Microsoft SQL Server is a go-to database management system for businesses of all sizes. From startups to Fortune 500 companies, it powers critical applications worldwide.
The Microsoft SQL Server License Guide is really not that long, but it references multiple other documents like the Capacity Guide and Volume Licensing Guide, which can make understanding the full licensing model complex.
So, to address the challenge, the most straightforward approach is to familiarize yourself with these documents and be done with it. They can be a bit tricky to read, but they cover Microsoft SQL Server Licensing in detail.
To a certain extent, the Microsoft SQL Server Licensing is very much like complex parking rules with multiple exceptions. Like, no free parking every other Sunday, on Thursdays, all parked cars are towed for street cleaning, etc. This article is an endeavor to build a cheat sheet containing the important parking rules as well as exceptions.
What Is Microsoft SQL Server?
Microsoft SQL Server is the backbone of modern business data management, a powerhouse relational database system that stores, processes, and secures your critical information.
It’s the trusted platform that Fortune 500 companies and small businesses depend on for everything from transaction processing to business intelligence.
SQL Server fits naturally into Microsoft’s ecosystem and comes packed with strong security features to keep your data safe. Regardless of whether you run it on-premises or in the cloud, it scales with your business without forcing your IT team to become database experts.
Choosing the Right SQL Server Licensing Model
The right SQL Server licensing model matters, much like a cell phone plan. Get it right, and you’ll save thousands; get it wrong, and you’ll be explaining budget overruns to your boss.
Microsoft offers two primary licensing models for SQL Server, each with distinct advantages depending on your usage patterns and organizational needs.
1. Core-Based Licensing: Pay for Power
Core-based licensing is straightforward in concept but a bit complicated in execution. Think of it as paying for horsepower under the hood.
Key points to remember:
- Licenses are sold in packs of two cores
- You must license every physical core in your server
- A minimum of 4 cores per processor must be licensed
- No additional CALs required – unlimited users can access your server
- Perfect for internet-facing applications or environments with unpredictable user counts
Note: Microsoft enforces a minimum of four core licenses per physical processor, even if the processor has fewer than four cores.
When Core-Based Makes Sense
Core licensing shines when you have web applications, customer-facing portals, or any scenario where counting users becomes impractical. It’s also the only option for SQL Server Enterprise Edition after 2012.
- Real-world example: A retail company with an e-commerce site experiencing seasonal traffic spikes would benefit from core-based licensing, eliminating concerns about user count during holiday rushes.
2. Server + CAL Model: Count Your Users
The Server + CAL (Client Access License) model separates the server license from user access rights. Think of it as a nightclub with a cover charge – you pay once for the venue and then for each person who enters.
How it works:
- Purchase one server license per physical server or VM
- Purchase CALs for each user or device accessing the server
- Available only for SQL Server Standard Edition
- CALs are version-specific but can access older versions (downgrade rights)
When Server + CAL Makes Sense
This model typically costs less for environments with a known, limited number of users. It’s ideal for departmental applications, internal tools, or small business scenarios.
Pro tip: If your SQL Server needs fewer than ~50 users, Server + CAL often provides better value than core-based licensing.
SQL Server Editions & Features
After the 2014 version, Microsoft acquired many companies. Based on their expertise, the product line was upgraded. So, starting with SQL Server 2016, these are the SQL Server editions:
1. Standard
This is the essential experience with standard reporting and analytic capabilities. There are a few limits in memory, database size, and the maximum number of cores. Microsoft offers it in both Core-Based and Server + CAL licensing models.
2. Enterprise
Adds features over the Standard Edition. It offers tools for analyzing business and financial data, critical applications, and data warehousing features essential for enterprises, which this edition is primarily targeted towards. It is only offered in core-based licensing models
3. Express
This free version offers a limited experience. The most important limitation is that SQL Server Express does not support databases larger than 10 GB. This will prevent you from growing your database to be large.
Many organizations will first deploy SQL Server Express to see if it is sufficient for their specific applications and will only move to the fee-based editions when they can confirm that Express will not meet their requirements.
4. Developer
This edition allows you to build, test, and demonstrate applications in a non-production environment only. Using it in production can result in hefty fines.
Production use includes situations where individuals (inside or outside your organization) use the software beyond development, when it connects to production databases, or when it serves as backup/disaster-recovery for production servers.
Mixing production and non-production environments is a recipe for disaster. Having evidence to prove you’re using the correct version is crucial – during a software audit, this distinction can mean the difference between owing hundreds of thousands of dollars and owing nothing.
Keep in mind that ‘non-production’ includes development, testing, and staging environments, but not UAT or pre-production environments that use live or masked production data.
How to buy an SQL Server 2019 license?
Microsoft sells SQL Server Licenses in a variety of channels and ways, which include:
- Retail (although you cannot buy an enterprise license through this means)
- Through a third-party:
- Software Vendor Royalty (ISVR);
- Services Provider License Agreement (SPLA).
