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Cost is king when a lot of people are making decisions, and cloud migrations or hybrid cloud strategies by organisations are no different.  Cost can be the deciding factor for a lot of organisations. And this is why I want to highlight the powerful licensing advantage that exists inside Azure.  

Azure Hybrid Benefit.

The Azure Hybrid Benefit can help you reduce costs across Windows, Linux, SQL and even Azure Local workloads. 

In this blog post, we’ll explore what Azure Hybrid Benefit is, who it applies to, and how to make the most of it across your infrastructure estate.

What Is Azure Hybrid Benefit?

Azure Hybrid Benefit (AHB) allows you to take or reuse your existing on-premises licences when moving workloads to Azure. Now it’s not quite that simple as your licensees have to have Software Assurance attached to them (or qualifying subscriptions).

Instead of paying for both on-premises and cloud licences, AHB gives you a way to leverage those existing investments you’ve made, reducing the cost of running virtual machines (VMs), SQL databases, and other services.

It’s designed to support both cloud-first and hybrid cloud strategies by easing the financial transition from traditional infrastructure models to Azure-based ones.

Azure Hybrid Benefit for Windows Server

Windows Server for a lot of IT departments has been the mainstay operating system deployed for workloads. And while a lot of customers are modernising and looking at alternative solutions to virtual machines (VMs) there are still a lot looking to modern their infrastructure and continue to run Windows Server within the club. 

If you have bought Windows Server licenses with Software Assurance or eligible server subscriptions you can use those  licences to run Windows Server virtual machines in Azure and pay only for the base compute, significantly lowering your cloud bill.

Each eligible Windows Server licence can be used to cover either one or two of your virtual machines, depending on your licensing model. This means you can run VMs in Azure at a reduced cost. 

You get:

• Up to 40% savings compared to pay-as-you-go VM pricing.
• Rights to run two VMs for every 16-core licence you own (or one VM per 8-core licence).

Azure Hybrid Benefit for Linux

A lot of people associate Azure Hybrid Benefit (AHB) with Windows and SQL server, however it’s also relevant for Linux workloads. 

If you’re running Red Hat Enterprise Linux (RHEL) or SUSE Linux Enterprise Server (SLES) on-premises and have active subscriptions, Azure lets you bring those licences to the cloud. This means you can continue to use the Linux distributions you are familiar with, trust and avoid paying extra fees. 

You can use this benefit for a range of Azure services including virtual machines and Azure Kubernetes Services (AKS). 

Just like with SQL Server, there’s a cost-saving angle here too — by reusing existing licences, you avoid double billing and keep cloud spend in check. This is useful for organisations who have already invested a lot of money and training time into the Linux ecosystem and want to continue to use it within the cloud.

Azure Hybrid Benefit for SQL

When migrating SQL Server workloads to Azure, cost is often a major consideration. With Azure Hybrid Benefit (AHB) you can bring your existing SQL Server licences, as long as they’re covered by Software Assurance or a qualifying subscription.

Instead of paying for the full SQL service in Azure, you only cover the base compute costs. This benefit applies whether you’re running SQL Server in Azure Virtual Machines, using Azure SQL Database, SQL Managed Instance, or even integrating SQL with Data Factory’s SSIS runtime. Essentially, you get flexibility without starting from scratch on licensing.

The number of virtual CPUs (vCPUs) your licences cover in Azure depends on the SQL edition. Enterprise Edition licences are particularly valuable, often allowing up to four vCPUs per on-prem core in certain service tiers, while Standard Edition maps closer to a one-to-one ratio. This can make a real difference to both performance planning and your budget.

You can also apply AHB to Azure Dedicated Hosts. If you have SQL Enterprise licences, you can assign them at the host level and licence only half the available vCPUs — a clever way to get more out of highly virtualized environments.

And if you’re worried about overlap during migration, Microsoft offers a 180-day grace period where you can use your licence on-prem and in Azure at the same time. That’s especially useful for phased transitions or testing new environments.

All of this adds up to serious savings — potentially up to 55% when combined with reserved instances and other Azure cost optimisation features — while helping you move to the cloud at your own pace and on your own terms.

Azure Hybrid Benefit for Azure Local

As businesses look to use Azure closer to where they operate services like Azure Local are becoming more important. But running services locally doesn’t mean you miss out on the benefits available in the global Azure cloud.

Azure Hybrid Benefit can be applied to Azure Local deployments too. In fact applying the benefit here can waive the Azure Local host service fee and Window Server guest subscription on your system. 

If you’re curious about how Azure Local licensing works more broadly — including how pricing differs and what to watch out for — I’ve broken it down in this blog post.

Summary: Why Azure Hybrid Benefit Matters

Azure Hybrid Benefit is more than a cost-saving tool — it’s a bridge between the traditional 

and cloud-native worlds. Whether you’re running Windows, Linux, SQL Server, or need to operate Azure services on local infrastructure, it enables a more flexible and financially sustainable cloud journey.

To help you monitor and maximise the impact of this benefit across your estate, I’ve created a step-by-step guide to the Azure Hybrid Benefit dashboard. It walks you through how to access, interpret, and act on the data to ensure you’re making the most of your licensing advantage.