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Microsoft BYOL Options and Cost Savings

Let’s explore Bring Your Own License (BYOL) and how Microsoft’s BYOL options can save you money when migrating to the Cloud.

Key outtakes:

  • Use BYOL to transfer existing software licenses to cloud environments, avoiding the need for repurchase.

  • Achieve significant cost reductions in cloud migration, particularly for organisations with a large number of Microsoft licenses.

  • Reduced costs when running Windows Server and SQL Server on Azure through the Azure Hybrid Benefit.

  • Transfer subscription licenses to other cloud providers using the Flexible Virtualization Benefit.

  • Understand eligibility and limitations, as not all Microsoft licenses are eligible for BYOL.

  • Employ effective migration planning to leverage existing licenses in the cloud environment successfully.

  • Choose BYOL for predictable workloads and Pay-As-You-Go for scalable, elastic workloads.

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What is Bring Your Own License (BYOL)?

Bring Your Own License (BYOL) is a licensing model that allows you to transfer your existing software licenses to a new environment, such as a cloud provider, without repurchasing those licenses.

With BYOL, you can continue leveraging your existing investments in software licenses while taking advantage of the cloud's flexibility and scalability.

Microsoft BYOL often depends on having active Software Assurance or a subscription-based license.

Benefits of Microsoft BYOL

Cost Savings

The main advantage of BYOL is cost savings. By reusing your existing licenses, you can minimise or even eliminate the need for Pay-As-You-Go licences when migrating to the cloud. Using BYOL can result in significant cost reductions, especially if you have a large number of licenses and significant discounts on your Microsoft Enterprise Agreement.

License Flexibility

With BYOL, you can make licensing adjustments between on-premises and the cloud as often as permitted by Microsoft’s BYOL terms and conditions. This flexibility allows you to optimise your licensing strategy for evolving requirements or hybrid environments.

Microsoft BYOL Programs

Microsoft offers several BYOL programs to help you get the most out of your existing licenses.

Azure Hybrid Benefit

You can save money on Azure by using your existing Windows Server and SQL Server licenses with Software Assurance or by using a subscription model to run virtual machines.

Flexible Virtualisation Benefit

Introduced in October 2022, the Flexible Virtualisation Benefit allows you to reduce costs by transferring your existing subscription licenses or licenses with Software Assurance to any cloud provider except Azure, Amazon, Alibaba and Google.

License Mobility

This traditional program is the only way to transfer your eligible licenses with Software Assurance to Amazon (AWS), Alibaba and Google (GCP) cloud platforms. Unlike in the Flexible Virtualisation Benefit, not every product is eligible. For example, Windows Server isn’t.

What Microsoft licences benefit from BYOL

To use Microsoft BYOL programs, you generally need licenses with active Software Assurance or a subscription-based model.

  • License Mobility requires Software Assurance, and the list of products is limited. For example, Windows Server does not have License Mobility benefits.

  • Azure Hybrid Benefit requires Software Assurance or subscription licences and only works for Windows Server and SQL Server.

  • Flexible Virtualisation Benefit is the most flexible program as it includes all products and requires a subscription or Software Assurance.

Perpetual licences without Software Assurance offer limited BYOL rights. They may only be used on dedicated hardware, and even that was severely curtailed in October 2019 for Amazon, Google, Alibaba, and Azure.

How to Implement Microsoft BYOL

1. Evaluate Your Licenses

Determine which licenses are eligible for transfer. Use this table as a guide: 


Amazon, Google, Alibaba

Other providers and hyperscalers

Azure Hybrid Use Benefit (AHUB)


Flexible Virtualisation Benefit


License Mobility



Yes, if the provider is a Microsoft License Mobility Partner

Important: Microsoft requires active Software Assurance or a subscription-based license. SA can be obtained through most of the Microsoft Volume Licensing programs, including Enterprise Agreement but not CSP. CSP is the most popular option for subscription licences.

2. Assess Your Licensing Position

Check for surplus eligible licenses before and after your cloud migration to optimise your licensing strategy.

