📖 Related: Comprehensive guide to Oracle BYOL licensing
Read the BYOL Guide →Licensing Cost Structures: BYOL vs Licence Included
Licence Included means you pay for Oracle database usage in the cloud with the software licence bundled in. You simply pay a higher hourly/monthly rate for the cloud service — all required Oracle Database licences (and support) are included in that price. There is no separate on-premises licence needed, which is ideal if you don't already own Oracle licences. For example, Exadata Cloud@Customer's licence-included pricing includes Oracle Database Enterprise Edition and all options/packs in the subscription.
BYOL (Bring Your Own Licence) means you apply your existing Oracle database licences to the cloud deployment. The cloud service cost is reduced to reflect that you are providing the licence. You continue paying separate annual support for your Oracle licences. This model leverages licences you've already purchased (or plan to purchase) to lower cloud subscription fees. Oracle notes that BYOL "enables customers to use existing licences and lower subscription costs." However, you must ensure you use only the database edition and options your licences entitle you to.
Bring Your Own Licence
- Lower cloud service rate (50–80% less)
- Requires existing licence investment
- Separate annual support (~22% of licence)
- Use only features you've licensed
- Support Rewards offset support costs
Licence Included
- Higher hourly rate includes all licensing
- No upfront licence purchase required
- Support bundled in — no separate bill
- All database options/packs included
- Pure pay-as-you-go flexibility
Key Differences in Cost Components
📚 Related Reading
Total Cost of Ownership (TCO) over 1, 3, and 5 Years
When evaluating BYOL vs Licence Included, it's critical to analyse TCO over several years, not just monthly costs. Below is a comparison for an example deployment on OCI.
1-Year, 3-Year, 5-Year Cost Comparison
| Cost Component | BYOL (Year 1) | BYOL (3-Year) | BYOL (5-Year) | Licence Included (Annual) | Licence Included (3-Year) | Licence Included (5-Year) |
|---|---|---|---|---|---|---|
| Licence Purchase | $95,000 | $95,000 | $95,000 | $0 | $0 | $0 |
| Annual Support | $20,900 | $62,700 | $104,500 | $0 | $0 | $0 |
| OCI Cloud Costs | $6,780 | $20,340 | $33,900 | $15,070 | $45,210 | $75,350 |
| Total TCO | $122,680 | $178,040 | $233,400 | $15,070 | $45,210 | $75,350 |
The key insight: if you already own the licences (sunk cost), Year 1 BYOL cost excludes the $95k purchase entirely, making BYOL dramatically cheaper. In that case, BYOL cost would be support + cloud usage (~$27,680/year) versus $15,070/year licence-included — a closer comparison where the breakeven depends on your specific discount levels and usage patterns.
Licence Included TCO formula: Cloud full rate × usage × years.
Oracle's pricing structure encourages BYOL mainly when you already own licences or have a long-term use horizon. If starting from scratch (no existing licences), Licence Included often has lower short-term TCO in the 1–3 year range.
Workload Type Impact on Costs (Dev/Test vs Production)
The cost-effectiveness of BYOL vs Licence Included shifts significantly depending on workload type and usage patterns.
🏭 Steady 24/7 Production
Always-on workloads that utilise resources continuously. BYOL is attractive if you already own licences — the lower cloud rate yields significant savings over time. For mission-critical databases expected to run for many years, buying licences once and paying the reduced BYOL rate can be more cost-effective after a certain breakeven point.
✓ Favours BYOL (if licences owned)🧪 Development / Test Environments
Intermittent or part-time usage. Pay-as-you-go flexibility of Licence Included is very cost-efficient here — turn off or scale down when not in use, and you're not paying for an underutilised licence. BYOL requires owning a licence that sits idle most of the time with support costs continuing year-round.
✓ Favours Licence Included📊 Bursty / Seasonal Workloads
Licence Included offers cost agility for fluctuating demand. Oracle allows mixing and switching models — run base capacity on BYOL and burst on licence-included. You can switch between models without downtime, paying a premium only during bursts rather than maintaining extra licences year-round.
✓ Hybrid approach optimal❓ Uncertain Lifespan Projects
If a project might be short-lived or you're trialling a new workload, Licence Included avoids locking in a licence investment. You pay purely for what you use. BYOL only makes sense if you can repurpose existing licences or are certain the workload will persist long enough to justify the purchase.
