Azure rolls out ‘commitment’ pricing, discounting its service for those willing to buy in consistent bulk

Today Azure, Microsoft’s cloud computing platform announced a new pricing scheme for its customers, providing discounts for those willing to ‘commit’ to a certain usage tier on a monthly basis.

Customers that do so will receive a discounted service rate, with the savings varying from 20% to 27%. Here are the tiers:

However, the company is adding two additional sweeteners: companies that pay for a year’s rate up front will be given another 2.5% discount, and a final 2.5% rate cut will be applied to companies that simply sign up for a year’s term. Thus, for a company looking to spend more than $40,000 a month, for a year, paid at once, they can save a maximum of 32%.

Now, why is Azure introducing these cuts? One reason is the obvious incentive for companies to lean more on Azure to handle their computing needs – to use all of what they have paid for, and thus perhaps lean more heavily on the service – and likely also to help it even out its revenues.

Here’s the issue that Microsoft is trying to rectify:

Current commitment offers in the market tempt customers with sizable savings on specific services or instances but require a crystal ball for usage and wipe out potential savings when needs change.

To that end, any company that exceeds its commitment rate will pay just the pay-as-you-go rate afterwards, sans penalty. Thus, there is no real disincentive to commitment pricing, for a company that does need a minimum of computing power, and is flexible on its top end of required usage.

It’s an interesting move by Azure. If it will help the PaaS and IaaS product procure new customers or not, the changes should be welcome to its regular users.

Top Image Credit: Robert Scoble