3. Plan Your Migration

Create a migration plan that includes timelines and licensing requirements at each stage and leverages Azure Hybrid Benefit (if migrating to Azure) to maximize cost savings.

4. Migrate Your Workloads

Transfer your workloads and immediately configure your cloud virtual machines for BYOL. This prevents double-paying for both BYOL and Pay-As-You-Go licenses.

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BYOL vs Pay-As-You-Go

Think of cloud licensing like buying vs. renting resources:

  • BYOL: Similar to buying a house. You have an upfront investment (your existing licenses) but gain long-term cost savings if your needs stay the same.

  • Pay-As-You-Go: This is like renting an apartment. You pay as you go, making it ideal for short-term needs or when your usage might go up or down a lot.

While BYOL focuses on leveraging existing licenses, Pay-As-You-Go is a consumption-based model where you pay for the resources you consume, which may fluctuate.

Pay-As-You-Go can offer more scalability and flexibility, but it may not be as cost-effective as BYOL for organisations with a significant volume of existing licenses.

When to Choose Which

  • BYOL is ideal For:

    • Predictable workloads that won’t change much in size.

    • If you already own the right licenses, this is almost always cheaper in the long term.

    • Tip: Combine with reservations/savings plans for even more savings.

  • Pay-As-You-Go is ideal For:

    • Workloads that need to grow or shrink quickly.

    • New projects where you’re not sure how many resources you’ll need.

Common Scenarios for Microsoft BYOL

Microsoft BYOL can streamline your cloud initiatives and significantly reduce costs. Here are common scenarios where BYOL offers potential advantages:

Migrating On-Premises Servers to the Cloud

Migrating on-premises workloads to the cloud? Microsoft BYOL can potentially lower your migration costs and simplify the process. Consider using BYOL if:

  • You have a significant number of eligible Microsoft licenses.

  • Your cloud needs fit the capabilities of Azure Hybrid Benefit or Flexible Virtualization Benefit.

Startup Expansion

BYOL can help control cloud costs while supporting deployment across multiple providers (Azure, AWS, Google Cloud, and more). BYOL could be ideal if:

  • You need to maximize your existing license investments.

  • Your workloads would benefit from a multi-cloud environment.

Hybrid Cloud Deployments

BYOL helps manage costs and simplify licensing by allowing you to reuse existing licenses across your on-premises and cloud environments, ensuring a smooth transition.

Multi-Cloud Strategy

BYOL lets you leverage your existing Microsoft licenses across providers like Azure, AWS, and Google Cloud, saving costs while maintaining strategic choice.

Working with Smaller Cloud and Hosting Providers

Microsoft BYOL isn’t limited to major cloud providers. Want the benefits of a local provider with personalized support? BYOL may let you transfer your existing licenses to smaller cloud and hosting providers, potentially reducing costs while maintaining the service you value.

Application Modernisation

Modernizing legacy applications with containers? BYOL can help you control costs by reusing your existing SQL Server licenses in your new Kubernetes environment, whether hosted on Azure, AWS, Google Cloud, Alibaba Cloud, or another provider.

These are just a few examples of how Microsoft BYOL can benefit your organisation in various scenarios, demonstrating its versatility across different cloud providers and situations.

Potential Drawbacks and Limitations of Microsoft BYOL

While Microsoft BYOL offers many benefits, it’s crucial to weigh these against potential challenges.

Limited License Eligibility

Not every Microsoft license qualifies for all BYOL programs. Carefully review your agreements and consult with a Microsoft licensing expert to ensure your licenses can be transferred to the cloud.

Potential Compliance Issues

BYOL can simplify license compliance, but you must stay updated on the latest requirements. Failure to maintain compliance could lead to costly penalties. Conduct regular audits and keep accurate records of license usage.

Complexity in License Management

BYOL might add complexity, especially with many licenses or a multi-cloud strategy. You may need additional tools or resources to track and manage your licenses across environments effectively.

Vendor Lock-in

While offering cost savings and flexibility, BYOL can increase reliance on Microsoft products. This may limit your future ability to switch vendors or adopt alternative solutions.

