Choose a cloud SQL Server option: Azure SQL (PaaS) Database or SQL Server on Azure VMs (IaaS)

Azure has two options for hosting SQL Server workloads in Microsoft Azure:

  • Azure SQL Database: A SQL database native to the cloud, also known as a platform as a service (PaaS) database or a database as a service (DBaaS) that is optimized for software-as-a-service (SaaS) app development. It offers compatibility with most SQL Server features. For more information on PaaS, see What is PaaS.
  • SQL Server on Azure Virtual Machines: SQL Server installed and hosted in the cloud on Windows Server Virtual Machines (VMs) running on Azure, also known as an infrastructure as a service (IaaS). SQL Server on Azure virtual machines is optimized for migrating existing SQL Server applications. All the versions and editions of SQL Server are available. It offers 100% compatibility with SQL Server, allowing you to host as many databases as needed and executing cross-database transactions. It offers full control on SQL Server and Windows.

Learn how each option fits into the Microsoft data platform and get help matching the right option to your business requirements. Whether you prioritize cost savings or minimal administration ahead of everything else, this article can help you decide which approach delivers against the business requirements you care about most.

Microsoft's data platform

One of the first things to understand in any discussion of Azure versus on-premises SQL Server databases is that you can use it all. Microsoft’s data platform leverages SQL Server technology and makes it available across physical on-premises machines, private cloud environments, third-party hosted private cloud environments, and public cloud. SQL Server on Azure virtual machines enables you to meet unique and diverse business needs through a combination of on-premises and cloud-hosted deployments, while using the same set of server products, development tools, and expertise across these environments.

Cloud SQL Server options: SQL server on IaaS, or SaaS SQL database in the cloud.

As seen in the diagram, each offering can be characterized by the level of administration you have over the infrastructure (on the X axis), and by the degree of cost efficiency achieved by database level consolidation and automation (on the Y axis).

When designing an application, four basic options are available for hosting the SQL Server part of the application:

  • SQL Server on non-virtualized physical machines
  • SQL Server in on-premises virtualized machines (private cloud)
  • SQL Server in Azure Virtual Machine (Microsoft public cloud)
  • Azure SQL Database (Microsoft public cloud)

In the following sections, you learn about SQL Server in the Microsoft public cloud: Azure SQL Database and SQL Server on Azure VMs. In addition, you explore common business motivators for determining which option works best for your application.

A closer look at Azure SQL Database and SQL Server on Azure VMs

Azure SQL Database is a relational database-as-a-service (DBaaS) hosted in the Azure cloud that falls into the industry categories of Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS). SQL database is built on standardized hardware and software that is owned, hosted, and maintained by Microsoft. With SQL Database, you can develop directly on the service using built-in features and functionality. When using SQL Database, you pay-as-you-go with options to scale up or out for greater power with no interruption.

SQL Server on Azure Virtual Machines (VMs) falls into the industry category Infrastructure-as-a-Service (IaaS) and allows you to run SQL Server inside a virtual machine in the cloud. Similar to SQL Database, it is built on standardized hardware that is owned, hosted, and maintained by Microsoft. When using SQL Server on a VM, you can either pay-as you-go for a SQL Server license already included in a SQL Server image or easily use an existing license. You can also easily scale-up/down and pause/resume the VM as needed.

In general, these two SQL options are optimized for different purposes:

  • Azure SQL Database is optimized to reduce overall costs to the minimum for provisioning and managing many databases. It reduces ongoing administration costs because you do not have to manage any virtual machines, operating system or database software. You do not have to manage upgrades, high availability, or backups. In general, Azure SQL Database can dramatically increase the number of databases managed by a single IT or development resource.
  • SQL Server running on Azure VMs is optimized for migrating existing applications to Azure or extending existing on-premises applications to the cloud in hybrid deployments. In addition, you can use SQL Server in a virtual machine to develop and test traditional SQL Server applications. With SQL Server on Azure VMs, you have the full administrative rights over a dedicated SQL Server instance and a cloud-based VM. It is a perfect choice when an organization already has IT resources available to maintain the virtual machines. These capabilities allow you to build a highly customized system to address your application’s specific performance and availability requirements.

