SQL Server vs PostgreSQL: Licensing and Cost for a Small Company

For a new line-of-business app at a small company, PostgreSQL costs nothing in license fees, SQL Server Express is free but capped at a 50 GB database and four cores, and SQL Server Standard is licensed per core (four-core minimum) or per server plus client access license. The cheapest option is not always the right one: the total cost also depends on who administers the database, where it runs and which application or vendor requires a specific engine. This guide compares license models and gives you a worksheet to estimate the real number.

Who this is for and what you will have at the end

This guide is for owners, IT managers and developers at small US companies who are choosing a database engine for a new internal or customer-facing application and need to understand licensing before committing. You will end with a clear view of each license model, the Express limits that matter, a cost worksheet and a short decision list.

The facts come from Microsoft's SQL Server 2025 edition documentation, Microsoft's SQL Server licensing terms and the PostgreSQL project's license page, checked on 2026-10-30. Dollar figures for SQL Server were surfaced from Microsoft's SQL Server 2025 price sheet through search results, because the PDF itself could not be read in full for this guide. Treat them as indicative US list estimates and get a quote from a Microsoft reseller before you budget. This is general information, not licensing advice for your specific situation.

PostgreSQL: what free means

The PostgreSQL project describes its license as a liberal open source license similar to BSD and MIT. It grants permission to use, copy, modify and distribute the software and its documentation for any purpose, without fee and without a written agreement, as long as the copyright notice and license text are kept in copies you distribute. The software is provided as is, with no warranty and no obligation to provide maintenance or support.

That means there is no per-core, per-user or per-server fee, no edition ladder and no audit risk tied to cores. The costs move elsewhere:

• Hosting. A virtual machine, a managed database service or hardware that you run.
• Administration. Someone has to install updates, monitor, tune and handle backups.
• Support. The project itself offers no support obligation, so budget for a paid support contract or managed service if the application is business critical.
• Tooling. Backup, high availability and monitoring tools are separate choices.

For how PostgreSQL compares with another open source engine, see MySQL vs PostgreSQL: which to choose.

SQL Server editions that matter to a small company

Microsoft's SQL Server 2025 edition documentation lists Enterprise, Standard, Developer (Enterprise Developer and Standard Developer), Evaluation and Express. For a small company, three matter.

Developer editions include all the functionality of their matching production edition but are licensed for development and test, not production. Evaluation includes Enterprise functionality for 180 days.

SQL Server 2025 scale limits

These limits come from Microsoft's edition documentation for SQL Server 2025.

Express has been made more capable in SQL Server 2025: Microsoft states that starting with that release, Express includes all functionality previously in Express with Advanced Services. It still lacks some features that Standard has, including SQL Server Agent, Database Mail, backup compression, transparent data encryption and Always On features. Check the full edition table against your requirements before you rely on Express in production. Missing SQL Server Agent in particular means scheduled jobs need another mechanism, such as Windows Task Scheduler.

Standard also has limits that rarely hit a small company but are worth knowing. High availability in Standard is built on basic availability groups, which support two replicas and one database, and failover cluster instances with two nodes. Enterprise has full Always On availability groups.

SQL Server licensing models

Microsoft's licensing terms describe two models for Standard.

Per-core licensing

Under this model the number of licenses equals the cores in the server or virtual machine, with a minimum of four licenses per physical processor, and four per virtual operating system environment. Core licenses are sold in 2-core packs. Standard under the core model does not need client access licenses for user or device access.

The practical consequence is that a very small server still costs at least four core licenses. A virtual machine with two virtual cores must still be licensed for four.

Server plus CAL licensing

Each server license permits one running instance, and each user or device that accesses it needs a client access license (CAL). Microsoft's terms say CALs are assigned by user or device and that this model requires subscription licenses or active Software Assurance. The terms also say new Enterprise Server plus CAL licenses are no longer available, so this model applies to Standard.

