Microsoft licensing refers to the various plans and purchasing programmes through which businesses obtain access to Microsoft products, including Microsoft 365, Dynamics 365 and Azure. Licensing determines which features a business has access to, how many users can use them, and how the subscription is billed and managed over time.
How Microsoft licensing works
Most Microsoft cloud products are licensed per user per month, with different plan tiers offering different combinations of features. Businesses can purchase licences directly from Microsoft, through a volume licensing agreement, or through a Microsoft Cloud Solution Provider partner such as Advantage, which manages billing, licence changes and support on the customer's behalf. Licensing decisions affect not just cost but which security, compliance and AI features, including Microsoft Copilot, are available.
Microsoft licensing in practice
- A growing business uses a Microsoft CSP partner to add and remove Microsoft 365 licences monthly as headcount changes, avoiding the need to commit to a fixed annual number of seats.
- An IT manager reviews current Microsoft 365 licensing and identifies that several users are on a higher-cost plan than they actually need, reducing overall spend.
- A business adds Microsoft Copilot licences for specific roles where AI assistance delivers the most value, rather than licensing every user by default.
- A company consolidates separate Microsoft 365, Dynamics 365 and Azure licences from different suppliers onto a single CSP relationship for simpler billing and management.
How Advantage helps with Microsoft licensing
As a Microsoft Cloud Solution Provider, Advantage manages licensing for Microsoft 365, Dynamics 365 and Azure for UK SMEs, providing licence optimisation reviews, flexible monthly billing and a single point of contact rather than navigating Microsoft's programmes directly.
Frequently asked questions
What is the difference between Microsoft 365 Business and Enterprise licensing?
Business plans, such as Business Basic, Standard and Premium, are designed for organisations up to 300 users and offer a more straightforward set of options. Enterprise plans, such as E3 and E5, remove the user cap and add more advanced security, compliance and analytics features suited to larger or more complex organisations.
Can Microsoft licences be changed during the year, or only at renewal?
This depends on the licensing programme. Licences purchased through a Microsoft CSP partner like Advantage can typically be added or removed monthly, giving flexibility as headcount changes. Other licensing programmes may involve annual commitments with less flexibility during the year.
Do I need separate licences for Dynamics 365 and Microsoft 365?
Yes. Dynamics 365 applications, such as Business Central or Sales, are licensed separately from Microsoft 365, since they serve different purposes. A typical user might need both a Microsoft 365 licence for email and Office apps, and a Dynamics 365 licence for ERP or CRM access.
