Licensing Microsoft Exchange: On Premise

Email. We all love it. We all hate it. For better or worse, it’s here to stay. So if you’re in charge of IT for your business, you need to figure out how to do it well.

What are the options available today? Painting in broad strokes, there are two options: a traditional on-premise solution and an online solution.  There are a variety of vendors out there who are happy to provide you with an email product, but at Mirazon we recommend our clients go with one of the tried and true solutions from Microsoft.  This post will cover an on-prem solution: traditional Exchange Server. My next post will cover Exchange Online.

If you are not ready to move to the cloud, a traditional on-prem solution is still a solid option.  Microsoft Exchange Server is a tried and true product, but right-sizing the solution can be a little tricky. Here’s what you need to know about licensing Exchange Server.

Exchange Server Licensing Issues

On the server side of things, there are two versions: Exchange Server 2016 Standard and Exchange Server 2016 Enterprise. The biggest distinction between Server Standard and Server Enterprise is the number of mailbox databases you can host. Here is how Microsoft distinguishes between the two …

  • Standard: “designed for the mailbox needs of small to midsize organizations. Also appropriate for non-mailbox roles in a larger Exchange deployment. This edition supports 1 to 5 mailbox databases.”
  • Enterprise: “designed for larger organizations that may require a greater number of mailbox databases. This edition supports 1 to 100 mailbox databases.”

Theoretically you could host all your employees’ email in a single database, but that will affect performance and your whole company will be impacted if that database goes down. Furthermore, smaller databases are easier to repair than larger ones. So, spreading mailboxes across multiple databases will improve performance, minimize the impact of a failed database, and provide faster recovery time. Subsequently, more is better.

But watch out for the price!  The Standard edition provides the right to have as many as five databases, and it will meet the needs of many businesses. The Enterprise edition costs over $3,300 more per instance, so you really need to consider carefully before you decide create more than five databases. Here’s the pricing for a license without SA through the Open License program:

Exchange Server 2016 Standard – License $708.00
Exchange Server 2016 Enterprise – License $4,051.00

Each license gives you the right to deploy a single instance of Exchange in either a physical or virtual environment.

Exchange CAL Licensing Issues

What about the CALs? As with other Microsoft server products, you can buy User CALs or Device CALs for Exchange. But there’s one other thing you should know …

Microsoft gets a bad rap for making their licensing confusing. Most of the time, I can see a method behind the madness and I don’t criticize, but here I have to agree with the critics. This is one place where Microsoft made a branding mistake and unnecessarily made things confusing where they didn’t need to be.

Just like there are Standard and Enterprise versions of the server license, there are Standard and Exchange versions of the CALs. But … here it is … the CAL versions do not match the server versions. You don’t need an Enterprise CAL to use Exchange Server Enterprise. On the other hand, you could be using Exchange Server Standard and still need an Enterprise CAL. In other words, either type of CAL (Standard or Enterprise) can be used with either type of server software (Standard or Enterprise). Why didn’t Microsoft name the CALs something different, like “Basic” and “Advanced”? I don’t know.  But hopefully that will be fixed in the next version of the product.

The difference between a Standard CAL and an Enterprise CAL is functionality:

  • A Standard CAL is a base CAL. Everyone (or every device) who uses Exchange will need a Standard CAL. This gives the user or device the right to access the email and calendar functions of Exchange Server.
  • An Enterprise CAL is an add-on CAL. You should only buy it for the users or devices who need additional functionality. Specifically, an Enterprise CAL provides functionality for Unified Messaging, advanced security, and integrated archiving.

For a full comparison between the CALs, see this page.

A running instance of either Exchange Server Standard or Exchange Server Enterprise will contain the advanced features, but the type of CAL you buy determines whether or not you have permission to access them.  That’s why you can purchase Exchange Server Standard for your network but then purchase Standard CALs and Enterprise CALs for your employees. The Server version tells you how many databases you are allowed to install. The CAL version tells you what features you can access on that server.  Microsoft put it this way in one of their datasheets: “Choose the server type based on required scalability and the CAL(s) based on required functionality.”

Here is the pricing matrix for Exchange CALs through the Open License program (again, without SA). As usual, User CALs are more expense than Device CALs:

Exchange Server 2016, Standard User CAL $88.00
Exchange Server 2016, Standard Device CAL $68.00
Exchange Server 2016, Enterprise Add-On User CAL $58.00
Exchange Server 2016, Enterprise Add-On Device CAL $42.00

You can also license your Exchange users through Office 365 since some Office 365 plans include “CAL equivalency use rights.” Depending on the plan, it could include the same rights as an Exchange Standard CAL or the same rights as a Standard CAL plus an Enterprise CAL. See my post here for more information on this option.

Other Licensing Issues

If you are planning on an on-prem solution, there are a couple other things you should know.  First, if your Exchange instance is being hosted on a Windows Server machine, then all users or devices accessing Exchange will also need a Windows Server CAL.

Second, if you are running Exchange in a virtual machine and you want to migrate that VM from host to host, then you need to purchase your Exchange licensing with Software Assurance (SA). Ever since 2013, “License Mobility” is an SA benefit. If you don’t cover your Exchange licenses with SA, then the VM must remain on a single host.

This material is based on information available from Microsoft here and here.

If you have any questions about how this works or you need someone to purchase these licenses from, look no further! Give us a call at 502-240-0404 or email us to get started!