Maximising cost savings with Azure Hybrid Benefit 

So, you’ve spent years building a collection of Microsoft licenses.  

Windows Server licences for your data centre, SQL Server for your databases. Now you’re eyeing a move to the cloud, but there’s a nagging worry: are you about to pay twice for the same software?  

Good news! With Azure Hybrid Benefit, you won’t. With this, most organisations see savings of 40-50% on their Azure costs. And if you play your cards right by combining multiple benefits like Reserved Instances, you could push those savings up to 80-85% in optimal scenarios.  

Let’s explore how Azure Hybrid Benefit works, why it’s such a game-changer for cloud migrations, and how to make sure you’re squeezing every penny of value from your existing licences.  

Azure Hybrid Benefit is Microsoft’s way of saying “bring your own licence” to the cloud. It’s a licensing benefit that lets you use your on-premises Windows Server and SQL Server licences (with active Software Assurance) in Azure, dramatically reducing your cloud costs.  

Think of it like this: when you normally spin up a Windows virtual machine in Azure, you’re paying for two things – the compute power (the “hardware”) and the Windows licence. With Azure Hybrid Benefit, you’ve already got the licence sorted, so you only pay for the compute. It’s like bringing your own drinks to a restaurant (without a corkage fee).  

The benefit primarily covers Windows Server and SQL Server, but has expanded to include Red Hat Enterprise Linux and SUSE Linux Enterprise Server subscriptions (though these are newer additions to the programme).  

Let’s break down exactly what you get with Azure Hybrid Benefit across different Microsoft products. The specifics matter here, because making use of them properly could save you thousands.  

Windows Server benefits  

For Windows Server, the maths is nice and straightforward. Microsoft now uses core-based licensing, where each set of core licences covers specific compute capacity in Azure.  

Here’s what that means in practice:  

• Windows Server Standard: use your licences either on-premises or in Azure (but not both simultaneously)  
• Windows Server Datacenter: enjoy unlimited virtualisation rights and use licences both on-premises and in Azure during migration  
• You need a minimum of 8 core licences (Datacenter or Standard edition) per VM – even for smaller 4-core instances  
• Each set of 8 core licences covers up to 8 vCores in Azure (or 16 core licences for up to 16 vCores)   

Thankfully, you get 180 days of dual-use rights during migration. That’s six whole months to move your workloads without any licensing gymnastics.  

SQL Server benefits  

SQL Server is where things get really interesting – and potentially very lucrative. The exchange rates vary by edition and deployment type:  

For PaaS services (Azure SQL Database and Managed Instance):  

• SQL Server Enterprise Edition: 1 core on-premises = 4 vCPUs in Azure (General Purpose and Hyperscale tiers)  
• SQL Server Standard Edition: 1 core on-premises = 1 vCPU in Azure   

For SQL Server on VMs:  

• Both editions use a 1:1 core mapping  

What makes this especially powerful is that Azure is the only cloud that provides this ability to move your licences to a fully managed PaaS product. AWS RDS isn’t eligible for bring-your-own-licence.  

Other eligible products  

The Azure Hybrid Benefit family has grown beyond just Windows and SQL:  

• Red Hat Enterprise Linux: bring your active RHEL subscriptions  
• SUSE Linux Enterprise Server: apply existing SLES subscriptions  
• Azure Stack HCI: waive the OS and Windows Server subscription fees (you still pay for the underlying hardware and infrastructure)  
• Azure Kubernetes Service: run AKS on Windows Server and Azure Local at no extra OS cost  

Let’s be realistic about savings. Most organisations see 40-50% cost reductions with Azure Hybrid Benefit alone. But here’s where it gets exciting – combine it with other Azure benefits, and you can push those savings much higher.  

Windows Server customers typically save around 40% with Hybrid Benefit alone. Add Reserved Instances to the mix, and you’re looking at up to 80% off pay-as-you-go pricing. For Linux workloads, Hybrid Benefit can save up to 56% on its own, or up to 76% when combined with Reserved Instances.  

Consider a real-world example:  

• A D4s v5 virtual machine (4 cores, 16GB RAM) running Windows Server  
• Standard pay-as-you-go price: around £220.02 per month 
• With Azure Hybrid Benefit: approximately £120.00 per month   
• Annual saving: £1,200 for just one VM  

Now multiply that across your entire estate. If you’re running 50 VMs, you’re looking at over £60,000 in annual savings. That’s some real money.  

Azure Hybrid Benefit Calculator  

Before you start figuring out savings on the back of an envelope, you can try this free tool – the Azure Hybrid Benefit Savings Calculator. This web-based calculator helps you:  

• Import your actual VM data from Azure via CSV export  
• Input your current licence costs (like the price for a 2-core standard licence pack)  
• Choose your preferred subscription duration  
• See a detailed comparison of costs with and without Azure Hybrid Benefit  
• Calculate exactly how many Windows Server core packs you need for your Azure VMs  

Be warned, though—this calculator is unofficial. So you can’t be sure the pricing data is accurate, but it’s good for making estimates. You can also use the Microsoft Azure Pricing Calculator instead, where you can add VMs to your basket and select ‘Azure Hybrid Benefit’ in the ‘Savings Options’ section further down the page.  

