Azure VM Pricing vs AWS EC2: Detailed Cost Comparison 2026

Cloud pricing is continually changing. However, if you do not understand how Azure and AWS bill you, you will pay more than necessary for your usage. In 2026, Azure VMs and AWS EC2's base per-hour rates will be very close. The real factor determining your monthly bill is how you utilise discounts and licensing options, and the locations of the services you are using. 

This document will describe the Azure VM Pricing and AWS EC2 Pricing Models in 2026 and where each is typically less expensive, as well as guide making your selections for each service. 

1. How Pricing Works in 2026 (High-Level) 

Azure Virtual Machines 

Azure’s predominant billing models: 

• 1. Pay-As-You-Go. 

• 2. Reserved VM Instances (for either 1 or 3-year terms). 

• 3. Azure Savings Plan (a pre-paid hourly expense commitment). 

• 4. Spot VMs (these are discounted rates for unused/discounted surplus capacity). 

Azure Hybrid Benefit – with this, you can use Windows/SQL licenses that were previously purchased to help lower your overall Azure VM costs 

AWS EC2 Instances 

AWS EC2 pricing includes: 

• 1. On-Demand (as needed by you). 

• 2. Savings Plans (for either 1 or 3-year terms). 

• 3. Reserved Instances (Standard and Convertible). 

• 4. Spot Instances (spare/unused capacity). 

The use of AWS Savings Plans is very popular due to their flexibility, and they provide very good discounting. 

2. Real-World Example: Similar Linux VM Costs 

If comparing the price of a 2-vCPU, 8GB Linux VM hosted in the US region: 

• 1. For an Azure Pay-As-You-Go VM, you would typically find it in the $0.09 to $0.10/hour range. 

• 2. For an AWS On-Demand VM, typically you will find it in the $0.08 to $0.10/hour range. 

For both clouds, when you have a 3-year commitment: 

• 1. You would generally expect a drop into the $0.03 to $0.04/hour pricing tier. 

So, to summarise: 

• 1. The pure pricing of VMs for Linux is nearly identical. 

The total price difference can vary based on discounts, storage requirements, operating system licensing, and data transfer out charges/fees. 

3. Discounting Models Compared 

Azure Discounts 

Azure offers: 

• 1. Reserved Instances for up to ~70% off. 

• 2. Savings Plan for Compute, which provides flexible discounts across regions. 

Benefits of the Hybrid Benefit for Azure offers significant savings for customers with Windows/SQL-based workloads on Azure. 

AWS Discounts 

AWS provides: 

• 1. Savings Plans, which provide the largest discount on most AWS workloads. 

• 2. Reserved Instances provide reliable pricing for predictable long-term workloads. 

Spot Instances, which can be up to 70–90% discount on the same workloads, but are also interruptible (i.e., can stop when AWS needs the capacity). 

4. Windows Licensing: The Biggest Difference 

Azure Advantage 

Users of Azure can: 

• 1. Bring their existing Windows Server/SQL Server licenses with them to use on Azure. 

• 2. Stack discounts by using both Reserved Instances and benefits from the Hybrid Benefit for significant cost reductions. 

This can provide massive savings to users who already hold Windows Server/SQL Server licenses. 

AWS Licensing 

AWS provides: 

• 1. License-included Windows pricing. 

• 2. Options for users to bring their own license with certain setups. 

These licensing options are certainly good options for AWS users, but in most cases, they provide less savings than the discounts available on Windows/SQL workloads through Azure. 

5. Spot / Low-Priority Workloads 

• 1. Azure Spot Virtual Machines Offer Significant Cost Savings and Are optimal for Users Whose Workloads Are Designed to be Resilient. 

• 2. Amazon Web Services (AWS) Offers a Much More Mature Ecosystem of Spot Instances Along With a Much Larger User Base. 

• 3. AWS generally offers users greater flexibility and Better Usability Tools for the Volume Use of Spot Instances. 

6. What People Usually Forget (But Matters a Lot) 

• 1. Storage Pricing: VM Pricing May Seem Low; However, Storage Costs Can Be Very High. 

• 2. Network Egress Fees: Sending Data Out of the Cloud Could Cost More than What a VM Could Cost You. 

• 3. Backup, Snapshots, Security, Monitoring: Neglecting These Areas Can Lead to Costly Bill Shock for Users. 

7. So Who’s Cheaper in 2026? 

The reasons Azure tends to be more economical include: 

• 1. Running workloads based on Windows or SQL. 

• 2. Utilising the Hybrid Benefit feature. 

• 3. Committing to using Reserved Instances. 

The reasons AWS tends to be more economical include: 

• 1. Running predominantly on a Linux-based system. 

• 2. Dependence on large quantities of Spot Instances. 

• 3. A need for a very wide and flexible global network of computing resources. 

The truth is: 

• 1. There isn't a single cloud provider that is always the least expensive overall. 

• 2. The price of each cloud solution is aligned to its workload and the discounts associated with that instance type. 

8. The Smart Evaluation Checklist 

When evaluating Azure and AWS, compare factors other than VM hourly rates.  

Use this calculation to compare both clouds: 

• 1. Location (region).  

• 2. Size of Virtual Machines (VMs), including Central Processing Unit (CPU) and Random Access Memory (RAM). 

• 3. Platform being used (Linux or Windows Operating System). 

• 4. Number of hours per month each VM will run. 

• 5. Data Egress (cost to transfer data out of the data center).  

• 6. Disk Performance (how fast you will be able to read/write data from & to the disks). 

• 7. Cost Savings Plans/Commitments (if you are going to commit to using a particular Resource for 1, 3, or greater than 3 years). 

After you compare both, it will be clear what the better option(s) are. 

Conclusion 

AWS and Azure will be very close in 2026 when you compare pure VM pricing. The primary area differences come from the effective use of discounts, still having to license, regional pricing, and ultimately, workload patterns. When comparing both providers for Linux workloads, they are very comparable in all aspects. When comparing Microsoft workloads (Windows/SQL), Azure is typically going to be the winner due to Microsoft's Hybrid Benefit. AWS provides a better offer for large amounts of spot usage, where flexibility and tooling are needed. Your best option may not be Azure or AWS. Your best option should depend on how your workloads behave, your licensing strategy, and your long-term plans. 

FAQs 

Q1. Is Azure cheaper than AWS for VMs? 

For Linux workloads, the two services are similar. 

For Windows workloads, Azure has a significant advantage with the Hybrid Benefit. 

Q2. What offers bigger discounts — Azure Savings Plan or AWS Savings Plan? 

Both services provide similar savings rates, but this depends heavily on the predictability of your workload. 

Q3. Which is better for Spot workloads? 

AWS has far superior tools and flexibility, especially for scaling. 

Q4. Why is Azure cheaper for Windows workloads? 

The Hybrid Benefit allows for the reuse of licenses, reducing VM costs substantially.