Azure Cost Optimization Skill

Analyze Azure subscriptions to identify cost savings through orphaned resource cleanup, rightsizing, and optimization recommendations based on actual usage data.

When to Use This Skill

Use this skill when the user asks to:

Optimize Azure costs or reduce spending

Analyze Azure subscription for cost savings

Generate cost optimization report

Find orphaned or unused resources

Rightsize Azure VMs, containers, or services

Identify where they're overspending in Azure

Optimize Redis costs specifically

- See

Azure Redis Cost Optimization

for Redis-specific analysis

Instructions

Follow these steps in conversation with the user:

Step 0: Validate Prerequisites

Before starting, verify these tools and permissions are available:

Required Tools:

Azure CLI installed and authenticated (

az login

)

Azure CLI extensions:

costmanagement

,

resource-graph

Azure Quick Review (azqr) installed - See

Azure Quick Review

for details

Required Permissions:

Cost Management Reader role

Monitoring Reader role

Reader role on subscription/resource group

Verification commands:

az

--

version

az account show

az extension show

--

name costmanagement

azqr version

Step 1: Load Best Practices

Get Azure cost optimization best practices to inform recommendations:

// Use Azure MCP best practices tool

mcp_azure_mcp_get_azure_bestpractices

(

{

intent

:

"Get cost optimization best practices"

,

command

:

"get_bestpractices"

,

parameters

:

{

resource

:

"cost-optimization"

,

action

:

"all"

}

)

Step 1.5: Redis-Specific Analysis (Conditional)

If the user specifically requests Redis cost optimization

, use the specialized Redis skill:

📋

Reference

:

Azure Redis Cost Optimization

When to use Redis-specific analysis:

User mentions "Redis", "Azure Cache for Redis", or "Azure Managed Redis"

Focus is on Redis resource optimization, not general subscription analysis

User wants Redis-specific recommendations (SKU downgrade, failed caches, etc.)

Key capabilities:

Interactive subscription filtering (prefix, ID, or "all subscriptions")

Redis-specific optimization rules (failed caches, oversized tiers, missing tags)

Pre-built report templates for Redis cost analysis

Uses

redis_list

command

Report templates available:

Subscription-level Redis summary

Detailed Redis cache analysis

Note

For general subscription-wide cost optimization (including Redis), continue with Step 2. For Redis-only focused analysis, follow the instructions in the Redis-specific reference document.
Step 1.6: Choose Analysis Scope (for Redis-specific analysis)
If performing Redis cost optimization
, ask the user to select their analysis scope:
Prompt the user with these options:
Specific Subscription ID
- Analyze a single subscription
Subscription Name
- Use display name instead of ID
Subscription Prefix
- Analyze all subscriptions starting with a prefix (e.g., "CacheTeam")
All My Subscriptions
- Scan all accessible subscriptions
Tenant-wide
- Analyze entire organization
Wait for user response before proceeding to Step 2.
Step 2: Run Azure Quick Review
Run azqr to find orphaned resources (immediate cost savings):
📋
Reference
:
Azure Quick Review
- Detailed instructions for running azqr scans
// Use Azure MCP extension_azqr tool
extension_azqr
(
{
subscription
:
""
,
"resource-group"
:
""
// optional
}
)
What to look for in azqr results:
Orphaned resources: unattached disks, unused NICs, idle NAT gateways
Over-provisioned resources: excessive retention periods, oversized SKUs
Missing cost tags: resources without proper cost allocation
Note: The Azure Quick Review reference document includes instructions for creating filter configurations, saving output to the output/ folder, and interpreting results for cost optimization. Step 3: Discover Resources For efficient cross-subscription resource discovery, use Azure Resource Graph. See Azure Resource Graph Queries for orphaned resource detection and cost optimization patterns. List all resources in the subscription using Azure MCP tools or CLI:

Get subscription info

az account show

List all resources

az resource list

subscription "" -- resource- group ""

Use MCP tools for specific services (preferred):

- Storage accounts, Cosmos DB, Key Vaults: use Azure MCP tools

- Redis caches: use mcp_azure_mcp_redis tool (see ./references/azure-redis.md)

