Part 7: Cost Management & Budgets

Source: John Savill's Azure Master Class v3 - Part 3: Governance
Video Timestamps: 1:32:00 - 1:51:00
AZ-104 Relevance: ⭐⭐⭐⭐ HIGH - Budgets and cost analysis questions

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Cost Management Overview

Access: Portal → Cost Management + Billing

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Cost Analysis

Views

View	Shows
Accumulated costs	Running total over time
Daily costs	Per-day breakdown
Cost by resource	Which resources cost most
Cost by service	Which services cost most
Cost by tag	Group by your tags

Grouping & Filtering

Group costs by:

• Resource group
• Resource type
• Location
• Tag
• Subscription

Filter to narrow down specific areas.

Smart Views (Saved Views)

Save commonly used views for quick access:

• Team A's monthly costs
• Production environment costs
• Dev/Test spending

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Budgets

Budgets are alerts, not hard limits. They don't stop spending.

Creating a Budget

1. Scope: Where (Subscription, RG, etc.)
2. Amount: Dollar value
3. Reset period: Monthly, Quarterly, Annually
4. Alerts: At what % to notify

Alert Thresholds

Type	Triggers When
Actual	Spent amount reaches threshold
Forecast	Projected spending will exceed

Alert Actions

When threshold hit:

• Email notification
• Action Group (webhook, function, logic app)

Important: Budgets do NOT stop resources. They only alert!

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Cost Allocation

The Tag Problem

Tags don't inherit. How do you track costs across resources?

Tag Inheritance for Billing

Portal → Cost Management → Cost allocation (Preview)

Options:

1. Inherit from subscription - Resources get subscription's tags for billing
2. Inherit from resource group - Resources get RG's tags for billing

This is for billing purposes only - doesn't change actual resource tags.

Cost Allocation Rules

For shared resources (like a log analytics workspace):

1. Create allocation rule
2. Define source (shared resource)
3. Define targets (distribute to subscriptions/RGs)
4. Choose split method (equal, proportional, fixed %)

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Exports

Schedule automatic export of cost data:

Setting	Options
Frequency	Daily, Weekly, Monthly
Format	CSV
Destination	Storage Account
Content	Amortized, Actual, Usage

Use for:

• Building custom dashboards
• Power BI reports
• Long-term storage/analysis

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Invoice & Billing

Invoices

Portal → Cost Management + Billing → Invoices

• View current and past invoices
• Download PDF
• See billing period breakdown

Billing Scopes

Scope	Description
Billing account	Top level (EA, MCA, etc.)
Billing profile	Invoice recipient
Invoice section	Grouping on invoice
Subscription	Individual sub

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Cost Visibility at Different Scopes

Scope	What You See
Management Group	All subscriptions below
Subscription	All RGs in that sub
Resource Group	All resources in that RG

Costs aggregate UP the hierarchy (unlike RBAC/Policy which goes DOWN).

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Tips for Cost Control

Strategy	Implementation
Tag everything	CostCenter, Environment, Owner
Budget alerts	Set at subscription level
Review regularly	Weekly cost analysis
Use reserved instances	For predictable workloads
Right-size resources	Azure Advisor recommendations
Auto-shutdown	Dev/Test VMs

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Mental Model

Budget = Speedometer Warning 🚗

• Dashboard shows your speed (spending)
• Warning light at 80% (alert)
• Doesn't hit the brakes for you
• YOU must take action

Cost Allocation = Splitting the Bill 🧾

• Shared resource (like shared appetizer)
• Split cost fairly across teams
• Everyone sees their portion

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AZ-104 Exam Tips

Topic	Key Point
Budgets	Alert only, don't stop spending
Forecast alerts	Predict overspend before it happens
Tag inheritance	Available for billing, not actual resources
Cost allocation	For shared resources
Cost flows	Aggregates UP (vs RBAC/Policy DOWN)
Export	To storage account, CSV format

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Practical Exercises

Exercise 1: Explore Cost Analysis (5 min)

1. Portal → Cost Management → Cost analysis
2. Change view to "Cost by resource"
3. Try grouping by Tag
4. Save as a custom view

Exercise 2: Create a Budget (5 min)

1. Portal → Cost Management → Budgets
2. Add a budget for your subscription
3. Set a small amount (e.g., $10)
4. Add alert at 50% and 80%
5. Add your email for notifications

Exercise 3: Review Billing (3 min)

1. Portal → Cost Management + Billing → Invoices
2. View current billing period
3. Note the invoice sections and totals

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End of Part 7