Microsoft Per Core licensing rules

  • Release version: Australia
  • Updated March 12, 2026
  • 5 minutes to read
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    Summary of Microsoft Per Core Licensing Rules

    The Per Core licensing model is applicable to various Microsoft server products, including SQL Server and BizTalk Server. This model is particularly beneficial for enterprise software where counting users or devices may be challenging, especially for internet-facing applications. Separate licensing rules apply for on-premise and cloud installations, with cloud environments following the Bring Your Own License (BYOL) model.

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    Key Features

    • Licensing Options: For on-premise installations, you can license by physical cores or by individual virtual machines. Note that licensing cannot be allocated to clusters.
    • Physical Cores: Requires licensing equal to the number of physical cores on the server. Minimum four licenses per physical processor are needed, and virtualization rights apply differently based on software assurance status.
    • Virtual Machines: The Per Core model allows licensing by virtual machines, where the number of licenses equals the number of virtual cores. For SQL Server Standard Edition, this is the only available option.
    • Software Assurance: This is necessary for the virtual machine licensing and allows license mobility within server farms. The 90-day rule applies for reassignment to other server farms or cloud providers.

    Key Outcomes

    Understanding these licensing rules helps customers effectively manage their software licenses and optimize costs. Customers can utilize the Software Asset Management application to automatically determine the most economical licensing approach. By adhering to Microsoft’s licensing guidelines, organizations can ensure compliance and maximize their software investment.

    The Per Core licensing model is used by many Microsoft server products, such as SQL Server and BizTalk Server. It's useful when counting users or devices connecting to the software is difficult, often for internet-facing software.

    Therefore, the Per Core licensing model is commonly used for enterprise software like Microsoft SQL Server.

    The licensing rules for on-premise installations of these products and the cloud installations are separate. The cloud licensing rules follow Bring Your Own License (BYOL). For more information, see Licensing rules for BYOL and BYOS.

    To license the on-premise installation of these products using the Per Core licensing model, consider the following two options.
    • Licensing by physical cores, also known as licensing by physical hosts
    • Licensing by individual virtual machines
    Note:
    You can either allocate to individual hosts or individual virtual machines, not to cluster.

    You can either allocate manually, or the Software Asset Management application can automatically select the most cost-effective licensing option based on optimization criteria. The number of core licenses required depends on whether you’re licensing the physical server based on its physical cores or licensing individual virtual machines.

    For more information about how to perform allocation, see Allocation management and how the Software Asset Management application performs automated optimization, see View realized and potential cost-based licensing optimizations for Microsoft.
    Note:
    Both options, whether licensing by physical cores or licensing by individual virtual machines, come with their own set of Microsoft rules that must be followed. For more information, see SQL Server.
    Other licensing models, such as the Server CAL licensing model, are also available for these products.

    Licensing by physical cores

    The Software Asset Management application supports licensing by physical core rules, introduced by Microsoft in 2016.
    Table 1. Licensing by physical core rules
    Rule SQL Server Standard SQL Server Enterprise
    Applicability Not allowed
    Note:
    Only allowed to be licensed through individual virtual machines.
    		 The number of licenses required equals the number of physical cores on the licensed server.

    The physical cores on servers are equal to CPU count * Core count.
    Min licenses required Not allowed
    Note:
    Only allowed to be licensed through individual virtual machines.
    		 4 licenses per physical processor
    Virtualization rights Not allowed
    Note:
    Only allowed to be licensed through individual virtual machines.
    • Without software assurance or subscription licenses, run virtual machines equal to the number of core licenses assigned to the physical server.
      Note:
      Each additional virtual machine would require an additional core license.
    • With active software assurance or subscription license, run an unlimited number of virtual machines if all physical cores on the server are fully licensed.
    Failover rights Not allowed
    Note:
    Only allowed to be licensed through individual virtual machines.
    		 For each server operating system environment (OSE) licensed with SQL Server subscription licenses covered by active Software Assurance, you can use the following passive replicas ahead of a failover event:
    • One passive failover replica for High Availability in a separate OSE
    • One passive failover replica for Disaster Recovery in a separate OSE
    • One passive failover replica for Disaster Recovery in a single virtual machine or instance on Azure
    Components services licensing Not allowed
    Note:
    Only allowed to be licensed through individual virtual machines.
    		 The software components of a single SQL Server license can't be separated. An OSE running any of the licensed components of SQL Server requires its own license. For more information about SQL Server components, see Editions and supported features of SQL Server 2022.
    When deploying Microsoft products like Windows Server or System Center (using the Per Core license model) on cluster virtualization technologies such as VMware vSphere, Microsoft Hyper-V, or Nutanix Acropolis HyperVisor (AHV), the number of licenses required for the physical host depends on the virtual machines that could potentially migrate to it within the cluster.

    Technologies like VMware vMotion, which enables live migration of virtual machines across all hosts, and host affinity, which helps lock virtual machines to hosts within a cluster, manage the movement of virtual machines across hosts. To understand more about cluster virtualization technology and its support on the Software Asset Management application, see Understanding your cluster infrastructure.

    According to Microsoft licensing rules, if a virtual machine with a Microsoft product like Windows Server installed is hosted on one server but can potentially migrate to another, the destination server must be licensed as if the virtual machine is already running on it.

    Tip:
    As only the Enterprise edition license can be used for this option and you must license the physical host based on the number of virtual machines that can run on it, this licensing option can be more costly.

    Licensing by virtual machines

    The Software Asset Management application supports licensing by individual virtual machines rules, introduced by Microsoft in 2022.

    Note:
    This licensing option is the only option available for SQL Server Standard Edition when using the Per Core licensing model.
    Table 2. Licensing by individual virtual machines rules
    Rule SQL Server Standard and SQL Server Enterprise
    Required number of licenses Equals the number of virtual cores on the virtual machine

    The virtual cores on servers are equal to CPU count * Core count * CPU thread count.
    Min licenses required 4 licenses per virtual machine
    Software assurance or subscription license
    Note:
    The option to license by virtual machine is only available with software assurance or a subscription license.
    		 Required
    License mobility within Server farms (Software assurance benefit)
    Note:
    Licenses can be reassigned within the same server farm as often as needed. The 90-day rule applies only when moving to another server farm or cloud provider.
    		 Supported
    Component services licensing The software components of a single SQL Server license can't be separated. An OSE running any of the licensed components of SQL Server requires its own license. For more information about SQL Server components, see Editions and supported features of SQL Server 2022.
    Failover rights For each server OSE licensed with SQL Server subscription licenses or licenses covered by active software assurance, use the following passive replicas ahead of a failover event:
    • One passive failover replica for High Availability in a separate OSE
    • One passive failover replica for Disaster Recovery in a separate OSE
    • One passive failover replica for Disaster Recovery in a single virtual machine or instance on Azure