Oracle Licensing

Five Types of Oracle Licenses

  • Processor: Based on the number of processor cores, typically for high-volume, web-based applications
  • Named User Plus (NUP): Based on the number of named users, suitable for smaller, predictable user counts
  • Application User: Similar to NUP, specific to Oracle Applications
  • Embedded Software License (ESL): For embedding Oracle software into third-party applications or hardware
  • Bring Your Own License (BYOL): Allows using existing licenses in authorized cloud environments

Introduction to Five Types of Oracle Licenses

Introduction to Five Types of Oracle Licenses

Oracle offers various software products, from databases and middleware to business applications and cloud services.

Oracle provides various licenses, each with its own set of terms, conditions, and usage rights, to accommodate diverse customer needs and deployment scenarios.

Understanding these license types is crucial for organizations to ensure compliance, optimize costs, and make informed decisions about their Oracle investments.

Technology Licenses

Oracle’s technology products, such as databases and middleware, are primarily licensed under two main license types: Processor and Named User Plus.

Processor License

A Processor license allows the use of Oracle software on a specific number of processor cores within a server.

The required licenses are determined by multiplying the total number of processor cores by a core processor licensing factor, which varies based on the specific processor type.

Processor licenses are typically used when the number of users accessing the software is high, unpredictable, or difficult to track, such as in web-based applications or large-scale enterprise deployments.

They offer the flexibility to support many users without the need to track individual user licenses.

Named User Plus (NUP) License

Named User Plus (NUP) License

A Named User Plus license allows a specific number of named individuals to access and use the Oracle software, regardless of whether they are actively using it at any given time.

Each named user must be a person, and the license cannot be shared among multiple users.NUP licenses are often used when the number of users is relatively small, predictable, and easy to track, such as in departmental or small-scale deployments.

They can be more cost-effective than Processor licenses when the user count is low, as the licensing cost is directly tied to the number of named users.

Application Licenses

Oracle’s business applications, such as E-Business Suite, PeopleSoft, and JD Edwards, have their license types tailored to these applications’ specific characteristics and usage patterns.

Application User License

An Application User license is similar to the Named User Plus license but is specific to Oracle Applications.

It allows a named individual to use the licensed application programs, regardless of whether they are actively using them at any given time. Application User licenses are typically used when the number of application users is relatively small and predictable.

Employee License

An Employee license is based on the number of employees within the organization, regardless of whether they use the Oracle application.

This license type is often used for applications widely deployed across the organization, such as Human Resources or Financials, where the potential user base is large and includes most employees.

Revenue or Expense-Based Licenses

Revenue or Expense-Based Licenses

Some Oracle application licenses are based on the customer’s revenue or expenses, such as the $M Cost of Goods Sold metric.

Under this type of license, the number of required licenses is determined by the customer’s financial metrics, such as the total cost of goods sold or the total operating budget, expressed in millions of dollars.

Embedded Licenses

Oracle also offers Embedded Software Licenses (ESL) for independent software vendors (ISVs) and hardware vendors who want to embed Oracle software into their products.

Embedded Software License (ESL)

An Embedded Software License allows the licensee to embed Oracle software into their own applications or hardware products, which they can then distribute to their end customers.

ESL terms are highly specific and restrictive, limiting the use of the Oracle software to the specific embedded application or hardware product.

ESL licenses typically have lower licensing costs than full-use licenses, as they are intended for a specific use case and have limited functionality.

However, they also come with additional restrictions and obligations, such as the requirement to track and report on the distribution and usage of the embedded Oracle software.

Cloud Licenses

Cloud Licenses

With the growing adoption of cloud computing, Oracle has introduced license types specifically designed for cloud deployments.

Bring Your Own License (BYOL)

The Bring Your Own License model allows customers to use their existing Oracle software licenses in authorized cloud environments, such as Oracle Cloud, Amazon Web Services, or Microsoft Azure.

Under BYOL, customers can move their on-premises licenses to the cloud, subject to specific terms and conditions.BYOL can provide flexibility and cost savings for customers who have already invested in Oracle licenses and want to migrate their workloads to the cloud.

However, it’s essential to carefully review the BYOL terms for each cloud provider, as the licensing requirements and calculations may differ from on-premises deployments.

Oracle Cloud Licenses

Oracle also offers cloud-specific license types for customers who want to use Oracle software exclusively in the Oracle Cloud.

These licenses are subscription-based and include access to the Oracle software, underlying infrastructure, and associated support services.

Oracle Cloud licenses can be more cost-effective and simpler to manage than traditional on-premises licenses, as customers do not need to worry about infrastructure procurement, installation, and maintenance.

However, they also come with certain limitations and dependencies on the Oracle Cloud platform.

Choosing the Right License Type

Selecting the appropriate Oracle license type depends on various factors, including the specific software product, the deployment scenario, the number and type of users, and the organization’s budget and growth plans.

Here are some key considerations:

  1. User Count and Predictability: If the number of users is small, predictable, and easy to track, Named User Plus or Application User licenses may be more cost-effective. If the user count is large, variable, or difficult to track, Processor licenses may be more suitable.
  2. Deployment Environment: The choice between on-premises and cloud licenses depends on the organization’s IT strategy, infrastructure readiness, and long-term goals. BYOL can bridge on-premises and cloud deployments, while Oracle Cloud licenses offer a fully managed solution.
  3. Functional Requirements: The application’s specific features, performance, and scalability needs should guide the license type and edition choice. Higher-end editions like Enterprise Edition offer advanced capabilities but have higher licensing costs.
  4. Budget and TCO: Each license type should be carefully evaluated for its upfront licensing costs, ongoing support fees, and total cost of ownership (TCO). Organizations should also consider the potential cost implications of future growth, upgrades, and migrations.


Oracle’s diverse range of license types offers flexibility and choice for customers but also introduces complexity and potential compliance risks.

By understanding the characteristics, use cases, and implications of each license type, organizations can make informed decisions that align with their business requirements, IT strategies, and budgetary constraints.

However, given the intricacies of Oracle’s licensing model and the ever-evolving nature of technology and business needs, engaging with experienced Oracle licensing experts,


  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, enhancing organizational efficiency.

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