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SQL Server 2022 licensing: economic impact of the changes

Are you feeling a little confused about the changes that Microsoft made to SQL Server licensing in 2022? You're not alone. I'm here to give you some answers and hopefully clear up some confusion.

And if you are unaware of the changes, trust me, you should be aware.

Licensing per virtual machine is now more expensive

First things first, let's talk about the main change that Microsoft has made. To license SQL Server per virtual machine, you now need active Software Assurance. If you're someone who has been buying all of your SQL licenses through an Enterprise Agreement (EA), you're probably in a pretty good spot. That is because EAs already come with compulsory Software Assurance, so nothing changes for you. 

But for those of you who – rightfully and compliantly – got clever and creative and used a "nitty gritty" approach to squeeze value out of every SQL Server license, it may be time to re-evaluate your licensing design. You could be forced to repurchase your licenses with Software Assurance if you want to upgrade to SQL Server 2022. And this could be a real budget-buster, especially for small businesses.

Small businesses and retail should be vigilant

Let me give you an example. Amongst our clients, we have retail companies that use minimal server deployments in every store. Rather often, there is a single host with a few virtual machines, one of which is a SQL Server Standard database server. Many such companies manage costs by using perpetual SQL Server Standard licences, which, until now, was an acceptable licensing approach.

Have you been using perpetual licenses for a similar configuration and purpose? In that case, you'll probably want to hold off upgrading to SQL Server 2022 and even buying new SQL Server 2022 licences. Otherwise, you will have to begin paying for Software Assurance or subscription licenses. Unfortunately, this means that your total cost of ownership for these instances will likely go up, maybe even double. 

How does it affect CSP customers?

Now, let's talk about another group of people who might be affected by these changes: customers who use Cloud Solution Provider (CSP) licenses. If you're a CSP customer, you might be wondering if there will be any impact on you. And the answer is – it depends.

CSP has two types of licenses: perpetual licenses and subscriptions. If you're currently using perpetual licenses in a configuration similar to the above example, you will have to switch to a subscription if you want to upgrade to SQL Server 2022. Perpetual CSP licences will not work in the new per-VM licensing model.

To upgrade or not to upgrade?

If cost is more important than new features, the reasonable decision would be to stay on SQL Server 2019 or below. The only question is, for how long will it still be supported? When support ends, many organisations will be forced to switch to a newer version and review their entire SQL Server licensing strategy. And you can guess what that means for their future budgets.

Buying new licences? Follow the new rules.

Another gotcha is that newly deployed instances may have to follow the new rules. Why? Because it's impossible to buy previous version licenses from resellers. The license on sale is always the latest version; hence the new rules will apply.

European clients can buy legacy SQL Server licenses from the second-hand market, but nobody outside the EU and the UK has that luxury. 

It does not matter which version you install. The license's version dictated the rules.

The new price of SQL Server

Let's not forget about pricing. Has the price of SQL increased? Yes, it has. SQL Server 2022 came with a 10% higher price tag. CSP customers should expect a pricing increase in the next subscription term. 

Your price has already increased if you are on a monthly CSP subscription. Those on an annual subscription will pay the premium at the renewal. If you're an EA customer, your prices are locked in for the entire contract duration, so you're in a better position.

Is there any good news?

Before you start pulling your hair out, I have some good news for you. Azure licensing for SQL Server has introduced a positive change. Before December, you could get passive SQL Server instances (like Disaster Recovery or High Availability) without having to buy licenses only if you brought your own licenses to Azure. 

But now, Microsoft has finally decided to align Azure pay-as-you-go terms with on-premise terms, which means you only have to license the active SQL Server that serves your employees, clients and partners with data. You don't have to pay extra for passive instances.

And another good news is that the number of SQL Server containers inside a virtual machine is now unlimited if the following conditions are met:

  • The virtual machine is licensed per SQL Server core,

  • The licenses are subscription licenses or licenses with active Software Assurance.

Have an expert by your side.

The recent SQL Server licensing changes are certainly not insignificant and will have a noticeable effect. With the right approach and strategy, you can mitigate the impact and make the most of the situation.

Ultimately, it's essential to understand how these changes will affect your organisation and budget and work with your licensing expert advisor to devise a plan that makes the most sense. 

Send us a message using the form below to discuss your SQL Server licensing budget. We don't sell licences, so you can be sure that our advice is impartial.