The following table summarizes the main characteristics of SQL Database and SQL Server on Azure VMs:

Best for: Azure SQL Database SQL Server in an Azure Virtual Machine
New cloud-designed applications that have time constraints in development and marketing. Existing applications that require fast migration to the cloud with minimal changes. Rapid development and test scenarios when you do not want to buy on-premises non-production SQL Server hardware.
Teams that need built-in high availability, disaster recovery, and upgrade for the database. Teams that can configure and manage high availability, disaster recovery, and patching for SQL Server. Some provided automated features dramatically simplify this.
Teams that do not want to manage the underlying operating system and configuration settings. You need a customized environment with full administrative rights.
Databases of up to 4 TB, or larger databases that can be horizontally or vertically partitioned using a scale-out pattern. SQL Server instances with up to 64 TB of storage. The instance can support as many databases as needed.
Resources: You do not want to employ IT resources for configuration and management of the underlying infrastructure, but want to focus on the application layer. You have some IT resources for configuration and management. Some provided automated features dramatically simplify this.
Total cost of ownership: Eliminates hardware costs and reduces administrative costs. Eliminates hardware costs.
Business continuity: In addition to built-in fault tolerance infrastructure capabilities, Azure SQL Database provides features, such as automated backups, Point-In-Time Restore, geo-restore, and active geo-replication to increase business continuity. For more information, see SQL Database business continuity overview. SQL Server on Azure VMs lets you set up a high availability and disaster recovery solution for your database’s specific needs. Therefore, you can have a system that is highly optimized for your application. You can test and run failovers by yourself when needed. For more information, see High Availability and Disaster Recovery for SQL Server on Azure Virtual Machines.
Hybrid cloud: Your on-premises application can access data in Azure SQL Database. With SQL Server on Azure VMs, you can have applications that run partly in the cloud and partly on-premises. For example, you can extend your on-premises network and Active Directory Domain to the cloud via Azure Virtual Network. In addition, you can store on-premises data files in Azure Storage using SQL Server Data Files in Azure. For more information, see Introduction to SQL Server 2014 Hybrid Cloud.
Supports SQL Server transactional replication as a subscriber to replicate data. Fully supports SQL Server transactional replication, AlwaysOn Availability Groups, Integration Services, and Log Shipping to replicate data. Also, traditional SQL Server backups are fully supported

Business motivations for choosing Azure SQL Database or SQL Server on Azure VMs


Whether you’re a startup that is strapped for cash, or a team in an established company that operates under tight budget constraints, limited funding is often the primary driver when deciding how to host your databases. In this section, you learn about the billing and licensing basics in Azure with regards to these two relational database options: SQL Database and SQL Server on Azure VMs. You also learn about calculating the total application cost.

Billing and licensing basics

SQL Database is sold to customers as a service, not with a license. SQL Server on Azure VMs is sold with an included license that you pay per-minute. If you have an existing license, you can also use it.

Currently, SQL Database is available in several service tiers, all of which are billed hourly at a fixed rate based on the service tier and performance level you choose. In addition, you are billed for outgoing Internet traffic at regular data transfer rates. The Basic, Standard, Premium, General Purpose, and Mission Critical service tiers are designed to deliver predictable performance with multiple performance levels to match your application’s peak requirements. You can change between service tiers and performance levels to match your application’s varied throughput needs. For the latest information on the current supported service tiers, see Azure SQL Database Service Tiers. You can also create elastic pools to share performance resources among database instances.


If your database has high transactional volume and needs to support many concurrent users, we recommend the Premium or Mission Critical service tiers. To minimize latency between your application and your SQL database, locate your application in the same region as your database and then test performance - increasing your service tier and performance level as needed.

With SQL Database, the database software is automatically configured, patched, and upgraded by Microsoft, which reduces your administration costs. In addition, its built-in backup capabilities help you achieve significant cost savings, especially when you have a large number of databases.

With SQL Server on Azure VMs, you can use any of the platform-provided SQL Server images (which includes a license) or bring your SQL Server license. All the supported SQL Server versions (2008R2, 2012, 2014, 2016) and editions (Developer, Express, Web, Standard, Enterprise) are available. In addition, Bring-Your-Own-License versions (BYOL) of the images are available. When using the Azure provided images, the operational cost depends on the VM size and the edition of SQL Server you choose. Regardless of VM size or SQL Server edition, you pay per-minute licensing cost of SQL Server and Windows Server, along with the Azure Storage cost for the VM disks. The per-minute billing option allows you to use SQL Server for as long as you need without buying addition SQL Server licenses. If you bring your own SQL Server license to Azure, you are charged for Windows Server and storage costs only. For more information on bring-your-own licensing, see License Mobility through Software Assurance on Azure.

Calculating the total application cost

When you start using a cloud platform, the cost of running your application includes the development and administration costs, plus the public cloud platform service costs.

