On October 27, 2025, Microsoft announced that Software Reservations for Red Hat Enterprise Linux (RHEL) on Azure are now generally available. This means that Azure customers can commit to using RHEL on Azure for a fixed term in exchange for discounted rates. In fact, a one-year commitment to a RHEL software plan in Azure can yield cost savings of up to 24% on the RHEL software charges, compared to pay-as-you-go pricing.
The reservation is applied automatically to any matching RHEL Azure Virtual Machines (VMs) in your subscription, so you receive the discounted rate without manual intervention. The offering also provides instance size flexibility, meaning the discount applies even if you run a VM with a different virtual CPU count (size) than the one you initially reserved.
With the addition of RHEL, the Azure Reservations program now includes 32 services that offer discounts for duration-based commitments, underscoring Microsoft’s broad range of cost-saving options for various Azure services.
What is Red Hat Enterprise Linux (RHEL)
Red Hat Enterprise Linux (RHEL) is a Linux-based operating system (OS) developed by Red Hat, Inc. that is designed for use in enterprise environments. It is known for its stability, robust security features, and support for a wide range of hardware platforms. RHEL is widely used in servers, data centers, and cloud computing environments for running mission-critical applications.
In the context of Microsoft Azure, RHEL is available as an option for Azure VMs, allowing organizations to deploy this enterprise-grade Linux OS on Azure’s cloud infrastructure with integrated billing and support from Red Hat.
Licensing
From a licensing and procurement perspective, an Azure RHEL Software Reservation is essentially a pre-paid software subscription for RHEL on Azure. When you purchase a RHEL reservation plan through the Azure portal, you are paying upfront (or committing) for one year of RHEL software usage on your Azure VMs.
In return, Azure charges you a lower rate for the RHEL component of those VMs during that year. The RHEL software plan covers the Red Hat subscription cost of the operating system for the VM – this is separate from the Azure compute cost, but both are billed through Azure.
The discount is applied automatically to the RHEL software meter of any VM that matches your reservation (for example, a VM of the specified region and size), so you don’t need to do anything extra once the reservation is in place. It’s important to note that you must plan to use RHEL on Azure continuously for the reserved period (12 months) to fully benefit from the cost savings; if your usage is sporadic or uncertain, a reservation might not yield the intended savings.
This model is comparable to Azure’s existing Reserved Instances (which cover compute costs) but here it specifically covers the software licensing cost for RHEL. You are effectively locking in a Red Hat license on Azure for a year. Standard Azure reservation policies apply – for instance, you can assign the reservation to specific subscriptions or shared scope, and Microsoft provides some flexibility such as instance size flexibility (as noted) and possible exchange or refund options on reservations under certain conditions. However, the details of managing reservations (e.g. exchanges or cancellations) can be referenced in Azure’s documentation.
For any organization, it’s wise to ensure that such a commitment aligns with your actual usage needs. If you have questions about how RHEL reservations fit into your licensing strategy or need guidance on optimizing costs, it may help to consult a software licensing expert.
SCHNEIDER IT MANAGEMENT provides advice tailored to your situation and ensure you’re making the best use of programs like Azure Reservations in combination with your Red Hat subscriptions. Engaging with a licensing expert is recommended for clarifying any details about Red Hat licensing on Azure versus traditional Red Hat subscriptions, especially if you are running hybrid cloud environments or transferring workloads.
More information
For further details, you can refer to the original sources from Microsoft:
- Microsoft Announcement: https://techcommunity.microsoft.com/blog/linuxandopensourceblog/red-hat-enterprise-linux-software-reservations-now-available/4463214
- Microsoft Learn Documentation: https://learn.microsoft.com/en-us/azure/cost-management-billing/reservations/understand-rhel-reservation-charges.
These links provide the official announcement of RHEL Software Reservations availability and detailed documentation on how the RHEL reservation discounts work in Azure, respectively.
They offer additional information on pricing models, how to purchase a reservation, and examples of how the discount is applied.
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