spikes or critical systems where you cannot risk unavailability
FAQs: Azure Capacity Reservations
Are Azure Capacity Reservations the same as Reserved Instances?
No. Reserved Instances are primarily for cost savings with a one- or three-year commitment, while Capacity Reservations focus on guaranteeing availability. Capacity Reservations do not require a long-term commitment and can be cancelled or modified at any time.
Do Azure Capacity Reservations save money?
Not by themselves. They are billed at PAYG unless combined with Reserved Instances or Savings Plans.
When should I use a Capacity Reservation?
When guaranteed compute availability matters more than cost, such as during peak or compliance-driven periods.
How are Capacity Reservations billed?
They are billed at the pay-as-you-go (PAYG) rate for VM size, regardless of usage. You can combine them with Reserved VM Instances or Savings Plans for cost efficiency.
Can Capacity Reservations be combined with other Azure cost optimization tools?
Yes, you can combine Capacity Reservations with Reserved Instances or Savings Plans to achieve both cost efficiency and guaranteed availability.
Are Capacity Reservations flexible?
They are flexible in terms of cancellation and modification, but are fixed to the chosen VM size, region, and availability zone.
For more information, contact Keystone Negotiation today.