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Image: Oracle’s Magic Ratio

I was perusing Oracle’s global online price list1 for their Enterprise Edition products, and a few things jumped out. The Oracle Enterprise Edition database product and Enterprise Edition Options are priced in a ratio of 50 to 1 for processor based licenses to Named User Plus (“NUP”) licenses. This means that any combination of the Oracle Database Enterprise Edition and multiple Enterprise Edition Options will also maintain this “Magic Ratio”. This comes in handy when determining what type of license to purchase to achieve the lowest cost. For example, it is quite common for corporations to buy NUP licenses for development, test, and staging environments, where user counts are typically lower, and purchase processor based licenses for production, where the user/processor ratio is higher than 50 to 1.

Oracle database license metrics have changed many times over the past 10 years, but currently are licensed on a named user or per processor basis. Named users are not just human users, but include devices accessing an Oracle program, such as a weather gauge that is updating a database. Each user must have their own NUP license, but that user may then access multiple Oracle database systems. Processor licensing is based on where Oracle programs are installed or running. Even if the programs aren’t running, the processors need to be counted. Both types of licenses have their merits. Generally, NUP licenses are more cost effective when the number of users is low, but processor licenses are easier to track and maintain, and are more cost effective when the user count is high. The processor based license metric must also be used when the user count is not available, such as externally facing Internet applications where the user population is unknown.

There are Oracle pricing rules that add complexity and must be considered to get the right balance, such as a minimum number of NUP licenses2 required per processor. The number of required licenses per processor is an amalgamation of the number of cores per processor times a core processor licensing factor (“Core Factor”) for each type of processor. Oracle has these Core Factors specified in their Oracle Processor Core Factor (PCF) table3. The number of cores must be multiplied by the appropriate Core Factor, where fractions are to be rounded up.

Processor Type (examples) Core Factor
(Generic) Multicore Chip 1.0
All Single Core Chips 1.0
Sun UltraSPARC T2 .75
Intel and AMD Multicore Chips 0.5
Sun and Fujitsu UltraSPARC T1 1.4 GHz 0.5
SPARC Enterprise T1000 Server, with 6 or 8 cores, 1.0 GHz UltraSPARC T1 processor .25
SPARC Enterprise T2000 Server, with 4, 6, or 8 cores 1.0 GHz

UltraSPARC T1 processor


For the Oracle Database Enterprise Edition software, the minimum is 25 NUP licenses per processor1. Ok, what does this mean in light of the definition of a processor? It means that the minimum number of NUP licenses for each server is 25 x #physical processors per server x # processor cores per physical processor x Core Factor. Therefore, if we have 6 SPARC Enterprise T2000 Servers each with an 8 core UltraSPARC T1 processor, then we would need 25 x 6 x 8 x .25 = 300 NUP licenses.

Let’s look at an example to help decipher this pricing complexity (chaos).

Software to be purchased:
–Oracle Database Enterprise Edition
–Oracle Data Mining (Enterprise Edition Option)
–Oracle OLAP (Enterprise Edition Option)

Total Number of Users: 90

When we consider the throughput requirements against available servers, we find:
A+B+C or C+D or E or F will suffice from a processing standpoint.

# Processors Processor Type # Cores Core Factor Clock Speed
A 1 SPARC Enterprise T1000 Server 6 .25 1 GHz
B 1 SPARC Enterprise T1000 Server 6 .25 1 GHz
C 1 SPARC Enterprise T2000 Server 8 .25 1.2 GHz
D 1 SPARC Enterprise T2000 Server 8 .25 1.2 GHz
E 2 Intel Xeon E5630 4 .5 2.53 GHz
F 4 Intel Xeon X7560 8 .5 2.26 GHz
Server Combinations # Processor Licenses Required
SUM (Each Processor x #Core/Processor x Core Factor/Processor)
A+B+C 6*.25 + 6*.25 + 8*.25  BUT Roundup 2 + 2 + 2 = 6
C+D 8*.25 + 8*.25 = 4
E 8*.5 = 4
F 32*.5 = 16

The 4 possibilities are quickly narrowed to 2—C+D or E—where both require 4 processor licenses.
The minimum number of NUP licenses2 is 25 NUPs per processor x 4 processors = 100 NUPs. Even though we have 90 users, the Oracle minimum requires us to have 100 NUPs.

Now let’s consider our Magic Ratio, 4 Processor Licenses will cost the same as 200 NUP licenses for the Oracle software. But we have 90 users that require 100 NUP licenses, which will cost half of 4 processor licenses.

Is the 50% saving significant?  Yes, selecting NUP licenses saves $228,140 or $2,281 per user.

Using the online Oracle price list1, the software is listed as:

100 NUP Licenses License 22% Maintenance
Oracle Database Enterprise Edition $950 x 100 = $95,000 $95,000 * 22% = 20,900
Oracle Data Mining (Enterprise Edition Option) $460 x 100 = $46,000 $46,000 * 22% = 10,120
Oracle OLAP (Enterprise Edition Option) $460 x 100 = $46,000 $46,000 * 22% = 10,120
Total:  $228,140 Subtotal: $187,000 Subtotal: $41,140
4 Processor Licenses License 22% Maintenance
Oracle Database Enterprise Edition $47,500 * 4 = $190,000 $190,000* 22% = $41,800
Oracle Data Mining (Enterprise Edition Option) $23,000 * 4 = $92,000 $92,000 * 22% = $20,240
Oracle OLAP (Enterprise Edition Option) 23,000 * 4 = $92,000 $92,000 * 22% = $20,240
Total:  $456,280 Subtotal: $374,000 Subtotal: $82,280

If the number of users was greater than 200 for this hardware configuration, the Magic Ratio tells us that it would be cheaper to purchase the 4 processor licenses.

The real work is making sure your hardware configuration will meet your throughput, test, growth, and fail-over requirements for these applications. The optimal license type can then be quickly identified. This exercise has also exposed the potential to over-pay, if you choose a server with more horse-power than is necessary and purchase a processor based license. In our example, you could end up paying 4X, if you had 200 users and put the software on Server F instead of Server E, since server F requires 16 processor licenses. Instead of $456K you would pay $1.8M, even if the software was utilizing only a few of the processors.

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Don’t forget that NUP licenses can be used across multiple databases. If your company has many databases spread out on servers across your enterprise, then NUP licenses can be very attractive. If you had 100 databases on 30 Intel Xeon E5630 servers, the processor base license would cost 30 servers * 2 processors per server * 4 cores per processor * .5 Core Factor * $47,500 = $5.7M for 60 processor licenses (Oracle Database Enterprise Edition database product).  If you had 2000 users accessing these 100 databases, the cost for NUP licenses would be $950 per user * 2000 users = $1.9M. Database sprawl can be an expensive proposition for processor based licenses. In this case the magic ratio tells us you would need more than 6000 users (50 *120) for processor licenses to be cost effective.


  1. Oracle  price list
  2. Oracle Processor Core Factor Table

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