Microsoft is introducing significant changes to Azure Reservations that will affect how long-term cost commitments in Azure are managed. For organisations using Reserved Instances to optimise infrastructure costs, this is a good time to review their current purchasing strategy and prepare for the upcoming changes.
What are Azure Reservations?
Azure Reservations offer significant savings compared with the Pay-As-You-Go model by committing to use specified Azure services for one or three years. This solution is particularly attractive for stable, predictable production environments where resource usage does not change significantly over time.
For several years, however, Microsoft has also been developing Azure Savings Plan, which provides greater flexibility. Rather than reserving a specific virtual machine family or selected service, the customer commits to a defined level of hourly compute service usage, and the discount is automatically applied to eligible resources.
Reservation exchanges ending from 1 February 2027
The most significant change concerns the ability to exchange reservations.
Microsoft has announced that, from 1 February 2027, reservations purchased after this date will no longer be eligible for exchange if the relevant service is covered by Azure Savings Plan. This includes, among others:
- Azure Virtual Machines,
- Azure App Service,
- Azure SQL Database,
- other compute and database services supported by Savings Plans.
Until now, the ability to exchange reservations has been one of the key advantages of Reserved Instances. It allowed organisations to align their commitments with changing business needs, for example by changing the virtual machine family or service type. From February 2027, this flexibility will be significantly reduced.
What about existing reservations?
For many customers, the key point is that Microsoft is not removing access to existing reservations.
Reservations purchased before 1 February 2027 will remain eligible for one final exchange after that date. This means organisations with active Reservations will still be able to adjust their commitments to a limited extent.
The following remain unchanged:
- the reservation cancellation policy,
- Instance Size Flexibility rules for virtual machines,
- the option to purchase new reservations for stable workloads.
When should you consider Azure Savings Plan?
The changes clearly indicate the direction in which the Azure platform is evolving. Microsoft is promoting Savings Plans as the default option for environments that change frequently.
Azure Savings Plan may be a good choice for organisations that:
- regularly change virtual machine sizes or families,
- use autoscaling,
- launch new projects across different regions,
- want to reduce the risk of reservations not matching actual usage.
Classic Reservations, in turn, remain an attractive option for stable and predictable production environments.
Additional change: retirement of some Reserved VM Instances from 1 July 2026
At the same time, Microsoft has begun phasing out the ability to purchase and renew reservations for selected older virtual machine series.
From 1 July 2026, it is no longer possible to purchase or renew certain Azure Reserved VM Instances. The change affects, among others, the following families:
Av2, Amv2, Bv1, D, Ds, Dv2, Dsv2, F, Fs, Fsv2, G, Gs, Ls, Lsv2, as well as Dv3, Dsv3, Ev3 and Esv3.
It is worth emphasising that:
- existing reservations remain valid until the end of the purchased term,
- running virtual machines will continue to operate,
- the change applies only to the purchase of new commitments or the renewal of expiring ones.
What should administrators pay attention to?
Microsoft recommends reviewing the current reservation portfolio and checking the expiry dates. Particular attention should be given to environments using retired VM series, as once reservations expire, workloads will automatically move to standard Pay-As-You-Go rates, which may result in a noticeable increase in costs.
In practice, it is worth:
- analysing current Azure Reservations usage,
- checking the expiry dates of active commitments,
- assessing the possibility of migrating to newer VM series,
- comparing the cost-effectiveness of Reservations and Azure Savings Plan,
- including the new reservation exchange rules in budget plans for 2027-2029.
2026 and 2027 bring the most significant changes to Azure Reservations in years. Microsoft is not withdrawing the reservation model itself, but it is limiting reservation exchanges for services covered by Azure Savings Plan and ending renewals for some older Reserved VM Instances.
For customers, this means reviewing their current cost optimisation strategy and determining which approach is better suited to their environment: classic Reservations for stable workloads or the more flexible Azure Savings Plan for dynamically evolving cloud environments.
Useful resources
Those wishing to analyse the impact of these changes on their Azure environment in detail can refer to the official Microsoft documentation:
- Changes to the Azure reservation exchange policy – detailed information on changes to reservation exchange rules from 1 February 2027.
- Transition guide for retired Azure Reserved VM Instances – a guide for customers using reservations for retired virtual machine series.
- Self-service exchanges and refunds for Azure Reservations – current rules for exchanging and cancelling Azure reservations.
FAQ
1. Will Azure Reservations be discontinued after 1 February 2027?
No. Microsoft is not discontinuing Azure Reservations. Only the exchange rules for new reservations covering services included in Azure Savings Plan are changing. Reservations will still be available for purchase and can be used to optimise costs in stable environments.
2. What will happen to reservations purchased before 1 February 2027?
Organisations with reservations purchased before this date will retain the option to make one final exchange after 1 February 2027. All other rules, including reservation cancellation and Instance Size Flexibility, remain unchanged.
3. When is Azure Savings Plan more cost-effective than Azure Reservations?
Azure Savings Plan is particularly well suited to dynamic environments where virtual machine sizes change frequently, autoscaling is used, or new projects are launched regularly. In these cases, greater flexibility may deliver more value than traditional reservations.
4. What is the risk associated with the retirement of certain Reserved VM Instances?
If an organisation uses older virtual machine series affected by the retirement, it will not be able to renew its reservation once the current term expires. Without migrating to newer series or adopting another cost-saving strategy, resources may be billed at higher Pay-As-You-Go rates.
5. How can an organisation prepare for changes to Azure Reservations?
The best place to start is by reviewing active reservations, their expiry dates and Azure resource usage. It is also worth comparing the benefits of Azure Reservations and Azure Savings Plan, then incorporating the new rules into budget planning for 2027-2029.
🚀 Would you like to learn more about the Microsoft Azure offering? Our team of experts will be happy to answer your questions and help you choose the most suitable solution:
You can also visit our website for more information about our products. Explore and find out more: MICROSOFT Azure