- Web apps, VMs, SQL: use az CLI commands

Step 4: Query Actual Costs
Get actual cost data from Azure Cost Management API (last 30 days):
Create cost query file:
Create
temp/cost-query.json
with:
{
"type"
:
"ActualCost"
,
"timeframe"
:
"Custom"
,
"timePeriod"
:
{
"from"
:
""
,
"to"
:
""
}
,
"dataset"
:
{
"granularity"
:
"None"
,
"aggregation"
:
{
"totalCost"
:
{
"name"
:
"Cost"
,
"function"
:
"Sum"
}
}
,
"grouping"
:
[
{
"type"
:
"Dimension"
,
"name"
:
"ResourceId"
}
]
}
}
Action Required: Calculate (30 days ago) and (today) in ISO 8601 format (e.g., 2025-11-03T00:00:00Z ). Execute cost query:

Create temp folder

New-Item

ItemType Directory

Path "temp" - Force

Query using REST API (more reliable than az costmanagement query)

az rest

method post `

url
"https://management.azure.com/subscriptions//resourceGroups//providers/Microsoft.CostManagement/query?api-version=2023-11-01"
`
--
body
'@temp/cost-query.json'
Important:
Save the query results to
output/cost-query-result.json
for audit trail.
Step 5: Validate Pricing
Fetch current pricing from official Azure pricing pages using
fetch_webpage
:
// Validate pricing for key services
fetch_webpage
(
{
urls
:
[
"https://azure.microsoft.com/en-us/pricing/details/container-apps/"
]
,
query
:
"pricing tiers and costs"
}
)
Key services to validate:
Container Apps:
https://azure.microsoft.com/pricing/details/container-apps/
Virtual Machines:
https://azure.microsoft.com/pricing/details/virtual-machines/
App Service:
https://azure.microsoft.com/pricing/details/app-service/
Log Analytics:
https://azure.microsoft.com/pricing/details/monitor/
Important: Check for free tier allowances - many Azure services have generous free limits that may explain $0 costs. Step 6: Collect Utilization Metrics Query Azure Monitor for utilization data (last 14 days) to support rightsizing recommendations:

Calculate dates for last 14 days

$startTime

( Get-Date ) . AddDays ( - 14 ) . ToString ( "yyyy-MM-ddTHH:mm:ssZ" ) $endTime = Get-Date - Format "yyyy-MM-ddTHH:mm:ssZ"

VM CPU utilization

az monitor metrics list `

resource "" -- metric "Percentage CPU" -- interval PT1H -- aggregation Average -- start-time $startTime ` -- end - time $endTime

App Service Plan utilization

az monitor metrics list `

resource "" -- metric "CpuTime,Requests" -- interval PT1H -- aggregation Total -- start-time $startTime ` -- end - time $endTime

Storage capacity

az monitor metrics list `

resource "" -- metric "UsedCapacity,BlobCount" -- interval PT1H -- aggregation Average -- start-time $startTime ` -- end - time $endTime Step 7: Generate Optimization Report Create a comprehensive cost optimization report in the output/ folder: Use the create_file tool with path output/costoptimizereport.md : Report Structure:

Azure Cost Optimization Report ** Generated ** : < timestamp

Executive Summary

Total Monthly Cost: $X (💰 ACTUAL DATA)

Top Cost Drivers: [List top 3 resources with Azure Portal links]

Cost Breakdown [Table with top 10 resources by cost, including Azure Portal links]

Free Tier Analysis [Resources operating within free tiers showing $0 cost]

Orphaned Resources (Immediate Savings) [From azqr - resources that can be deleted immediately] - Resource name with Portal link - $X/month savings

Optimization Recommendations

Priority 1: High Impact, Low Risk [Example: Delete orphaned resources] - 💰 ACTUAL cost: $X/month - 📊 ESTIMATED savings: $Y/month - Commands to execute (with warnings)

Priority 2: Medium Impact, Medium Risk [Example: Rightsize VM from D4s_v5 to D2s_v5] - 💰 ACTUAL baseline: D4s_v5, $X/month - 📈 ACTUAL metrics: CPU 8%, Memory 30% - 💵 VALIDATED pricing: D4s_v5 $Y/hr, D2s_v5 $Z/hr - 📊 ESTIMATED savings: $S/month - Commands to execute

