Microsoft Per Core licensing rules

  • Release version: Zurich
  • Updated July 31, 2025
  • 5 minutes to read
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    Summary of Microsoft Per Core licensing rules

    The Microsoft Per Core licensing model applies primarily to server products like SQL Server and BizTalk Server, especially when counting users or devices is impractical, such as for internet-facing software. This model is commonly used for enterprise software on-premises, while cloud licensing follows Bring Your Own License (BYOL) rules. Licensing on-premises under this model can be done either by physical cores on the host server or by individual virtual machines (VMs), with specific Microsoft rules for each approach.

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    Licensing by Physical Cores

    This method, supported by the Software Asset Management application, licenses based on the total physical cores of the server (CPU count multiplied by core count). Key points include:

    • Applicable only to SQL Server Enterprise edition; SQL Server Standard edition must be licensed by virtual machines.
    • Minimum license requirement is 4 licenses per physical processor.
    • Virtualization rights depend on Software Assurance or subscription status:
      • Without Software Assurance: license count equals number of VMs running; each additional VM requires more licenses.
      • With Software Assurance: unlimited VMs can run if all physical cores are fully licensed.
    • Failover rights allow passive failover replicas for high availability and disaster recovery in separate or Azure environments when covered by active Software Assurance.
    • Licensing must consider cluster virtualization technologies (e.g., VMware vSphere, Microsoft Hyper-V), requiring licenses on any host to which VMs can migrate.
    • Licensing physical hosts based on potential VM migration can be more costly, and only Enterprise edition licenses support this method.

    Licensing by Individual Virtual Machines

    Introduced in 2022 and supported by Software Asset Management, this licensing option is mandatory for SQL Server Standard edition under Per Core licensing. Key aspects include:

    • Licenses are counted by the virtual cores allocated to each VM (CPU count × core count × CPU thread count).
    • Minimum of 4 licenses per virtual machine.
    • Requires Software Assurance or a subscription license.
    • License mobility is allowed within the same server farm without restriction, with a 90-day reassignment rule when moving licenses outside the farm or to the cloud.
    • Failover rights include one passive failover replica for high availability and disaster recovery scenarios, including Azure instances, when under active Software Assurance or subscription.

    Additional Notes

    • Software components of SQL Server licenses cannot be separated; each operating system environment running any licensed component requires its own license.
    • Other licensing models, such as Server CAL, are available but outside the scope of Per Core licensing.
    • For detailed allocation management and optimization, ServiceNow’s Software Asset Management application provides tools and automated recommendations to ensure cost-effective compliance.

    This information helps ServiceNow customers understand the distinctions and rules between licensing by physical cores and virtual machines, enabling informed decisions to optimize licensing costs and maintain compliance with Microsoft’s licensing requirements.

    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