Are reserved instances Capex or Opex model?
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AZ-900 Are reserved instances Capex or Opex model?
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Azure Reservations would be considered an operating expense (OPEX).
You can pay for a reservation up front or monthly. While paying for a reservation up front might make it seem like a capital expenditure (CAPEX), you are not purchasing something that will need to be upgraded or replaced (by you anyways, Microsoft will take care of that). So reservations are really a day-to-day expense.
Property taxes are an example of OPEX. They are not something you buy, like a building, but an ongoing expense. You can pay the entire year of property tax at once, or pay it monthly. Either way it is still OPEX.
Buying the building would be an example of CAPEX. Even though you might pay a monthly mortgage, it is a long-term expense.
I like this definition.
The term CAPEX stands for Capital Expenditure while the term OPEX stands for Operational Expenditure. CAPEX is the money which is used by an organization to buy something new or to upgrade something they already have. OPEX is the money which is utilized in running the routine duties within a company or industry.
Hope this helps!
Mike Rodrick
Edutainer, ITProTV**if the post above has answered the question, please mark the topic as solved.