✓ Favours Licence IncludedCore Factors, Minimums, and Licence Portability
Oracle's licensing policies impose technical factors and minimums that affect cost calculations in BYOL scenarios.
Core Factors and OCPU Licensing
On-premises Oracle licences use physical processor cores with a core factor depending on CPU type. In OCI and Exadata Cloud, Oracle simplifies this via OCPUs/ECPUs. Generally, 1 Oracle Processor licence covers 2 OCPUs (vCPUs) in OCI for Enterprise Edition — reflecting the common core factor of 0.5 for Intel cores. For example, 4 OCPUs allocated in OCI requires 2 processor licences for Enterprise Edition. For Named User Plus (NUP) licences, you must meet user minimums (usually 25 NUP per processor for Enterprise Edition).
Minimum OCPU Commitments
On Exadata Cloud@Customer, VM clusters require at least 8 OCPUs (ECPUs) to be enabled, and there's a minimum 48-hour charge for any DB instance you bring online. This means even very small workloads may not size down as much due to platform minimums — potentially favouring licence-included if you don't want to buy licences for capacity you won't fully use.
Licence Portability and Transition Periods
| Portability Aspect | Details | Cost Impact |
|---|---|---|
| Concurrent Use Overlap (OCI) | Up to 100 days of concurrent on-prem + OCI use during migration | Avoids buying duplicate licences for migration period |
| Concurrent Use (Exadata C@C) | Often up to ~180 days overlap in certain programs | Extended transition reduces cost pressure during migration |
| Post-Migration | Licence is "deployed" in cloud — cannot be used on-prem simultaneously | No double-licensing cost but reduces flexibility |
| Cross-Cloud Portability | BYOL also works on AWS/Azure — 2 vCPUs = 1 licence in authorised environments | OCI BYOL typically offers best cost optimisation for Oracle |
| BYOL Eligibility | Only active, supported licences qualify — lapsed support forfeits BYOL rights | Support renewal is mandatory cost component of BYOL |
When BYOL Is More Cost-Effective
You Already Own Sufficient Licences
BYOL maximises the value of sunk costs. Your ongoing expense is support (which you're likely paying anyway) and a much lower cloud rate. Existing workloads with consistent usage are ideal — e.g., moving an on-prem Oracle database that runs 24/7 into OCI. The cloud bill drops dramatically (50–80% lower unit cost).
Long Project Lifespan / Stable Growth
If you anticipate running the database for many years at steady capacity, investing in licences can yield lower TCO over the long term — especially with a good discount upfront. Over 5+ years, the upfront licence cost is amortised and BYOL will usually come out ahead versus paying the premium rate indefinitely.
ULA or Surplus Licence Pool
If your company has an Oracle ULA (Unlimited Licence Agreement) or pool of excess licences, BYOL is essentially "free" from a licensing perspective. The marginal cost of another server is negligible since you're covered by the ULA. Under a ULA, using OCI also generates Support Rewards at 33%, further offsetting support costs.
Need for Full Licence Control
BYOL lets you leverage existing investments and move workloads between on-prem and cloud. Owning the licence provides a perpetual asset that can be used in different environments as needed. A licence-included subscription doesn't give you a transferable asset if you later move back on-prem or to another cloud.
When Licence Included Is More Cost-Effective
No Existing Licences / High Upfront Barrier
Purchasing licences outright (potentially hundreds of thousands of dollars for multi-core deployment) may not be feasible. The OPEX model of Licence Included is far more accessible — pay as you use, with no big upfront spend. Especially true for smaller organisations or new workloads.
Short-Term or Uncertain Duration Projects
For projects expected to last a year or two, buying perpetual licences doesn't make financial sense. Included pricing is akin to "renting" the licence for as long as needed. A 6-month analytics project costs far less at the higher hourly rate than purchasing licences you might not use afterward.
Variable or Seasonal Workloads
Resource needs that swing up and down benefit from cost flexibility. BYOL requires owning enough licences to cover peak, paying support year-round even when used seasonally. Licence Included lets you pay a premium only on demand — often cheaper overall than maintaining a larger licence pool for rare peaks.