Using these calculators is particularly useful for building business cases. Nothing convinces your finance team quite like a spreadsheet showing six-figure savings; it’s definitely worth a go.  

Good news – enabling Azure Hybrid Benefit is surprisingly straightforward. Here’s where to activate it for different scenarios:  

• For new VMs: Look for the licensing options during VM creation in the Azure Portal  
• For existing VMs: Head to your VM’s configuration settings where you’ll find the Azure Hybrid Benefit option  
• For SQL VMs: Choose the BYOL (Bring Your Own License) images when deploying from the marketplace  
• For SQL Database/Managed Instance: You’ll find the toggle in the pricing tier configuration  
• Via command line: Both PowerShell and Azure CLI support enabling Azure Hybrid Benefit if you prefer scripting your deployments  

Just remember to verify you have enough eligible licences with active Software Assurance before enabling the benefit – expired SA means no savings. Also worth noting that the standard 90-day licence reassignment rule still applies, so keep good records for compliance purposes. Microsoft does conduct audits, and using Hybrid Benefit without proper licensing can result in significant penalties.  

One of the unsung heroes of Azure Hybrid Benefit is how it transforms the migration experience. That 180-day dual-use right is a migration game-changer.  

Here’s why it matters:  

• No licensing cliff edge: Run workloads in both locations during transition  
• Phased migrations: Move at your own pace without licensing penalties  
• Rollback protection: If something goes wrong, your on-premises licences are still valid  
• Testing flexibility: Run parallel environments for thorough testing  

This flexibility addresses one of the biggest concerns you hear from businesses: “What if the migration doesn’t go smoothly?” With Azure Hybrid Benefit, you’ve got a six-month safety net.  

The benefit also plays nicely with other Azure migration tools and programmes:  

• Azure Migrate for assessment and migration  
• Azure Site Recovery for disaster recovery during transition  
• FastTrack for Azure support programmes  
• Partner migration services  

Getting Azure Hybrid Benefit enabled is just the start. Here’s how to squeeze maximum value from it:  

Combine with Reserved Instances  

This is where the magic happens. Reserved Instances are perfect for stable, predictable workloads that run 24/7. When you combine Azure Hybrid Benefit with Reserved Instances for these steady-state workloads, you can achieve those eye-catching 80% savings figures:  

1. Apply Azure Hybrid Benefit to remove the licence cost   
2. Purchase Reserved Instances for 1 or 3 years to reduce compute costs   
3. Right-size your VMs based on actual usage   

Remember, Reserved Instances require upfront commitment, so they’re best suited for workloads you know will be running consistently throughout the term.  

Regular licence reviews  

Your licence position isn’t static—it’s constantly changing as your business grows and evolves. Setting up quarterly reviews helps you stay on top of your licensing estate and ensures you’re not leaving money on the table.  

During these reviews, check when your Software Assurance is due to expire (nothing worse than discovering it lapsed just when you need it most). Look for unused licences sitting idle on-premises that could be working harder for you in Azure. You might find you’ve over-licensed some areas while others are running short—a quick rebalance could unlock significant savings. These regular check-ins also give you time to plan for upcoming renewals and negotiate better deals with Microsoft.  

Strategic licence purchasing  

Sometimes it makes financial sense to buy new licences specifically for Azure Hybrid Benefit. If you’re paying full price for Windows VMs in Azure, purchasing licences with Software Assurance might actually save money – especially for 24/7 workloads.  

Monitor and optimise  

Don’t just set and forget your Azure Hybrid Benefit; actively monitoring it can reveal even more savings opportunities.  

Azure Advisor and Cost Management tools are your best friends here. They’ll help you track which resources have Hybrid Benefit applied, spot VMs that are eligible but missing out, and show you exactly how much you’re saving each month. Even better, these tools provide automated recommendations for further optimisation—like right-sizing oversized VMs or identifying workloads perfect for Reserved Instances.  

Azure Hybrid Benefit is one of the most significant cost-saving opportunities in Azure’s pricing model. But like any benefit, you need to actively claim it.  

Here’s your action plan:  

1. Check your eligibility 

• Review your Microsoft licence inventory  
• Verify active Software Assurance status  
• Identify which workloads could migrate to Azure  

2. Calculate potential savings 

• Use the Azure Pricing Calculator with Hybrid Benefit options  
• Run the Azure Hybrid Benefit Savings Calculator  
• Compare with your current costs  

3. Plan your approach 

• Decide between gradual migration or big-bang approach  
• Consider combining with Reserved Instances  
• Factor in the 180-day dual-use period  

4. Get expert help  

Making the most of Azure Hybrid Benefit takes a good understanding of your licence position, planning of your cloud architecture, and navigation of the various cost optimisation options.   

That’s where we come in. At Synextra, we’ve helped dozens of UK businesses unlock the full value of their Microsoft investments. We’ll assess your current licences, plan your migration strategy, and ensure you’re getting every penny of available savings.  

Ready to reduce your cloud costs by up to 85%? Get in touch with Synextra today.