Q: If I run SQL Server in Microsoft Azure IaaS, do I need to provide my own SQL license?

A: There are actually two answers to this question depending on how you create the virtual machine that will be hosting SQL Server.

Related: Setup SQL Server AlwaysOn Replicas in Microsoft Azure

When you create a virtual machine, a number of images are available. In addition to standard Windows images, there are SQL-specific images that have SQL Server pre-installed and that also include the required SQL Server licenses.

If you look at the Azure virtual machine pricing, you'll notice that Windows Server images have a certain cost—for example, Medium size (A2) at 18 cents an hour. SQL Server virtual machines have a different pricing—for example, Medium size (A2) at 73 cents an hour (for Standard). The reason the SQL Server images are more expensive is they include the SQL Server licensing, which means you don't have to bring your own license.

If you deploy a standard Windows image and then install SQL Server manually, you'll need to provide your own SQL Server license because it isn't included as part of the standard Windows image license.

If you intend to host a long-term SQL Server instance on Microsoft Azure, it will likely be cheaper to install a regular Azure Windows Server virtual machine and then install SQL Server and use your own SQL Server license. If you need SQL Server short-term, such as for a single project, then using the Azure SQL Server image with included SQL Server license is probably more cost effective than buying a license.

This situation is similar for BizTalk, which also has special Microsoft Azure images and pricing that includes BizTalk licensing.