I would like to get clarification how storage for VMs is billed exactly.

1. is it actual data stored INSIDE the VHDs, or based on max capacity of allocated VHD size? (or a 3rd alternative)?
Is there an actual public description about this?

2. how are the OS drives calculated for storage billing? Are they billed at all? An OS drive is 127GB usually, but contains only ~
The expression "LOCAL DISK STORAGE" is misleading, as it is used only in Web/Worker PaaS terminology as I understand, right?
There are confusing answers in FAQ on public site here:
http://www.windowsazure.com/en-us/pricing/details/virtual-machines/
Do I need to purchase local disk storage with Virtual Machines separately?
No, local disk storage is provided with Virtual Machines and is not charged separately. To explore virtual machines configurations visit here.
- Does the virtual machine instance price include Storage cost associated with the image running in the virtual machine?
The virtual machine instance price does not include any Storage cost associated with the image running in the virtual machines.

3. How is the Temp drive or data residing inside calculated? Is it counted at all? (it is in the local host internal drive, not on Azure redundant storage at

Hi,

I suggest you read this blog from the Azure Storage team that explains storage for VM's in detail.

Hope this helps.

Edward