Describe the consumption-based model
📘Microsoft Certified: Azure Fundamentals (AZ-900)
What Is the Consumption-Based Model?
The consumption-based model means you only pay for the cloud resources you use, and you stop paying when you stop using them.
This is similar to how IT resources work inside a data center—except Azure gives you the ability to scale up or down instantly.
In simple terms:
- No upfront cost
- No long-term commitment
- Billing is based on actual usage
- You can start or stop services anytime
IT-related example:
If a company runs a virtual machine (VM) for 10 hours, Azure charges for the 10 hours of compute time. If the VM is stopped or deleted, billing stops.
⭐ Why Azure Uses Consumption-Based Billing
This pricing model helps organizations:
1. Control Costs
You pay only for what you consume.
Unused resources = no cost.
2. Scale Easily
If demand increases, you can scale up and pay for more resources.
If demand decreases, you can scale down and pay less.
3. Eliminate Capital Expenses (CapEx)
Traditional IT requires buying expensive servers and hardware.
With consumption-based cloud billing, everything is an operational expense (OpEx).
4. Reduce Waste
Resources like virtual machines, storage, and networks are billed only when used.
Pay-As-You-Go Pricing (PAYG) Explained
Pay-as-you-go is the most common pricing option under the consumption-based model.
🔍 Key Features of Pay-As-You-Go
- Charges are based on usage only
- CPU hours, memory, bandwidth, storage, database requests, etc.
- No upfront payment required
- You don’t need to pre-purchase anything.
- No long-term contracts
- Cancel or modify services anytime.
- Azure bills monthly
- You get a bill showing exactly what you used.
How Azure Measures Usage in PAYG
Here are common Azure resource types and how they are billed:
### 1. Virtual Machines
- Charged per second or per hour
- Depends on VM size (CPU, RAM)
Example (IT-based):
A development team runs a test VM for 5 hours. Azure bills only for those 5 hours.
2. Storage (Blob, File, Disk Storage)
- Charged monthly based on how many GB are stored
- Additional charges for read/write operations
Example:
A backup system uploads 500 GB of data to Azure Blob Storage. Billing is based on:
- 500 GB stored
- Number of read/write operations
3. Networking
- Charged based on outbound bandwidth
- Inbound data is usually free
Example:
A web application sends 200 GB of data to users. Azure charges for 200 GB outbound.
4. Databases (Azure SQL, Cosmos DB)
- Charged by compute units, storage, or request units
Example:
An application that performs many database queries consumes more request units and is billed accordingly.
5. Azure Functions (Serverless)
- Charged per execution and compute time
Example:
A function runs only when needed, and Azure charges per execution—no idle cost.
🎯 Benefits of Pay-As-You-Go (Exam-Focused)
For the AZ-900 exam, remember these core benefits:
✔ Cost flexibility and efficiency
Only pay when services are running.
✔ Reduced financial risk
No large hardware investments.
✔ Supports variable workloads
Ideal for workloads that fluctuate.
✔ Easier budgeting
Billing reports show exactly what was consumed.
✔ Immediate access to services
No waiting for hardware deployment.
🎯 Scenarios Where PAYG Is a Good Fit (Exam-Relevant)
Scenario 1: Workloads with unpredictable usage
Example: An application that receives random spikes in traffic.
Scenario 2: Short-term workloads
Example: A company needs a VM for a one-week project.
Scenario 3: Development and testing environments
Developers turn VMs on/off when needed.
Scenario 4: Organizations new to the cloud
They want flexibility before committing to long-term plans.
❗ Key PAYG Concepts Likely to Appear on the Exam
Here are the most testable points:
| Concept | Summary |
|---|---|
| Consumption-based billing | Pay only for what you use |
| PAYG pricing | No upfront cost, no commitment |
| OpEx instead of CapEx | Operational expenses replace hardware purchases |
| Metered usage | Resources billed per unit (hour, GB, request) |
| Scalability impacts cost | More use = more cost; less use = less cost |
| Billing stops when resource stops | Important exam definition |
| Flexibility | Start/stop anytime |
📝 Summary for Students and Exam Preparation
To successfully answer any AZ-900 exam question on this topic, remember:
✔ Pay-as-you-go is the most flexible pricing model
✔ You only pay for actual consumed resources
✔ No long-term contracts or upfront payments
✔ Works well for changing workloads
✔ Azure tracks usage on a per-unit basis
✔ Ideal for organizations avoiding large hardware purchases
If you see exam choices mentioning:
- “only pay for what you use”
- “no upfront cost”
- “operational expenses (OpEx)”
- “billing based on usage”
➡ The correct answer is Pay-As-You-Go / Consumption-Based Model.
