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If you have both reservations and pre-purchase plans, discounts apply in a set order. The most specific discount always applies first. This article explains how that order works.
Benefit types
Azure offers two ways to save by committing to usage in advance:
| Benefit type | What you get | How billing works |
|---|---|---|
| Reservation | A discounted rate for a specific SKU and region. The discount applies every hour to matching resources. | Fixed hourly benefit. If no matching resource runs that hour, the benefit is lost. |
| Pre-purchase plan | A pool of commit units at a discounted price. Your usage draws from this pool. | The balance decreases with eligible usage. When it reaches zero, you pay regular prices. |
Application order
Discounts apply from most specific to least specific:
- Reservation — Locked to one SKU and region.
- Pre-purchase plan — Covers eligible usage across a service.
- Azure savings plan — Covers compute across services.
- Standard Pay-in-Advance Offer — Standard rates for any remaining usage.
Reservation → Pre-purchase plan → Azure savings plan → Standard Pay-in-Advance Offer
If you don't have a savings plan, that step is skipped.
How reservations apply
Reservations are always evaluated first. If you have reservations at multiple scope levels, the narrowest scope is evaluated first:
- Resource group — Reservations scoped to the resource group where the resource runs.
- Subscription — If no match, reservations scoped to the subscription.
- Management group — If no match, reservations scoped to the management group.
- Shared — Reservations shared across the billing profile or enrollment.
When a match is found, that reservation applies and broader scopes aren't evaluated for that resource.
Key behaviors
- Hourly application — The discount applies every hour. You don't need to take any action.
- Instance size flexibility — Within the same VM instance family group, a reservation for one size can cover other sizes. For example, a D4 VM reservation can cover two D2 VMs. For more information, see Instance size flexibility.
- Partial coverage — If a reservation covers only part of the usage, the uncovered portion moves to the next step.
- First-come, first-served — If you have several reservations at the same scope, they apply based on which resources are running.
How pre-purchase plans apply
Pre-purchase plans are evaluated only after all reservation scopes. They follow the same scope order from narrowest to broadest:
- Resource group
- Subscription
- Management group
- Shared (billing profile or enrollment)
Key behaviors
- Balance draws down — Eligible usage reduces the balance. When it reaches zero, further usage is billed at pay-as-you-go rates.
- Earliest expiry first — If you have multiple plans of the same type at the same scope, the plan expiring soonest is used first. This helps avoid losing unused commit units.
- Targeted plans first — If multiple plan types could cover the same usage, the more specific plan applies first.
- Overflow — When one plan runs out, remaining usage is evaluated against other eligible plans before pay-as-you-go.
Priority order summary
| Priority | Benefit type | Scope |
|---|---|---|
| 1 | Reservation | Resource group |
| 2 | Reservation | Subscription |
| 3 | Reservation | Management group |
| 4 | Reservation | Shared (billing profile or enrollment) |
| 5 | Pre-purchase plan | Resource group |
| 6 | Pre-purchase plan | Subscription |
| 7 | Pre-purchase plan | Management group |
| 8 | Pre-purchase plan | Shared (billing profile or enrollment) |
| 9 | Standard Pay-in-Advance Offer | — |
Examples
Example 1: Reservation covers the VM
Setup: You have a D4s_v3 VM reservation scoped to Subscription A. You also have a Microsoft Agent pre-purchase plan on the same subscription. A D4s_v3 VM runs in Subscription A.
Result: The reservation covers the full VM cost. The pre-purchase plan balance stays intact for other eligible usage like Microsoft Copilot Studio or Microsoft Foundry.
Example 2: Partial reservation coverage
Setup: You have a D4s_v3 reservation scoped to a resource group. You run a D8s_v3 VM in that resource group.
Result: With instance size flexibility, the D4s_v3 reservation covers half of the D8s_v3 usage (ratio 4 out of 8). The remaining 50% is evaluated against Azure savings plans, then pay-as-you-go.
Example 3: No reservation match
Setup: You have a Microsoft Agent pre-purchase plan. Your organization uses Microsoft Copilot Studio. No reservation exists for this service.
Result: No reservation matches. The pre-purchase plan covers the usage, and commit units are drawn from the balance.
Example 4: Multiple pre-purchase plans
Setup: You have both a GitHub AI Credits pre-purchase plan and a broader Microsoft Agent pre-purchase plan. Your organization uses GitHub Copilot.
Result: The more targeted GitHub AI Credits plan is used first. When it runs out, remaining usage draws from the Microsoft Agent pre-purchase plan. After both run out, usage is billed at pay-as-you-go rates.