Aug 2017
Azure Stack commercial models

Azure Stack – Choose a door. A tale of two commercial models

If you are considering deploying Azure Stack there are two commercial models available to you.  In this post I aim to give you an understanding of both of these models to enable you to pick the right model for your specific circumstances. But first a caveat. It’s near impossible to place a dollar figure on either model, to forecast exactly what costs you might be up for, it’s best to engage an experienced partner. I’d argue that should be us (obviously), but ignoring the hard sell, lets just cover the basics of what each option involves.


As I discussed in my last post, Azure Stack is available as an integrated system.  When you purchase it from one of the approved vendors you are buying hardware – as a capital expenditure with the software already installed on it. If you’re already nearing an upgrade of your on-premises virtualisation environment this might be an easy line item to account for but that may not be the case for all businesses. In addition to the upfront cost, there are the ongoing costs that need to be considered.

The most important consideration is the Azure Stack software itself and there are two options available to you.  These are the pay-as-you-use billing model and the capacity billing model. I’ll explore both of these in more detail below.

In addition to this you will need to consider support and the licensing for any items deployed from the market place – however they are beyond the scope of this article.

The Pay-As-You-Use Model

The pay-as-you-use model is, in my view, the model that should be considered the preferred option.  By that, I mean provided you can connect your Azure Stack to the internet PAYU offers some benefits.  In this model you do not pay an upfront cost to Microsoft for the Azure Stack software. Rather you pay for the consumption of resources much like in Azure.  Resources are charged either per VCPU per minute or per GB per min, depending on the resource.  Also like Azure you can bring your own Windows and SQL licenses and pay for VMs at a lower rate. For example, if you are running a Windows VM you can bring your own license and just pay a base VM rate per VCPU per minute.

The PAYU model can be purchased either through an Enterprise Agreement (EA) or through a Cloud Solution Provider (CSP).  For EA customers there is an added bonus – you can use the same pool of monetary commit to consume both Azure and Azure Stack. 

The Capacity Model

The capacity model is primarily intended for environments that can’t be connected and as such it does not leverage the Azure billing engine or meter resources.  Instead you pay a fixed, annual fee for the amount of capacity your Azure Stack has available – whether you use it or not.

There are two different packages available under the capacity model – the IaaS Package and the App Service Package.  The former is cheaper but you can only leverage VMs and Storage services, not application services such as Web Apps, Mobile Apps, API Apps and Functions.  If you are considering the IaaS Package I would suggest you price it against a well-managed, traditional virtualisation environment. As I’ve stated many times before, the true power comes from the power Azure brings regarding modern applications.  Without the App Services, and again in my humble opinion,  I think it will be hard to justify the additional cost of Azure Stack over other virtualisation alternatives.

The Capacity Model is only available as part of an Enterprise Agreement, however purchasing Azure Stack via the capacity model does not use your Azure monetary pre-commit.  In both capacity model packages you have to bring your own licenses for Windows Server and SQL.  I.e. If you are running Windows Server or SQL virtual machines you still need to license that software through your EA as well.

So what Azure Stack package is the right model for you?

I’ve already stated that I expect many use cases will benefit from the pay-as-you-go model, but there are many stories of companies who have moved to consumption models in the cloud, failed to properly manage their use of cloud resources and therefore, their spend. To avoid making the wrong choice, the best option is to engage a partner who is well versed in not only Azure Stack, but also in many other hybrid environments. A partner that can help you understand your operating environment and needs based on past experience.

For more information on the two pricing models or on bringing your own licenses to Azure Stack, this Customer Licensing Guide from Microsoft is a good place to start.  You can also reach out to us and we will be able to answer your questions.

Ensyst is a 2016 Worldwide Microsoft Partner of the Year – Hybrid Cloud and Infrastructure

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