Guide to SQL Server Models and Options

Choosing the right licensing model for Microsoft SQL Server is one of the most important decisions when planning a deployment. Proper licensing ensures cost efficiency, future scalability, and legal compliance in software usage. On the other hand, choosing incorrectly can result in unnecessary expenses or violations of licensing policies.

Microsoft SQL Server mainly offers two licensing models that organizations should consider depending on their needs:

Core-based License
Server License + CAL (Client Access License)

Below, we will explore each model in detail, including their features, advantages, limitations, and recommended scenarios. We will also review some general rules for choosing between them, compare how they apply to different editions (Standard vs. Enterprise), highlight common mistakes to avoid, and provide practical examples of how to calculate licenses in different situations.

Core-based Licensing

In the core-based licensing model, the license is tied to the server’s processing power. This means that all physical cores of the machine running SQL Server must be licensed. Microsoft sets a minimum of 4 cores per server (or per physical processor), even if the processor has fewer than 4 available cores. In practice, SQL Server licenses under this scheme are sold in packs that cover 2 cores each, so they are always purchased in pairs.

The major advantage of core-based licensing is that no CALs (Client Access Licenses) are required. This allows an unlimited number of users or devices to connect to the SQL Server, whether from within the organization or externally (for example, public-facing web applications), without the need to license each one individually. For this reason, the core model is ideal for scenarios where:

The number of users or devices accessing the database is high, difficult to determine accurately, or constantly growing.
Virtualized or cloud environments with multiple SQL Server instances are used, where managing CALs for each instance or user would be complex or costly.
Maximum flexibility and scalability in access is required, such as in large-scale enterprise applications or online customer-facing services.

When licensing by core, the main concern is properly covering the hardware capacity. All physical cores dedicated to SQL Server must be licensed. If a server has, for example, 8 physical cores in total, you would need to purchase licenses for those 8 cores (which equals 4 packs of 2 cores each). Even if the actual workload is low, Microsoft requires the entire capacity of the server or assigned virtual machine to be licensed.

This licensing model is typically recommended for medium and large organizations, especially those that:

Have hundreds or thousands of employees and devices accessing data.
Offer SQL Server–based services to external users (clients, the general public) where obtaining a CAL for each person would not be feasible.
Have dynamic or elastic infrastructures (e.g., in the cloud) where the number of instances or users can vary significantly.

In short, core-based licensing provides simplicity in access control (since you don’t need to track users or devices) and offers unlimited scalability in client connections. The trade-off is that it can be more expensive in small environments, as you must purchase a minimum number of cores even if the database has only a few users. Therefore, it is crucial to evaluate whether the investment is justified by the current and future number of users before choosing this model.

Server + CAL Licensing

The Server + CAL (Client Access License) model is based on two components:

Server License: A license is purchased for the installation of the SQL Server software on a server (physical or virtual). This license grants the right to run the software on that server.
Access Licenses (CALs): For each user or device that will connect to SQL Server, a CAL is required. In other words, every person using the database or every device from which it is accessed must be covered by an access license.

In this scheme, you first license the server itself, and then acquire the necessary CALs according to the number of client users or devices. If 10 employees are going to use the database, for example, you would purchase 1 SQL Server license (for the server) and 10 corresponding CALs (one per employee, or one per device, depending on the chosen CAL type).

What exactly is a CAL?

A CAL is not software that you install, but rather a legal right to access SQL Server services. It does not grant installation rights, but rather allows a user or client device to connect to the licensed SQL Server instance. There are two types of CALs available:

User CAL: licenses a specific person (named user). That user can connect from any device, but the license is tied to them individually.
Device CAL: licenses a device (e.g., a PC, laptop, or specific terminal). Any user can use that licensed device to access SQL Server.

Choosing Between User CAL or Device CAL

The choice between a User CAL or a Device CAL will depend on how the organization uses SQL Server. For example:

If employees typically access the server from multiple devices (e.g., they have an office PC, a laptop, and a mobile phone), it is better to assign a User CAL to each employee. This way, each user can work across several devices under the same license.
If, on the other hand, there are shared workstations (for instance, several shift workers use the same computer), it may be more efficient to purchase Device CALs for each machine, so that anyone using that workstation is covered.

