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SQL Server licensing in the cloud: Azure Hybrid Benefit, license-included and BYOL on AWS

How SQL Server licences carry over to Azure and AWS. Covers Azure Hybrid Benefit and the 180-day dual-use right, pay-as-you-go versus reserved capacity, AWS license-included versus BYOL with License Mobility or Dedicated Hosts, and edition and core optimisation.

Deepak Bhardwaj3 min read

Applies toSQL Server Enterprise and Standard with or without Software Assurance; Azure SQL, Azure VMs, Amazon RDS and EC2

Note

Licensing rules change and depend on your agreements. Use this post to prepare the right questions, and confirm the details with your Microsoft licensing partner or the current Product Terms.

1. Azure

Azure Hybrid Benefit (AHB) lets SQL Server core licences with Software Assurance (or qualifying subscription licences) pay only the base compute rate:

Target Conversion (vCore model)
Azure SQL DB / MI, General Purpose 1 Enterprise core = 4 vCores; 1 Standard core = 1 vCore
Azure SQL DB / MI, Business Critical 1 Enterprise core = 1 vCore
SQL Server on Azure VM Core for core, same edition
  • 180-day dual use: during migration you can run licences both on-premises and in Azure.
  • Turn AHB on per resource (licenseType: BasePrice for Azure SQL, AHUB for SQL VMs). Track usage centrally with the centrally managed AHB feature (scope-level licence assignment).
  • Free passive DR replica rights: one free passive secondary for HA and one for DR in Azure, with SA or AHB.
  • Reserved capacity (1 or 3 years) cuts compute cost further; it's separate from AHB and stacks with it.

2. AWS

Model Where Notes
License Included RDS, EC2 (SQL AMIs) Pay per hour; simplest; no SA needed
BYOL with License Mobility (needs SA) EC2 shared tenancy Submit the License Mobility verification form to Microsoft
BYOL on Dedicated Hosts EC2 Dedicated Hosts For licences without SA; Microsoft's 2019 rules limit this to licences bought before 1 Oct 2019 (check your case)
RDS Custom BYOM / license included options Check current options per edition

Free passive failover rights with SA also apply on AWS under License Mobility (check your terms).

3. Reduce the licence count during migration

  • Right-size first: many on-premises servers are licensed for cores they don't use (see the sizing post).
  • Edition review: Standard edition covers up to 24 cores and 128 GB buffer pool, plus Basic AGs. Many apps don't need Enterprise.
  • AWS Optimize CPUs: on EC2 you can disable hyperthreading or reduce vCPUs on memory-heavy instance types, so you license fewer cores while keeping the memory.
  • Consolidate small databases onto fewer instances, or into elastic pools on Azure.
  • Retire unused databases: no licence needed at all.
  • Dev/test: use Developer edition (free) or dev/test pricing, never production licences.

4. Extended Security Updates (ESU)

SQL Server 2012 and 2014 are out of support. On Azure (VMs and Arc-enabled servers via pay-as-you-go ESU) security updates are available under Microsoft's ESU terms; on other clouds and on-premises you buy ESU. Use migration as the moment to upgrade the version instead.

5. A worked comparison

For each database, compare 3-year cost of: (a) AHB + reserved on Azure, (b) license included on AWS, (c) BYOL on AWS, (d) Babelfish (no SQL licence, but migration effort). Include support, HA replicas and backup storage. The cheapest option often changes when HA is included.

Tip

Keep a licence register that maps every cloud SQL resource to the licence it uses (AHB, BYOL or included). Auditors ask for exactly this, and it's painful to rebuild later.