Server plus CAL tends to suit small user counts, where a handful of named users cost less than four core licenses. As the user count grows, or when external or anonymous users connect through a web application, per-core usually becomes simpler. Confirm with Microsoft or a reseller how your application's users are counted, because multiplexing through a middle tier does not remove the CAL requirement for the underlying users or devices.

Software Assurance and failover rights

With Software Assurance, Microsoft's terms give each primary workload one failover environment that may be used for any purpose, including high availability, plus disaster recovery environments with conditions: DR failover must be asynchronous and manual, and cannot serve data to users. Failover rights require Software Assurance on the licensed server and any CALs. Without Software Assurance, a standby server that you want to run needs its own licenses, so include that in the cost.

List prices to start your estimate

Microsoft's SQL Server 2025 price sheet (the PDF could not be text-extracted for this guide, so the figures were confirmed through a search result quoting the datasheet and should be re-checked against the PDF) gives open no-level estimated retail prices in US dollars:

The same sources say these are estimates and that a reseller quotes the actual price. The Microsoft Store also lists Standard edition at a different price for a server license with 10 CALs, which shows the product page and the price sheet can differ by licensing channel. Use the price sheet and a reseller quote together, and record the date.

Worked example

A company has 12 named users and one new application on one server with four cores.

These figures use the estimated retail prices above, exclude Software Assurance, tax and volume discounts, and are not a quote. With an increase to 30 users, server plus CAL would be $989 + 30 x $230 = $7,889, roughly equal to the per-core price, which shows how headcount moves the balance.

Total cost beyond the license

License price is rarely the largest part of ownership. Compare each of these for both engines.

Existing skills often matter more than license savings. A team that has run SQL Server for years may spend less overall than a team learning PostgreSQL from scratch, and the reverse is also true. If you run SQL Server, factor in the version lifecycle as well; see SQL Server 2025 upgrade checklist.

Step-by-step: decide and document

1. List requirements. Expected database size, concurrent users, uptime needs, reporting tools and any engine required by a vendor application.
2. Check Express fit. If the database will stay well under 50 GB and the workload fits one socket or four cores and the buffer pool limit, Express can be a legitimate free start.
3. Price Standard both ways. Calculate per-core with the four-core minimum, and server plus CAL for your user count.
4. Price PostgreSQL honestly. Add hosting, backup, administration time and optional support.
5. Add high availability. Include a standby server and the licenses or Software Assurance it needs.
6. Get quotes. Request written Microsoft reseller pricing and any PostgreSQL support or managed hosting quotes.
7. Record the decision with the date and the assumptions so you can revisit it at renewal.

Troubleshooting the decision

The app vendor only supports SQL Server. Follow the vendor. Check whether Express meets their requirements, and ask the vendor about the edition they certify.

Express limits keep hitting. Moving from Express to Standard is a supported upgrade path in Microsoft's documentation, but plan the licensing cost before you reach the 50 GB limit.

The cost looks too low. Check whether you have included a standby server, backup storage and administration time.

The license count is unclear for a virtual machine. Use Microsoft's licensing terms or a reseller, because virtual core counts, minimums and mobility rights all affect it.

Checklist

1. Confirm the engine requirements of the applications you will run.
2. Check Express limits against your data and workload.
3. Calculate Standard per-core and server plus CAL costs.
4. Add Software Assurance and standby needs if you require high availability.
5. Price PostgreSQL hosting, backup and support.
6. Get written quotes and keep the date.

References

• Editions and supported features of SQL Server 2025: https://learn.microsoft.com/en-us/sql/sql-server/editions-and-components-of-sql-server-2025
• Microsoft Product Terms, SQL Server: https://www.microsoft.com/licensing/terms/productoffering/SQLServer/EES
• SQL Server 2025 pricing sheet (PDF): https://cdn-dynmedia-1.microsoft.com/is/content/microsoftcorp/microsoft/bade/documents/products-and-services/en-us/cloud/SQL-Server-2025-Pricing.pdf
• PostgreSQL license: https://www.postgresql.org/about/licence/