- Volume licensing programs:
- Microsoft Products and Services Agreement (MPSA);
- Enterprise Agreement (EA);
- The Enterprise Software Advisors (ESAs);
- Open Value Subscription (OVS);
- The Server and Cloud Enrollment (SCE).
*Every edition may not be available in all channels or licensing programs in all regions. For more information about Microsoft Volume Licensing Programs, see the Volume Licensing Reference Guide.
SQL Server Licensing Cost Optimization Strategies
Organizations focus on SQL Server licensing costs, especially as infrastructure evolves. Pick the optimal licensing model, and you reduce spending in on-premises and cloud scenarios.
For large-scale operations, think of adjusting your approach to ensure you’re not over-licensed. Evaluate your server capacity and user counts regularly to optimize the number of cores and CALs needed.
Cost-Optimization Strategies:
- Consolidate workloads onto fewer servers to reduce core licensing.
- Explore reserved or spot instances in cloud environments to cut down on variable costs.
- Take advantage of Software Assurance for mobility and upgrade options.
Licensing Basics for On-Premises (Physical Servers)
SQL Server 2019 offers five editions: Developer and Express (free but limited), Web (available only through the SPLA program), Enterprise, and Standard.
The most probable choice you will make is between the Enterprise or Standard versions.
- Standard Edition offers two licensing options: Server + CAL (Client Access License) or Per Core.
- Enterprise Edition can only be licensed Per Core, unless you have a valid Enterprise Agreement or Software Assurance version upgrade.
CAL licensing requires a license for each user, while Per Core charges based on server CPU cores. The minimum core license is four per server, even for servers with fewer cores.
The same rules apply to virtual cores in virtual environments, and Per Core licensing allows unlimited user access. Under Per Core licensing, each server running SQL Server 2019 software or its components must be licensed for the appropriate number of cores. This means you cannot split SQL Server components across different machines under one license.
SQL Server components like SQL Server Agent and Reporting Services must be licensed appropriately. If they run on separate servers, each server must have the required licensing unless covered under Software Assurance with proper mobility rights.
Finally, it’s also worth noting that the SQL Server Enterprise and Standard Core customers can purchase Big Data Node cores for SQL Server 2019 Big Data Clusters.
Key Considerations for Choosing a Licensing Model
When you decide on the ideal licensing model for your infrastructure, consider the following:
- The number of cores – For servers with four cores or more, several licenses will be obligatory.
- The internal or external facing of the server – In a publicly accessible application or website, using CAL is impossible because you cannot find out the total number of users.
- The number of users who have access to the server – Just like in the case of a public/private server, you should opt for a core license if you expect more than 30 users.
- The possibility of a licensing break from a cloud provider – It’s a pretty common occasion when service providers pass on savings from a Service Provider Licensing Agreement, so try and ask about Bring Your Own License (BYOL) vs. buying a license as part of your cloud contract.
Licensing for Public Cloud
The cloud provider could be Amazon (AWS) or Microsoft (Azure). Here we assume that the license sits with the service provider, i.e., it pay-as-you-go approach.
For example, a retailer could purchase additional capacity before Christmas sales to make sure there are no outages, and then ramp it down right after the holidays.
Usually, such an approach allows both flexibility and cost-efficiency. There might be complex cases where this doesn’t work, e.g., when the peak happens unexpectedly (see a case study where we had addressed a similar issue differently).
Amazon Web Services (AWS)
Licenses Mobility
There’s a License included (so-called license mobility on AWS) option that puts the burden of license compliance on Amazon. Another benefit of AWS is AMI. This is when Amazon manages Windows images, i.e., there is a library of the disk images of the popular products that are already pre-packaged, optimized, and tested.
For example, there’s an image of Microsoft Server 2016 Enterprise. Another benefit of AMI is that starting from SQL Server 2017, it supports Linux AMI.
License Mobility Target Savings
Real-world examples show the impact of smart SQL Server licensing moves.
For instance, a company moved its SQL Server licenses to Amazon EC2 Dedicated Instances and Dedicated Hosts; they saved 15% on SQL licensing costs (+10% on Windows Server costs).
Pricing Options
There’s a calculator on the AWS website that compares bringing your own license vs. buying a service that already has a license enabled.
You can choose on-demand (per hour billing), reserved instances (1-year and 3-year contracts are available), and spot instances.
The challenge is how to choose the right approach to licensing, so it is both cost-efficient and technically sufficient to meet all the business requirements. Eventually, it boils down to the following rules:
- BYOL works for slowly varying infrastructure
- License included works better for varying infrastructure (less management overhead)
- Mix
Microsoft Azure Licensing
All standard licensing options are supported.
Enterprise Agreements
Scaling up/down is available for enterprise customers. The pay-per-use principle is used, i.e., an image is selected from the library of pre-built images, and then the company gets charged within the scope of the enterprise agreement. The BYOL option is also supported.
Software Assurance
Within this additional expensive Microsoft-provided support, it is possible to upgrade the software. No library is available, i.e., the company’s own images have to be used.
SQL Server Images
These are images that have the license installed, and that’s why they are more expensive than the plain VM.
