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# Cost Estimator Reference
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Formulas and patterns for converting Azure unit prices into monthly and annual cost estimates.
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## Standard Time-Based Calculations
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### Hours per Month
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Azure uses **730 hours/month** as the standard billing period (365 days × 24 hours / 12 months).
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```
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Monthly Cost = Unit Price per Hour × 730
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Annual Cost = Monthly Cost × 12
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```
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### Common Multipliers
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| Period | Hours | Calculation |
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|--------|-------|-------------|
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| 1 Hour | 1 | Unit price |
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| 1 Day | 24 | Unit price × 24 |
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| 1 Week | 168 | Unit price × 168 |
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| 1 Month | 730 | Unit price × 730 |
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| 1 Year | 8,760 | Unit price × 8,760 |
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## Service-Specific Formulas
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### Virtual Machines (Compute)
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```
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Monthly Cost = hourly price × 730
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```
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For VMs that run only business hours (8h/day, 22 days/month):
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```
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Monthly Cost = hourly price × 176
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```
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### Azure Functions
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```
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Execution Cost = price per execution × number of executions
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Compute Cost = price per GB-s × (memory in GB × execution time in seconds × number of executions)
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Total Monthly = Execution Cost + Compute Cost
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```
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Free grant: 1M executions and 400,000 GB-s per month.
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### Azure Blob Storage
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```
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Storage Cost = price per GB × storage in GB
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Transaction Cost = price per 10,000 ops × (operations / 10,000)
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Egress Cost = price per GB × egress in GB
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Total Monthly = Storage Cost + Transaction Cost + Egress Cost
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```
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### Azure Cosmos DB
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#### Provisioned Throughput
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```
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Monthly Cost = (RU/s / 100) × price per 100 RU/s × 730
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```
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#### Serverless
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```
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Monthly Cost = (total RUs consumed / 1,000,000) × price per 1M RUs
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```
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### Azure SQL Database
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#### DTU Model
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```
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Monthly Cost = price per DTU × DTUs × 730
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```
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#### vCore Model
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```
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Monthly Cost = vCore price × vCores × 730 + storage price per GB × storage GB
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```
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### Azure Kubernetes Service (AKS)
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```
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Monthly Cost = node VM price × 730 × number of nodes
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```
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Control plane is free for standard tier.
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### Azure App Service
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```
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Monthly Cost = plan price × 730 (for hourly-priced plans)
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```
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Or flat monthly price for fixed-tier plans.
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### Azure OpenAI
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```
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Monthly Cost = (input tokens / 1000) × input price per 1K tokens
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+ (output tokens / 1000) × output price per 1K tokens
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```
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## Reservation vs. Pay-As-You-Go Comparison
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When presenting pricing options, always show the comparison:
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```
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| Pricing Model | Monthly Cost | Annual Cost | Savings vs. PAYG |
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|---------------|-------------|-------------|------------------|
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| Pay-As-You-Go | $X | $Y | — |
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| 1-Year Reserved | $A | $B | Z% |
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| 3-Year Reserved | $C | $D | W% |
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| Savings Plan (1yr) | $E | $F | V% |
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| Savings Plan (3yr) | $G | $H | U% |
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| Spot (if available) | $I | N/A | T% |
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```
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Savings percentage formula:
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```
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Savings % = ((PAYG Price - Reserved Price) / PAYG Price) × 100
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```
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## Cost Summary Table Template
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Always present results in this format:
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```markdown
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| Service | SKU | Region | Unit Price | Unit | Monthly Est. | Annual Est. |
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|---------|-----|--------|-----------|------|-------------|-------------|
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| Virtual Machines | Standard_D4s_v5 | East US | $0.192/hr | 1 Hour | $140.16 | $1,681.92 |
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```
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## Tips
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- Always clarify the **usage pattern** before estimating (24/7 vs. business hours vs. sporadic).
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- For **storage**, ask about expected data volume and access patterns.
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- For **databases**, ask about throughput requirements (RU/s, DTUs, or vCores).
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- For **serverless** services, ask about expected invocation count and duration.
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- Round to 2 decimal places for display.
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- Note that prices are in **USD** unless otherwise specified.
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