Firstly, what is an Azure RI?

A Reserved Instance (RI) is when you pre-pay (monthly or upfront) for a virtual machine or available service in Azure for 1 or 3 years instead of paying hourly.

In return, Microsoft gives you a big discount (up to 72% in some cases) compared to pay-as-you-go prices.

What if I need to change my RI?

When you buy an Azure Reserved Instance (RI), you’re pre-paying for a certain VM type for 1 or 3 years to save money.

But what if your needs change? That’s where the cancellation pot comes in.

What is the RI Cancellation Pot?

It’s a limited refund allowance that Microsoft gives you in case you need to cancel a reservation early.

As of now, Microsoft allows:

Up to $50,000 USD per 12-month period in cancelled reserved instance value per Azure subscription or billing account.

What Happens When You Cancel?

If you cancel an RI:

  • Microsoft removes the reservation from your account.
  • You get a pro-rated refund (for the unused time if paid upfront).
  • The refunded amount goes to your Azure credit balance (not straight back to your bank if paid upfront)
  • That value of the total VM commitment counts against your $50,000 pot.

Example in Plain English.

  • You bought a 3-year RI for a VM for £100/pm for 1 year.
  • After 6 months, your business no longer needs that VM.
  • You cancel the RI.
  • Microsoft works out the commitment for the 1 year (£100/pm x 12 months = £1,200), the unused portion (6 months = £600).
  • That £600 comes out of your $50,000 cancellation limit.
  • If you cancel another later, it keeps counting until you hit the $50,000 limit in a year.

What Happens After You Hit the Limit?

Once you've hit the $50,000 cancellation cap, you cannot cancel any more RIs that year—unless Microsoft approves an exception (which is rare and must be justified).

Tips!

  • You can also exchange RIs (e.g., swap regions or VM sizes) if your needs change—but cancellation is only for situations where you don’t need the reservation at all.
  • Microsoft won’t refund past usage—only the future unused portion.

If you want any more information or what to discuss RI’s or the Management of you RI’s further, please feel free to reach out to your Bechtle Account Manager or the Bechtle Cloud Team.