Change the license model for a SQL virtual machine in Azure

Applies to: SQL Server on Azure VM

This article describes how to change the license model for a SQL Server virtual machine (VM) in Azure by using the SQL IaaS Agent Extension.


There are three license models for an Azure VM that's hosting SQL Server: pay-as-you-go, Azure Hybrid Benefit (AHB), and High Availability/Disaster Recovery(HA/DR). You can modify the license model of your SQL Server VM by using the Azure portal, the Azure CLI, or PowerShell.

  • The pay-as-you-go model means that the per-second cost of running the Azure VM includes the cost of the SQL Server license.
  • Azure Hybrid Benefit allows you to use your own SQL Server license with a VM that's running SQL Server.
  • The HA/DR license type is used for the free HA/DR replica in Azure.

Azure Hybrid Benefit allows the use of SQL Server licenses with Software Assurance ("Qualified License") on Azure virtual machines. With Azure Hybrid Benefit, customers aren't charged for the use of a SQL Server license on a VM. But they must still pay for the cost of the underlying cloud compute (that is, the base rate), storage, and backups. They must also pay for I/O associated with their use of the services (as applicable).

According to the Microsoft Product Terms: "Customers must indicate that they are using Azure SQL Database (Managed Instance, Elastic Pool, and Single Database), Azure Data Factory, SQL Server Integration Services, or SQL Server Virtual Machines under Azure Hybrid Benefit for SQL Server when configuring workloads on Azure."

To indicate the use of Azure Hybrid Benefit for SQL Server on Azure VM and be compliant, you have three options:

  • Provision a virtual machine by using a bring-your-own-license SQL Server image from Azure Marketplace. This option is available only for customers who have an Enterprise Agreement.
  • Provision a virtual machine by using a pay-as-you-go SQL Server image from Azure Marketplace and activate the Azure Hybrid Benefit.
  • Self-install SQL Server on Azure VM, manually register with the SQL IaaS Agent Extension, and activate Azure Hybrid Benefit.

The license type of SQL Server can be configured when the VM is provisioned, or anytime afterward. Switching between license models incurs no downtime, does not restart the VM or the SQL Server service, doesn't add any additional costs, and is effective immediately. In fact, activating Azure Hybrid Benefit reduces cost.


Changing the licensing model of your SQL Server VM has the following requirements:

Change license model

You can modify the license model directly from the portal:

  1. Open the Azure portal and open the SQL virtual machines resource for your SQL Server VM.
  2. Select Configure under Settings.
  3. Select the Azure Hybrid Benefit option, and select the check box to confirm that you have a SQL Server license with Software Assurance.
  4. Select Apply at the bottom of the Configure page.

Azure Hybrid Benefit in the portal


  • Azure Cloud Solution Provider (CSP) customers can use the Azure Hybrid Benefit by first deploying a pay-as-you-go VM and then converting it to bring-your-own-license, if they have active Software Assurance.
  • If you drop your SQL virtual machine resource, you will go back to the hard-coded license setting of the image.
  • The ability to change the license model is a feature of the SQL IaaS Agent Extension. Deploying an Azure Marketplace image through the Azure portal automatically registers a SQL Server VM with the extension. But customers who are self-installing SQL Server will need to manually register their SQL Server VM.
  • Adding a SQL Server VM to an availability set requires re-creating the VM. As such, any VMs added to an availability set will go back to the default pay-as-you-go license type. Azure Hybrid Benefit will need to be enabled again.


Changing the license model is:

  • Only supported for the Standard and Enterprise editions of SQL Server. License changes for Express, Web, and Developer are not supported.
  • Only supported for virtual machines deployed through the Azure Resource Manager model. Virtual machines deployed through the classic model are not supported.
  • Available only for the public or Azure Government clouds. Currently unavailable for the Azure China region.

Additionally, changing the license model to Azure Hybrid Benefit requires Software Assurance.


Only SQL Server core-based licensing with Software Assurance or subscription licenses are eligible for Azure Hybrid Benefit. If you are using Server + CAL licensing for SQL Server and you have Software Assurance, you can use bring-your-own-license to an Azure SQL Server virtual machine image to leverage license mobility for these servers, but you cannot leverage the other features of Azure Hybrid Benefit.

Known errors

Review the commonly known errors and their resolutions.

The Resource 'Microsoft.SqlVirtualMachine/SqlVirtualMachines/<resource-group>' under resource group '<resource-group>' was not found.

This error occurs when you try to change the license model on a SQL Server VM that has not been registered with the SQL Server IaaS Agent Extension:

The Resource 'Microsoft.SqlVirtualMachine/SqlVirtualMachines/\<resource-group>' under resource group '\<resource-group>' was not found. The property 'sqlServerLicenseType' cannot be found on this object. Verify that the property exists and can be set.

You'll need to register your subscription with the resource provider, and then register your SQL Server VM with the SQL IaaS Agent Extension.

Next steps

For more information, see the following articles: