This blog post is the second blog of Topic 1: Cloud Concepts in the Microsoft Azure Fundamentals Certification Series(AZ-900)
In this blog post 1.2, we’ll cover the Capital Expenditure (CapEx) and Operational Expenditure (OpEx) models in cloud computing.
If you have not gone through the first topic on Cloud Computing: Overview & Benefits click here.
There are two ways of investing in the resources available on the Cloud:
- Capital Expenditure (CapEx)
- Operational Expenditure (OpEx)
What Is CapEx?
CapEx is the spending of money on physical infrastructure upfront and then deducting that expense from your tax bill over time. CapEx is an upfront cost, which has a value that reduces over time and usually has no recurring cost.
Deploying your own data center and Azure Reserved VM Instances are a few examples of the CapEx pricing model.
Pros: With capital expenditures, you plan your expenses at the start of a project or budget period with a fixed cost. This is appealing when you need to predict the expenses before a project starts due to a limited budget. It is also beneficial in the longer run.
Note: Azure Reserved Instances (Azure RI) help Azure’s most active customers save on long-term VM usage reserving VMs in advance at a discounted price by committing to a one or three-year benefits.
What Is OpEx?
OpEx is spending money on services or products now and being billed for them now. You can deduct this expense from your tax bill in the same year. There’s no upfront cost but has a recurring cost. You pay for a service or product as you use it i.e. pay-as-you-go pricing.
Pros: Demand and growth can be unpredictable and can outpace expectations, which is a challenge for the CapEx
Sample Questions
Here are a few sample questions from the Microsoft Azure Fundamentals Certification Exam[AZ-900] that you should be able to solve after reading this blog.
Q 1. HOTSPOT: For each of the following statements, select Yes if the statement is true. Otherwise, select No.
NOTE: Each correct selection is worth one point.
Correct Answer:
Q 2. HOTSPOT: For each of the following statements, select Yes if the statement is true. Otherwise, select No.
NOTE: Each correct selection is worth one point.
Correct Answer:
Explanation:
- The cost of an Azure VM depends on various factors like its size, OS, and the region. Even though we create two VMs of the same size and OS they incur different charges if they are in a different region.
- We will be charged for the OS, public IP, disk and other resources even if the VM has been stopped. In order to avoid paying for any non-functional resources, they should be deleted.
Related/References
- [AZ-900] Microsoft Azure Certification Fundamental Exam: Everything You Must Know
- Learn how to create a Free Microsoft Azure Trial Account
- [AZ-900] Microsoft Azure Fundamentals: Cloud Computing – Overview & Benefits
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