QUOTA VS. CAPACITY (BAG SIZE)
Quota is how much you’re allowed to purchase (your bag size).
Capacity is how much is available to purchase (how many oranges are in the bin).
- High quota ≠ guaranteed supply: A bigger bag doesn’t help if the bin is empty.
- Low quota can still be limiting: Even when supply is plentiful, a small bag caps what you can take.
- Key takeaway: Quota controls entitlement; Capacity controls availability.
Quotas overview – Azure Quotas | Microsoft Learn
PAYGO: SHARED CAPACITY (ORANGE BIN)
PAYGO is like a shared bin of oranges: you can take what you need when it’s available, with no commitment. Because it’s shared and demand changes, you can’t guarantee capacity will always be there when you need it, during spikes, the ‘bin’ can get emptied by others.
- Flexible: start/stop anytime, no long-term commitment
- Shared availability: capacity can fluctuate under high demand
- Best fit: dev/test, bursty workloads, or unknown demand
- Pricing: contracted pricing is available, but capacity isn’t guaranteed
https://azure.microsoft.com/en-us/pricing/purchase-options/azure-account
RESERVATIONS: PREDICTABLE CAPACITY
Capacity reservations are a commitment that improves predictability for eligible Azure services. The orange tree represents supply set aside for you, to plan, reduce uncertainty, and typically lower cost compared with PAYGO (without contracted pricing).
- More predictable capacity for eligible services
- Term commitment (e.g., 1 or 3 years depending on the offering)
- Better planning + typically lower cost vs PAYGO (always check with your sales specialist)
- Can be used with Reserved Instances for pricing discounts
https://learn.microsoft.com/en-us/azure/virtual-machines/capacityreservation-overview
RESERVED INSTANCES: COMMIT FOR DISCOUNT
Like a bulk orange contract, Reserved Instances (RI’s) are a bulk-purchase agreement: you commit to a specific compute configuration for a longer term in exchange for significant savings. This works best when usage is steady and you can plan sizing confidently.
- Lower flexibility than PAYGO (plan sizing/region carefully)
- Utilize RI’s when you can predict usage over 1–3 years
- RI’s do NOT guarantee capacity, and may be required to utilize to specific Azure SKU’s.
- May be combined with Reserved Capacity reservations.
https://learn.microsoft.com/en-us/training/modules/save-money-withazure-reserved-instances
What is Azure savings plans for compute? – Microsoft Cost Management | Microsoft Learn
