Unexpected Azure Databricks VM Pricing – Matches RI Cost Without RI Purchase

Question

I have an Azure Databricks customer with both Dev and Prod environments. The concern is regarding the VM cost associated with Databricks.

• The VM type is D4ads_v5 Linux, located in Southeast Asia.
• According to the Azure Pricing Calculator, the expected cost should be $188.34 per month.
• However, the actual incurred cost is $111.24 per month, which closely matches the 1-year RI price.

The issue is that the customer hasn’t purchased any Reserved Instances (RI) so far.

• We have checked the subscription and account level, and there is no RI applied.
• Despite this, the pricing still reflects RI-based discounts.
• Azure still recommends these VMs for RI purchase, which adds to the confusion.

The customer is currently evaluating the environment to apply Savings Plan and RI, but we need to clarify this unexpected pricing behavior.

Can anyone explain why the cost is already reduced and matches the RI pricing even when no RI has been purchased? Any insights would be appreciated!

Answer 1

@Sundarakannan M

Thank you for posting your query!

The situation you're encountering with Azure Databricks VM pricing can be perplexing, especially when the costs appear to reflect Reserved Instance (RI) pricing without any actual RI purchase. Here are a few potential explanations for this unexpected pricing behavior:

1. Spot Pricing or Discounts: Azure may be applying some form of temporary discount or promotional pricing for the VMs in question. Sometimes, Azure offers discounts for specific VM types or regions to encourage usage, especially for new customers or during promotional periods.
2. Azure Hybrid Benefit: If the customer has existing Windows Server licenses with Software Assurance, they might be eligible for the Azure Hybrid Benefit, which can significantly reduce the cost of running VMs. However, this typically applies to Windows VMs rather than Linux VMs, so it may not be relevant in this case.
3. Dynamic Pricing Adjustments: Azure's pricing can be dynamic based on demand and availability. If there is lower demand for the D4ads_v5 VMs in the Southeast Asia region, Azure might adjust the pricing to be more competitive, resulting in lower costs.
4. Usage Patterns: If the customer is using the VMs in a way that qualifies for lower pricing (e.g., using them for short bursts rather than continuously), they might be benefiting from lower per-hour rates that are not immediately obvious in the pricing calculator.
5. Subscription-Level Discounts: There might be subscription-level discounts or agreements in place that are automatically applied to the customer's account

I hope this information helps. Please do let us know if you have any further queries.

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