Azure SQL (Management Instance and Database)
The service is a pay-as-you-use model that delivers PaaS, DBaaS, and SaaS from the cloud, charging clients only for live instances.
SPLA
After installation, the SQL Server is registered in the Microsoft Volume Licensing Program. This approach is designed for service providers that deliver SaaS to their clients.
Licensing of Virtualized Servers (On and Off-Premise Options)
With virtualization, SQL Server licensing becomes more complex. It depends on:
- The size of your environment
- The number of cloud servers running SQL Server
- The hardware specifications behind them
Your cloud provider may not share full details about the server specifications, so it’s a good idea to verify this information. If you’re using a private cloud, you have full visibility into the specifications, making licensing decisions clearer.
If server details are unavailable, you may be forced to license each virtual machine (VM) separately.
How Virtualization Affects SQL Server Licensing
- If only a few VMs are running SQL Server, licensing each VM separately is often the best approach.
- Treat each VM as if it were a physical server – the same licensing rules apply.
- If a VM has one or two vCPUs, the Per Core model still requires a minimum of four licenses.
- With the Server + CAL model, one license per VM is enough, but you must track the exact number of users.
Simply put, imagine your VM is an ordinary server in your data center. The choice between Per Core and Server + CAL licensing follows the same logic as with physical servers.
The Role of Software Assurance (SA) in Virtual Environments
Purchasing Software Assurance (SA) can provide flexibility in VM mobility and disaster recovery.
Key benefits include:
- Relocating virtual machines – SA allows you to move your VM to another physical host for High Availability or Backup purposes.
- vMotion and similar tools – With SA, you can migrate VMs between virtual data centers or host servers without licensing issues.
- Avoiding license restrictions – Without SA, your SQL Server license is tied to a single physical host for 90 days.
- Licensing flexibility – Moving SQL Server to another server is possible only if the destination server is already licensed, unless you have SA.
Without SA, your license is bound to the physical server, limiting your ability to move workloads freely.
SQL Server Licensing Mistakes That Cost Companies Thousands
SQL Server licensing is full of complex rules, and small mistakes can lead to huge unexpected costs. Here are some of the most common pitfalls – and how to avoid them.
Forgetting Passive Failover Licensing
If you’re using SQL Server in a high-availability setup, don’t assume the passive failover server is free. Unless you have Software Assurance (SA), a passive node requires a full license, even if it’s only there for disaster recovery.
Many businesses unknowingly violate this rule and face huge back payments during audits.
Misusing Developer Edition
SQL Server Developer Edition is free, but only for development and testing, not production. If your team is using it for internal reporting, automation, or any live business process, you’re at risk of compliance issues.
Companies caught doing this are often required to purchase full licenses retroactively, leading to significant unplanned expenses.
Failing to Track CALs (Client Access Licenses)
If you’re using the Server + CAL model, every user or device accessing SQL Server needs a CAL. Many businesses lose track of their growing user base and end up under-licensed – a common issue found during audits.
The cost of catching up on missing CALs can be substantial.
Overpaying for Enterprise Edition
SQL Server Enterprise Edition is powerful, but not always necessary. Many organizations over-license when the Standard Edition would have met their needs, resulting in significant overspending.
Finally, to avoid costly licensing mistakes:
- Track failover licensing requirements
- Use Developer Edition only for dev/test environments
- Regularly audit your CAL usage
- Choose the right edition based on workload needs
A few simple precautions can save your company thousands and keep you audit-proof.
Optimize Your SQL Server Licensing With Trusted Experts
Navigating SQL Server licensing can be tricky, but with the right approach, you can ensure compliance and optimize your costs. Whether you’re deciding between core-based licensing or Server + CAL models, understanding the differences can save your business from costly mistakes.
But don’t get overwhelmed! Red9’s team of experienced DBAs is here to help! With our SQL Server license guide and tailored advice, we’ll make sure that you make the best decisions for your SQL Server environment.
Hello Jose,
Well explained.
Have few queries
1. Cloud SKU – Its one time purchase, what does it mean ? What happen after one year and who will provide the support ?
2. Cloud SKU – Where we can use, On-premise only or Cloud also ?
3. OVL 3 Years with SA — Where we can use, On-premise only or Cloud also ?
4. OVL 3 Years with SA – What to be renewed after 3 years, Only SA renewal or whole license cost to be paid ?
If I purchase an Ent edition of SQL 2019, on how many Windows servers can I install the SQL Server?
Hello,
Hope you can shed some light and offer some direction on this question. I know the question may seem vague but I will try to give some information without overwhelming. I work for a company that has 170-180 SQL Server instances ranging from 2012 – 2022. 95% of the editions are Enterprise. We also have over 600 servers that connect to those instances and we also have outward facing applications. They would like to move to Developer Edition in all the non-production environments. I was asked to look into this. In the information I have received from MS it seems like a large task and one with consequences. My first question would be who usually takes care of the licensing, specially in a large organization. Would it he the an architect or a dba? Any help would be greatly appreciated.