Migration Challenges

Migrating workloads to the cloud is inherently complex, and BYOL can add another layer. Proper planning, testing, and execution are essential for a successful and seamless migration.

Changing License Models

Microsoft and other software vendors frequently update their licensing models, potentially impacting your BYOL strategy. Stay informed about changes to adjust your approach proactively.

Example: In October 2019, a significant licensing terms update prohibited BYOL without Software Assurance on dedicated hosts within Amazon AWS, Google GCP, Alibaba Cloud, and even Microsoft Azure.

Video Guide for Service Providers

Frequently asked questions

What is Microsoft BYOL?

Microsoft BYOL (Bring Your Own License) lets you transfer eligible Microsoft licenses to the cloud, potentially reducing the need to purchase new Pay-As-You-Go licenses.

What are the benefits of Microsoft BYOL?

The primary benefit of BYOL is cost savings, especially if you have substantial discounts on your volume licensing program like Microsoft Enterprise Agreement.

What Microsoft programs support BYOL?

Azure Hybrid Benefit, Flexible Virtualisation Benefit and License Mobility are the three Microsoft programs that support BYOL.

What Microsoft licences can I BYOL?

BYOL generally requires licenses with active Software Assurance or a subscription model. The specific eligible licenses vary by BYOL program (Azure Hybrid Benefit, Flexible Virtualization Benefit, License Mobility) and cloud provider. Always consult with a Microsoft licensing expert to confirm eligibility.

Can I use Microsoft BYOL with other cloud providers?

Yes, Microsoft supports BYOL for other cloud providers, such as Amazon Web Services (AWS), Google Cloud Platform (GCP), and smaller providers ranging from your next-door data centre to hyperscalers like IBM (Kyndryl), Oracle Cloud, Rackspace, Digital Ocean and OVH.

How do I get started with Microsoft BYOL?

To get started with Microsoft BYOL, learn the terms and conditions of Azure Hybrid Benefit, Flexible Virtualisation Benefit and License Mobility, evaluate your current licenses, create a migration plan, and then migrate your workloads to the new environment while leveraging your existing licenses.

Can I transfer my licenses back to on-premises after using BYOL in the cloud?

Yes, you can typically transfer licenses back on-premises after using BYOL. However, there might be time limits or other conditions. Consult a Microsoft licensing expert for details.

How does Microsoft BYOL affect my Software Assurance benefits?

Microsoft BYOL doesn’t affect your Software Assurance benefits. You can continue to enjoy the benefits of Software Assurance, such as version upgrades while using BYOL in the cloud.

Does BYOL apply to Microsoft 365 and Office 365 licenses and applications?

Yes, BYOL does apply to Microsoft 365 and Office 365. However, there may be specific rules and benefits depending on your subscription.

Is Microsoft BYOL available for educational or nonprofit organisations?

Yes, Microsoft BYOL is available for educational and nonprofit organisations, provided they have eligible licenses. 

Do I need to purchase additional Client Access Licenses (CALs) for my users when using BYOL in the cloud?

Client Access Licenses (CALs) are typically required for users or devices accessing a Microsoft server product, but requirements vary depending on the cloud environment and chosen BYOL program. You may need to purchase additional CALs for your users if your current CALs don’t cover cloud-based access. Consult with a Microsoft licensing expert for specific guidance on CAL requirements in your situation.

How can I ensure my organisation remains compliant with Microsoft licensing when using BYOL in the cloud?

To ensure compliance with Microsoft licensing when using BYOL:

  • Stay updated on Microsoft licensing requirements.

  • Keep accurate records of your license usage.

  • Conduct regular audits.

  • Work closely with a Microsoft licensing consultant.

Talk to a Microsoft Cloud Expert

Want to reduce cloud migration costs with BYOL but unsure where to begin? Please tell us about your challenges using the form below, and one of the leading consultants will get back to you ASAP. We’ll assess your potential savings and ensure you maximise your license investments.

We do not sell licences or cloud services, so our advice to you is objective and unbiased.