hello guys my name is Adam welcome back to our fourth episode of arrow fundamentals course in this episode I'll take you through what is consumption based pricing model in the cloud stay tuned one of the most important things you need to understand when you start working with Azure is how other is pricing services and to do that you need to understand consumption based model and to help you understand that I will use exactly same example as in previous episodes naturally a typical usage fluctuates over time and to match that user to demand you want to allocate as many resources as you need at any given time ideally you will only pay for those resources during the time of the usage and only as much as the resources that you consumed the first thing you should note is that there is no upfront cost because with consumption based model you only start paying when you start using the resources and because cloud is elastic you don't have to assign resources when you don't need them that of course means there are no wasted resources and you're not paying for them so simply said if consumption based model you only pay for the resources when you need them and you stop paying as soon as you don't need them but in order for this model to work we need to understand one more thing so let me use a service like a virtual machine as an example here charging for a service like virtual machine might be very tricky so what Microsoft did is created a few metrics that the price is based on first one is so-called compute - this is the power of the virtual machine the size of the virtual machine that we purchased if your usage changes per day if your size changes per day you will be charged different amount each day additionally you will filter machine usually there's a storage attached you are priced for that storage separately so that if you have small machine but a lot of storage you will pay different price that if you have big machine and very low amount of storage or of course some additional metrics that are factored in in the price of virtual machines like networking not really the amount of those factors is different per service because there are different services and they have different complexity because some services are easier to price other are harder but they are designed so that Microsoft can charge you appropriately to your use it therefore in a consumption based model you have multiple pricing components per each service additionally the charges are very very granular if you only use virtual machine for 20 seconds you will only pay for 20 seconds of the usage as an example here I want to quickly go to other portal which is a powerful web-based self-service portal allowing its users manage all of the aspects of their other resources inside the Vajra portal there is a one service that interests us right now is the cost management service inside of that service I can reveal the cost of my subscription I think it's the best example to show you a real case of consumption based model in Azure using my own subscription and to do that I will select my own subscription from the list now on the left hand side panel I will select cost analysis and this will open a new window which will allow me to analyze the cost of my own auto subscription or the previous months and previous days as an example I will use a last month data to show you the costs let me scroll down here select last month I will change the granularity daily and change the area chart the column chart by default you will only see the total cost per day which is very hard to use if you want to understand where are the costs coming from so my advice is always change the group by and select from the list the service name this way you can review the cost of your other services divided by day and by the service name in this case on the screen you can see a lot of colors each color indicates a separate service that are used in this case as you can see my virtual machine costs are very flat the reason for that is because I'm using the same virtual machine running constantly 24 by 7 every day there are some additional costs related to store it because that virtual machine has a storage attached again a flat fee because that storage is consuming the same amount of storage every single day through one day on the June 19th you can see the increase in the cost and this is because I was using Azure data break service which created some extra virtual machines therefore my storage and virtual machine cost rolls that day if we look back a little bit we'll be able to see on the previous day some additional costs like logic ops because during the day I was performing some tests 2 days back I was using Azure data factory the same goes for last week and he go even further IOT hubs were used so what you can observe here is that on the days that I was using my services less I simply was charred a smaller amount on the days I did used and more I paid more it's as simple as that whenever I'm using my services I'm paying based on my consumption and if I use my data factory lesson someday I simply paid less and that's pretty much it consumption-based model simply means paying for what you're using or this episode please go to my website - episode number four and in the study guide you will only find cheat sheet and the practice test because this was fairly simple episode try yourself try what you learned and let me know your feedback and that's it for this episode I appreciate every single one of you that stayed until the very end if you like what I do support the channel by subscribing liking and commenting if you want to follow to the next episode simply use the playlist or hit icon on the side and see you in the next episode [Music]