The Server + CAL model is usually the most cost-effective option for small or medium-sized organizations with a relatively low, stable, or predictable number of users. Some characteristics of this model include:

Low upfront cost and pay-as-you-grow: The server license (in the Standard edition) has an affordable fixed cost, and CALs are purchased only for the actual number of users or devices that connect. This avoids paying for unused capacity; for example, if only 5 people will use the database, you purchase 5 CALs (in addition to the server license) and nothing more.
Suitable for controlled environments: It is ideal in scenarios where it is clear who (or which devices) will connect, such as internal applications for a small business or departmental systems with a limited number of users.

Important Considerations

That said, there are some important considerations to keep in mind:

User growth: If the company grows and many new users are added, additional CALs will need to be purchased for each one. A system that has 20 users today but could reach 100 in a year or two might have been more cost-effective under the core licensing model from the start. Therefore, in cases of rapid growth projections, the core option should be evaluated.
Indirect users: Any user or device that accesses SQL Server directly or indirectly requires a CAL under this model. This includes “multiplexing” scenarios (for example, when multiple users connect to the database through an intermediate application or service account). Licensing only the application is not enough; each end user generating requests to the server must be covered with their own CAL.

In summary, Server + CAL is a cost-effective and manageable approach when the number of users/devices is limited and known. You pay only for the actual client access needed. However, if the environment grows significantly or users are very numerous (or mostly external to the organization), this model becomes less viable economically and administratively, making the core licensing model preferable in those cases.

SQL Server Standard

The SQL Server Standard edition is designed for general business needs. It offers most of the database functionalities required by corporate applications, including reporting and analytics capabilities. In terms of licensing, SQL Server Standard provides flexibility since it can be licensed either by Core or by the Server + CAL model, at the customer’s choice.

This means that a small organization may choose to buy a Standard server license and a set of CALs if that is more convenient, while a larger company or one with growth expectations may prefer core-based licenses for Standard to avoid worrying about user counts. Both approaches are valid with SQL Server Standard, allowing spending to be adapted to actual use.

It is important to note that SQL Server Standard has some technical limits that define its use in mid-scale scenarios. For example, it supports a maximum of 24 CPU cores per instance (if the physical server has more, the Standard instance will still only be able to use 24). These limitations are not related to licensing itself but rather to product capacity. However, they do imply that if your workload exceeds what Standard can handle, you will likely need to consider the Enterprise edition.

In summary, SQL Server Standard is often the default choice for many environments due to its balance of features and cost. Since it can be licensed both by CAL and by Core, it is cost-effective in small setups (where CALs are few) as well as in larger deployments (where core licensing is preferable). That said, if performance, scalability, or special feature requirements exceed what Standard offers — for example, if you need more than 24 processing cores or advanced high-availability features — then it is time to evaluate the Enterprise edition.

SQL Server Enterprise

The SQL Server Enterprise edition is the top-tier version, designed for mission-critical applications, heavy workloads, and large-scale environments. It includes all the features of Standard and adds a range of advanced capabilities in security, performance, and availability. For example, Enterprise includes advanced security tools (data encryption, detailed auditing) and high availability features (online restore, etc.), as well as removing the resource caps present in Standard. Enterprise imposes no limit on the number of CPU cores the instance can use, and it supports much more memory and larger database sizes than Standard.

In terms of licensing, SQL Server Enterprise is only available under the Core-based model. There is no Server + CAL option for this edition. This means that any Enterprise deployment requires licensing all cores of the server(s) where it runs. While this may seem like a disadvantage at first, it aligns with Enterprise’s intended use: it is typically deployed in environments where the number of users is very high or where powerful hardware is used, making CAL-based licensing impractical or even impossible (think of customer-facing applications, for example).

An important advantage of licensing Enterprise by core is that, if you license all physical cores of a host server, you gain the right to run unlimited virtual instances of SQL Server Enterprise on that host. In other words, with Enterprise, once all the hardware is licensed, you can create any number of virtual machines running SQL Server on that server without buying additional licenses for each VM. This is especially valuable in virtualized datacenters or private cloud environments, where a single licensing investment can support dozens of isolated instances.

Because of its higher cost, Enterprise is targeted at organizations where the investment is justified by the criticality of the applications or the volume of data. Large enterprises, banks, global corporations, or government institutions are typical users of SQL Server Enterprise, as they require both the superior technical capabilities and the licensing freedom to reliably serve thousands of users.

