Cost Management and Tags
Azure Cost Management tracks your spending, sets budgets, and sends alerts. Tags organise your resources and help you understand where the money goes.
Tracking and controlling Azure spending
Think of Azure Cost Management as your banking app.
Your banking app shows you how much you’ve spent this month, what you spent it on, and alerts you if you’re about to overdraw. Azure Cost Management does the same for your cloud bill.
Tags are like labels on your expenses. “Food,” “Transport,” “Entertainment” — they help you see WHERE your money is going. In Azure, you tag resources with “Project: Website” or “Department: Marketing” so you can break down costs by project, team, or environment.
Azure Cost Management
What it does
| Feature | Description |
|---|---|
| Cost analysis | Visualise spending by service, region, resource group, or tag |
| Budgets | Set monthly/quarterly spending limits with alerts |
| Alerts | Email notifications when spending reaches 50%, 75%, 90%, 100% |
| Recommendations | Suggestions to reduce costs (right-size VMs, delete unused resources) |
| Exports | Schedule automatic exports of cost data to storage accounts |
Summit Construction’s Cost Management setup
Summit sets a monthly budget of $3,000 across all subscriptions:
- 50% alert ($1,500): Email to IT manager — “mid-month check”
- 75% alert ($2,250): Email to IT manager + finance — “approaching budget”
- 90% alert ($2,700): Email to all + Slack webhook — “take action”
- 100% alert ($3,000): Email to CTO — “budget exceeded”
Cost analysis shows them that 60% of their spend is on VMs, 20% on storage, and 15% on networking — helping them identify optimisation targets.
Tags — organising your resources
Tags are name-value pairs you attach to resources for organisation:
| Tag Name | Tag Value | Purpose |
|---|---|---|
| Environment | Production / Development / Test | Identify environment |
| Project | Website / Portal / API | Track costs by project |
| Department | IT / Marketing / Finance | Allocate costs to departments |
| Owner | maya@summit.com | Know who to contact |
| CostCenter | CC-1042 | Map to accounting codes |
Why tags matter
| Use Case | Example |
|---|---|
| Cost allocation | ”How much does the Website project cost per month?” |
| Automation | ”Shut down all resources tagged Environment: Dev at 6 PM” |
| Governance | ”Require all resources to have an Owner tag” |
| Organisation | ”Show me all production resources across all subscriptions” |
Tags are NOT inherited
Important exam concept: Tags applied to a resource group are NOT automatically inherited by the resources inside it.
If you tag a resource group with Department: IT, the VMs inside that group do NOT automatically get that tag. You must apply tags to individual resources (or use Azure Policy to enforce tagging).
Azure Policy can require tags on resource creation — this prevents untagged resources from being created.
Key exam concept: Tags are for metadata and organisation. They don’t affect how resources function — a VM runs the same whether it’s tagged or not. But without tags, cost analysis becomes nearly impossible at scale.
🎬 Video walkthrough
Flashcards
Knowledge Check
Summit Construction wants to track Azure spending per construction project. What should they use?
An IT manager wants to receive an email alert when Azure spending reaches 80% of a $2,000 monthly budget. Which Azure feature should they configure?
Next up: Azure Governance — Microsoft Purview, Azure Policy, and resource locks.