Priority 3: Long-term Optimization [Example: Reserved Instances, Storage tiering]

Total Estimated Savings

Monthly: $X

Annual: $Y

Implementation Commands [Safe commands with approval warnings]

Validation Appendix

Data Sources and Files

Cost Query Results

:

output/cost-query-result<timestamp>.json

-

Raw cost data from Azure Cost Management API

-

Audit trail proving actual costs at report generation time

-

Keep for at least 12 months for historical comparison

-

Contains every resource's exact cost over the analysis period

-

Pricing Sources

[Links to Azure pricing pages]

Free Tier Allowances

[Applicable allowances]
>
**
Note
**: The temp/cost-query.json file (if present) is a temporary query template and can be safely deleted. All permanent audit data is in the output/ folder. Portal Link Format: https://portal.azure.com/#@/resource/subscriptions//resourceGroups//providers////overview Step 8: Save Audit Trail Save all cost query results for validation: Use the create_file tool with path output/cost-query-result.json : { "timestamp" : "" , "subscription" : "" , "resourceGroup" : "" , "queries" : [ { "queryType" : "ActualCost" , "timeframe" : "MonthToDate" , "query" : { } , "response" : { } } ] } Step 9: Clean Up Temporary Files Remove temporary query files and folder after the report is generated:

Delete entire temp folder (no longer needed)

Remove-Item

Path

"temp"

-

Recurse

-

Force

-

ErrorAction SilentlyContinue

Note

The

temp/cost-query.json

file is only needed during API execution. The actual query and results are preserved in

output/cost-query-result*.json

for audit purposes.

Output

The skill generates:

Cost Optimization Report

(

output/costoptimizereport.md

)

Executive summary with total costs and top drivers

Detailed cost breakdown with Azure Portal links

Prioritized recommendations with actual data and estimated savings

Implementation commands with safety warnings

Cost Query Results

(

output/cost-query-result.json

)

Audit trail of all cost queries and responses

Validation evidence for recommendations

Important Notes

Data Classification

💰

ACTUAL DATA

= Retrieved from Azure Cost Management API

📈

ACTUAL METRICS

= Retrieved from Azure Monitor

💵

VALIDATED PRICING

= Retrieved from official Azure pricing pages

📊

ESTIMATED SAVINGS

= Calculated based on actual data and validated pricing

Best Practices

Always query actual costs first - never estimate or assume

Validate pricing from official sources - account for free tiers

Use REST API for cost queries (more reliable than

az costmanagement query

)

Save audit trail - include all queries and responses

Include Azure Portal links for all resources

Use UTF-8 encoding when creating report files

For costs < $10/month, emphasize operational improvements over financial savings

Never execute destructive operations without explicit approval

Common Pitfalls

Assuming costs

Always query actual data from Cost Management API

Ignoring free tiers

Many services have generous allowances (e.g., Container Apps: 180K vCPU-sec free/month)

Using wrong date ranges

30 days for costs, 14 days for utilization

Broken Portal links

Verify tenant ID and resource ID format
Cost query failures: Use az rest with JSON body, not az costmanagement query Safety Requirements Get approval before deleting resources Test changes in non-production first Provide dry-run commands for validation Include rollback procedures Monitor impact after implementation SDK Quick References Redis Management : .NET

azure-cost-optimization

安装

Get subscription info

List all resources

az resource list

Use MCP tools for specific services (preferred):

- Storage accounts, Cosmos DB, Key Vaults: use Azure MCP tools

- Redis caches: use mcp_azure_mcp_redis tool (see ./references/azure-redis.md)

- Web apps, VMs, SQL: use az CLI commands

Create temp folder

New-Item

ItemType Directory

Query using REST API (more reliable than az costmanagement query)

az rest

method post `

Calculate dates for last 14 days

$startTime

VM CPU utilization

az monitor metrics list `

App Service Plan utilization

az monitor metrics list `

Storage capacity

az monitor metrics list `

Executive Summary

Total Monthly Cost: $X (💰 ACTUAL DATA)

Total Estimated Savings

Monthly: $X

Data Sources and Files

[Links to Azure pricing pages]

Delete entire temp folder (no longer needed)

Remove-Item