SQL Server 2022: Licensing Without Surprises

The latest version, SQL Server 2022, introduced no changes in the licensing models. The Standard and Enterprise editions follow the same rules already described: Standard can be licensed either by Core or by Server + CAL, while Enterprise is Core-only. In other words, everything explained applies equally to SQL Server 2022.

Common Licensing Mistakes to Avoid

Even with clear rules, in practice it’s easy to make mistakes when licensing SQL Server. These are some of the most common errors we’ve seen over the years that you should avoid:

Thinking that 2-core license packs are a different or limited edition of SQL Server: The “SQL Server 2-Core” presentation is sold, and some mistakenly assume it’s a separate version of the software with fewer features. In reality, it is not a different product; it’s simply how core licensing is sold (each pack covers 2 cores). The SQL Server you install is the same (Standard or Enterprise) with all its features intact.
Not licensing all physical cores of the server: Under the core model, all physical cores must be licensed (with a minimum of 4 per physical processor, even if it has fewer). If not all cores are covered, the server is under-licensed and non-compliant.
Choosing Server + CAL just because it looks cheaper at first: Initially, buying a Standard server license and a few CALs may cost less than core licensing. But if the number of users increases, it quickly stops being the economical option. Often, once you exceed a few dozen users, core licensing would have been cheaper (and simpler) from the start.
Not acquiring enough CALs for all users: A common mistake is assuming that infrequent users (or service accounts) don’t need CALs. This is incorrect: any access, no matter how occasional, requires a CAL. Skipping licenses for some users leaves the company non-compliant and vulnerable to penalties in an audit.
Ignoring cloud licensing rules: Migrating SQL Server to cloud VMs (Azure, AWS, etc.) does not eliminate the obligation to license it properly. If you bring your own licenses (BYOL), you must license all physical cores assigned to those instances, just as you would on-premises. Only in fully managed database services (where the provider includes the license in the cost) can you skip purchasing separate licenses.

Tip

Always verify the actual number of physical cores assigned to your server (or the equivalent vCPUs mapped to physical cores) and make sure you have licenses for all of them. Don’t rely only on logical threads shown by the operating system; check the hardware or host configuration to know exactly how many physical cores you’re using.

Practical Examples of Core Licensing

To illustrate how to apply the rules, here are three concrete scenarios:

Example 1: A server with 2 physical processors of 4 cores each (8 total cores). All cores must be licensed, which equals 4 SQL Server licenses (each covering 2 cores).
Example 2: One physical server with 3 virtual machines; each VM has 2 vCPUs assigned. For licensing purposes, each VM requires at least 4 cores. Total: 3 VMs × 4 cores = 12 cores to license, equal to 6 two-core licenses.
Example 3: A server with 4 physical CPUs of 5 cores each (20 total cores). All 20 cores must be licensed, which requires 10 two-core licenses.

Summary of Key Points

To wrap up, here are the most important aspects to remember about SQL Server licensing models:

SQL Server Standard is suitable for most general business needs and offers licensing flexibility: it can be purchased by Core or Server + CAL, depending on convenience.
The Standard edition has a technical limit of 24 cores per instance. If more CPU capacity is required, SQL Server Enterprise will likely be necessary.
SQL Server Enterprise provides advanced enterprise-level features and is licensed exclusively by Core (there is no CAL option for Enterprise).
The Server + CAL model is best suited for small organizations with a stable and manageable number of users. It minimizes costs by paying only for the specific users or devices accessing the server.
In the Server + CAL model, every user or client device requires a CAL. It doesn’t matter if usage is heavy or occasional: any access to SQL Server must be covered by an access license.
Core-based licensing provides maximum scalability and flexibility, as it doesn’t limit the number of users or require access licenses. It is the right choice for environments with many clients, unpredictable growth, or public-facing services.
Under the Core model, you must license all physical cores dedicated to SQL Server (with a minimum of 4 per server). Even if the hardware has fewer than 4 cores, you still need to purchase 4 licenses to meet the minimum requirement.

In Conclusion...

Understanding and choosing the right SQL Server licensing model is essential to optimize your software investment and avoid compliance issues. Before making a decision, carefully analyze your current user base size, potential growth, and the criticality of your applications. If in doubt, it’s worth consulting with software licensing specialists or your Microsoft provider for guidance. This ensures your organization stays compliant while obtaining the most cost-effective solution for your environment.