Access to All Features Without Buying Options
Licence Included service tiers include all database options by default (Partitioning, Advanced Security, In-Memory, RAC, etc.). Instead of buying each option licence at tens of thousands per processor, use an "Extreme Performance" licence-included cloud service. Much cheaper for feature-rich use cases you haven't already licensed.
Dev/Test Agility
Spinning up many short-lived instances for CI/CD or testing — tracking licence assignments for each under BYOL is a headache. Licence Included lets teams self-service without worrying about licence counts. The cost is directly tied to actual usage time, giving fine-grained cost control.
Simplified Compliance & Risk Reduction
Licence Included greatly reduces the risk of unexpected licensing costs from miscounted cores or unauthorised feature usage. Oracle handles the licensing. The cost of a potential licence compliance issue or true-up can be huge — licence-included may be "cheaper" in the big picture if predictability and risk avoidance have monetary value.
Many enterprises use a combination to optimise costs: BYOL for stable production workloads (exploiting lower rates for constant loads) and Licence Included for everything else (burst capacity, test environments, new projects). There is no one-size-fits-all answer.
Budgeting and Cost Predictability
The choice between BYOL and Licence Included also impacts how you plan and predict IT budgets.
| Budget Dimension | BYOL | Licence Included |
|---|---|---|
| CapEx vs OpEx | Capital expenditure for licence procurement (large upfront), then lower ongoing OpEx for cloud infrastructure | Pure operational expense (OpEx) — monthly cloud bill only, aligns with subscription-based spending |
| Recurring Costs | Fixed annual support (~22%, rising ~4%/year) + variable cloud usage at lower rate. Two separate budget lines | All costs variable with usage in a single cloud bill. If you run more hours/OCPUs, bill increases proportionally |
| Predictability | Higher predictability if sized correctly — known support fees, stable BYOL rates. Risk: unexpected growth requires new licences (CapEx) | Flexible but can be hard to forecast — monthly bill swings with usage. Committed spend deals add predictability |
| Growth Scenarios | Capacity growth beyond licence count requires unplanned licence purchase or temporary switch to Licence Included | Scales seamlessly up and down — costs follow usage automatically with no procurement delays |
| Multi-Year Contracts | After initial purchase, somewhat insulated from cloud price increases. Licence is a perpetual asset | Pricing could change at renewal. No transferable licence asset if you move off Oracle Cloud |
| IT Finance Structure | Support from software maintenance budget, cloud from cloud ops budget — split across teams | Everything in cloud ops budget — single budget owner, simpler cost allocation |
Conclusion and Key Takeaways
Best When...
- You already own Oracle licences (with active support)
- Workloads are long-term, steady, and always-on
- You have a ULA or surplus licence pool
- You want a perpetual, transferable licence asset
- You can commit to multi-year cloud usage
- Support Rewards will offset significant support costs
Best When...
- You don't already own Oracle licences
- Workloads are short-term, variable, or uncertain
- You need dev/test agility and self-service
- You want all database options without buying each
- OpEx-only model aligns with financial strategy
- Compliance simplicity has value to your organisation
IT leaders should evaluate their inventory of licences, workload patterns, and financial preferences. Often, a hybrid approach maximises savings — use BYOL where you can (to exploit lower rates for constant loads) and use Licence Included for everything else (burst, test, new projects).
Perform a detailed TCO analysis for your specific project lifespan, including licence purchase, support, cloud costs, and potential discounts. The examples in this guide illustrate the importance of timeline: BYOL may look expensive in Year 1 but can win out in later years, whereas Licence Included is "pay little now, keep paying more later." Align the model with your organisation's financial strategy (CapEx vs OpEx) and risk tolerance.
How Redress Compliance Helps with Oracle Cloud Licensing
Need Help Choosing BYOL vs Licence Included?
The decision between BYOL and Licence Included can mean hundreds of thousands — or even millions — of dollars in difference over a multi-year contract. Our Oracle licensing specialists help enterprises model TCO scenarios with actual pricing, optimise licence positions before cloud migration, negotiate BYOL terms and cloud commit discounts, and ensure compliance across OCI, Exadata Cloud@Customer, and hybrid deployments. With 20+ years of Oracle insider expertise, we bring the analysis and negotiation leverage you need.