Here is the detailed cost calculation for your application running in SQL Database and SQL Server on Azure VMs:

When using Azure SQL Database:

Total cost of application = Highly minimized administration costs + software development costs + SQL Database service costs

When using SQL Server on Azure VMs:

Total cost of application = Highly minimized software development cost + administration costs + SQL Server and Windows Server licensing costs + Azure Storage costs

For more information on pricing, see the following resources:


There is a small subset of features on SQL Server that are not applicable or not available with SQL Database. See SQL Database Features and SQL Database Transact-SQL information for more information. If you are moving an existing SQL Server solution to the cloud, see Migrating a SQL Server database to Azure SQL Database. When you migrate an existing on-premises SQL Server application to SQL Database, consider updating the application to take advantage of the capabilities that cloud services offer. For example, you may consider using Azure Web App Service or Azure Cloud Services to host your application layer to increase cost benefits.


For many businesses, the decision to transition to a cloud service is as much about offloading complexity of administration as it is cost. With SQL Database, Microsoft administers the underlying hardware. Microsoft automatically replicates all data to provide high availability, configures and upgrades the database software, manages load balancing, and does transparent failover if there is a server failure. You can continue to administer your database, but you no longer need to manage the database engine, server operating system or hardware. Examples of items you can continue to administer include databases and logins, index and query tuning, and auditing and security.

With SQL Server on Azure VMs, you have full control over the operating system and SQL Server instance configuration. With a VM, it’s up to you to decide when to update/upgrade the operating system and database software and when to install any additional software such as anti-virus. Some automated features are provided to dramatically simplify patching, backup, and high availability. In addition, you can control the size of the VM, the number of disks, and their storage configurations. Azure allows you to change the size of a VM as needed. For information, see Virtual Machine and Cloud Service Sizes for Azure.

Service Level Agreement (SLA)

For many IT departments, meeting up-time obligations of a Service Level Agreement (SLA) is a top priority. In this section, we look at what SLA applies to each database hosting option.

For SQL Database Basic, Standard, Premium, General Purpose, and Mission Critical service tiers Microsoft provides an availability SLA of 99.99%. For the latest information, see Service Level Agreement. For the latest information on SQL Database service tiers and the supported business continuity plans, see Service Tiers.

For SQL Server running on Azure VMs, Microsoft provides an availability SLA of 99.95% that covers just the Virtual Machine. This SLA does not cover the processes (such as SQL Server) running on the VM and requires that you host at least two VM instances in an availability set. For the latest information, see the VM SLA. For database high availability (HA) within VMs, you should configure one of the supported high availability options in SQL Server, such as AlwaysOn Availability Groups. Using a supported high availability option doesn't provide an additional SLA, but allows you to achieve >99.99% database availability.

Time to market

SQL Database is the right solution for cloud-designed applications when developer productivity and fast time-to-market are critical. With programmatic DBA-like functionality, it is perfect for cloud architects and developers as it lowers the need for managing the underlying operating system and database. For example, you can use the REST API and PowerShell Cmdlets to automate and manage administrative operations for thousands of databases. Features such as elastic pools allow you to focus on the application layer and deliver your solution to the market faster.

SQL Server running on Azure VMs is perfect if your existing or new applications require large databases, interrelated databases, or access to all features in SQL Server or Windows. It is also a good fit when you want to migrate existing on-premises applications and databases to Azure as-is. Since you do not need to change the presentation, application, and data layers, you save time and budget on rearchitecting your existing solution. Instead, you can focus on migrating all your solutions to Azure and in doing some performance optimizations that may be required by the Azure platform. For more information, see Performance Best Practices for SQL Server on Azure Virtual Machines.


This article explored SQL Database and SQL Server on Azure Virtual Machines (VMs) and discussed common business motivators that might affect your decision. The following is a summary of suggestions for you to consider:

Choose Azure SQL Database if:

  • You are building new cloud-based applications to take advantage of the cost savings and performance optimization that cloud services provide. This approach provides the benefits of a fully managed cloud service, helps lower initial time-to-market, and can provide long-term cost optimization.
  • You want to have Microsoft perform common management operations on your databases and require stronger availability SLAs for databases.

Choose SQL Server on Azure VMs if:

  • You have existing on-premises applications that you want to migrate or extend to the cloud, or if you want to build enterprise applications larger than 4 TB. This approach provides the benefit of 100% SQL compatibility, large database capacity, full control over SQL Server and Windows, and secure tunneling to on-premises. This approach minimizes costs for development and modifications of existing applications.
  • You have existing IT resources and can ultimately own patching, backups, and database high availability. Notice that some automated features dramatically simplify these operations.

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