What each one commits you to, which is applied first, and how to layer the two instead of choosing.
An Azure reservation commits you to a specific resource in a region and gives the deeper discount, up to 72% according to Microsoft. An Azure savings plan commits you to a fixed hourly spend on covered compute and gives up to 65%, but follows the workload across series, sizes and regions. Most estates use both: reserve the stable baseline, cover the variable remainder with a savings plan. Azure applies reservations first.
The discount figures are Microsoft's maximums against pay-as-you-go. What you get depends on service, term, region and your agreement.
| Reservation | Savings plan | |
|---|---|---|
| What you commit to | A specific resource: a VM series or database tier in a region, for one or three years. | A fixed hourly spend on covered compute, for one or three years, regardless of series, size or region. |
| Maximum discount, as Microsoft states it | Up to 72% against pay-as-you-go. The figure varies by service, term and region. | Up to 65% against pay-as-you-go. Lower than a reservation on the same workload, and also variable. |
| Coverage | Many services, including compute, databases and storage. | Compute plus some eligible database services, such as SQL Database, PostgreSQL, MySQL and Cosmos DB. The exact list varies, so check it before you rely on it. |
| Flexibility | Low. A change of series or region means an exchange or a new purchase. | High. The benefit follows the spend across series, sizes and regions. |
| Way out | Exchange restricted from 1 February 2027 for services savings plans cover (reservations bought before keep one final exchange); trade-in to a savings plan remains; cancellation is capped. | None. A savings plan can be neither exchanged nor cancelled. |
The difference in discount is the price of flexibility. A reservation is cheaper because you tell Microsoft exactly what you will run. A savings plan is dearer because you do not.
| Workload pattern | Usually | Why |
|---|---|---|
| Always-on production VMs or databases, same series and region for a year or more | Reservation | The workload will not move, so the deeper discount costs you nothing in flexibility. |
| Compute that varies in size, series or region, or is migrating | Savings plan | The discount follows the spend, so a replatforming does not strand the commitment. |
| Storage or other services savings plans do not cover | Reservation | A savings plan does not cover them, so a reservation is the only commitment instrument here. |
| Containers, App Service or Functions with a steady spend but changing instances | Savings plan | Spend is predictable even where the exact resource is not. Check the eligible-service list first. |
| Workload you cannot forecast beyond a few months | Neither, or a one-year term | Pay-as-you-go costs more per hour, but a wrong commitment costs more in total. |
Azure applies a reservation first, wherever its resource and region match running usage, and applies the savings plan to the compute spend that remains. So the order of decisions is fixed too. First measure what is genuinely stable and reserve that. Then size the savings plan on the spend left over, not on the total, or part of the hourly commitment goes unused. Stack Azure Hybrid Benefit underneath where your Windows Server or SQL Server licences with Software Assurance qualify; it works on the licence portion of the price, the commitment on the compute portion.
Sizing needs real usage over months, not a forecast. This is the part the Zation Platform and our FinOps service do: commitments are planned from your actual usage and weighed together with the reservations and entitlements you already hold, rather than recommended one resource at a time.
This is where the two instruments differ most, and it is changing. From 1 February 2027, reservations bought before that date keep one final exchange, and reservations bought on or after it cannot be exchanged for any service savings plans cover. A savings plan never could be. Cancellation of reservations continues, capped at USD 50,000 of refunded commitment per rolling 12 months. The consequence for the choice: the flexibility a reservation used to carry in its exchange right is shrinking, which moves uncertain workloads towards the savings plan. For the full rules and a four-step plan, read our post on the exchange change.
Reserve the stable baseline, keep the rest flexible, and check it against what you already hold.