Demystifying Microsoft 365 Business Licensing


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Microsoft 365 Business Licensing is a first of its kind cloud-based licensing service that streamlines the check out, approval and deployment process for Microsoft’s Office 365 Enterprise license. With Microsoft 365 Business Licensing you get everything included with an OEM purchase in one self-service platform.

The “licensing office 365” is a topic that often confuses new users. Microsoft has released a document to help demystify the licensing process for its Office 365 Business product.

Demystifying Microsoft 365 Business Licensing

Microsoft license is one of the most difficult aspects of the Microsoft ecosystem to grasp. Thousands of licensing options are available across hundreds of items. M365 (Microsoft 365) is no exception. Licensing for Microsoft 365 is as complicated as it gets. However, with the help of this tutorial, you’ll be able to regain control.

Microsoft 365 is a collection of Software as a Service (SaaS) online services and software solutions from Microsoft that allow end-user productivity and contemporary work. This tutorial isn’t solely based on material from Microsoft. Instead, it’s written just for you.

If you know the goods you want to employ in your company, you’ll have a better knowledge of your licensing alternatives.

Microsoft updates its licensing offers and features on a regular basis. Use this resource as a starting point for learning about Microsoft licensing. Speak with your Microsoft Business Partner or Microsoft Account Executive before acquiring a licensing agreement. You’ll discover how to locate a spouse if you don’t already have one.

Terminology for Microsoft M365 Licensing

To many different individuals, the term “license” might signify many different things. However, the term has a special meaning in the Microsoft environment that you should be aware of, and it is often used in Microsoft license paperwork in numerous settings.

What exactly is a “License”?

Each Microsoft product has its own set of product use rights that govern how you may use it. A license is a tool that enables you to exercise such rights.

For example, suppose you wanted to provide a user an Online Exchanging mailbox. To utilize the Online Exchanging product, the user would require product usage privileges. An Online Exchanging service plan is required for the product licensing. Online Exchanging Service Contracts are available in a variety of user subscription licenses from Microsoft (SL). The Online Exchanging service plan specifies the functionality of Online Exchanging as well as the product usage permissions granted to the user.

In a nutshell, a license grants you the ability to download, install, access, and utilize specified features of a product for a set amount of time.

A general Description of an M365 license, as well as particular termsA general Description of an M365 license, as well as particular terms

Assignment of a License

Each product has its own set of terms that describe how a license might be assigned to an entity. Almost all licenses for any M365 product are granted using subscription licensing.

If you encounter the phrase ‘license’ in the rest of this article, presume it means’subscription license.’

User and devices typically break up Assignment of a Licenses with a specific timeframe. For M365, the common term lengths are for one month or one year. Once that subscription term period ends, you will no longer be able to use the features that license granted.

If you go over the time limit on your license, Microsoft will give you a 30-day grace period.

A user subscription license is issued to a real person, an organization’s employee, a contractor, and so forth. A user license usually contains a restriction on how many devices they may utilize with a product.

M365 licensing is almost entirely done via a user subscription license.

A single physical asset of the company is covered by a device subscription license. Device licenses are normally available for Windows 10 is the latest version of Microsoft’s operating certified devices.

License Restrictions

Even though you have the ability to give a license, it does not guarantee you can utilize it in all circumstance.

Maximum Number of Devices

Most installable M365 products, such as the Apps for Microsoft 365, can only be utilized by one user on up to five devices at a time. Remember that just because you buy a user license doesn’t imply the person may use the software on an infinite number of devices!

Limits on License Reassignment

You may want to transfer a license to a different employee. If the individual is still employed by your company, you aren’t allowed to transfer that license in less than 90 days.

Microsoft has no established safeguards in place to prevent administrators from reassigning licenses prematurely.

Features that have been unlocked are not licensed.

When you give a license to a user, Microsoft makes some capabilities available to that user, but not always. In certain cases, an applied license will provide access to capabilities that are not available to a single user. Although this may seem to be unrestricted access, you may be charged when it comes time for an audit.

Microsoft Defender for Office 365 is a cloud-based version of Microsoft Office is a security program developed by Microsoft. is a cloud-based version of Microsoft Office is a good example of a license that enables more capabilities than it should. When you add a single-user Microsoft Defender license to your tenant, it becomes available to all tenants’ users. You’d have to make sure that only users with valid licenses are really utilizing the features to prevent other users from using them.

It’s better if you license users with the same Service Contracts throughout your whole tenancy.

Service Contracts

When it comes to understanding M365 licensing at a high level, you must first understand how Microsoft categorizes them. This understanding involves getting used to many of the terms it uses, like Service Contracts.

A service plan is similar to a product license for a single Microsoft product such as OneDrive, Online Exchanging, and so on. Instead, it refers to unique characteristics of individual items.

When you buy a license, it almost usually comes with a service plan.

For example, Online Exchanging has three different Service Contracts; Online Exchanging Kiosk, Online Exchanging Plan 1, and Online Exchanging Plan 2. Each service plan only allows you to use specific features in Online Exchanging.

Which of the Online Exchanging Plans 1 and 2 Should You Choose?

Sometimes you’ll see Service Contracts called products, licenses, subscriptions, or offers. Each of these terms refers to a service plan but in a different context.

Suites of Service Plans

If you need to use multiple M365 products, chances are you’re going to go with a service plan suite. A suite is a bundle of related Service Contracts that generally provide the easiest and most cost-effective option to license product features.

If you need specific product features, individual Service Contracts may be for you rather than a suite. You can sometimes optimize license costs at the expense of extra management overhead if you exclude certain Service Contracts when you know the user does not need the product or features.

Families of Military Personnel

Microsoft’s highest categorization is Families of Military Personnel. Each service family contains multiple Suites of Service Plans for specific customer segments, such as education or Enterprise. The Families of Military Personnel focus on offers for common use cases of users within those types of organizations.

At a high level, Microsoft breaks down Families of Military Personnel for personal and commercial use. This article will only focus on commercial Families of Military Personnel.

You will read more detail about the five commercial Families of Military Personnel Microsoft offers in the following sections; Business, Enterprise, Education, Government, and Nonprofit.

The Business and Enterprise Families of Military Personnel are the most common as they require no organizational Qualifications. The Family of Business Services focuses on small and medium businesses with less than 300 employees. In contrast, the Family of Enterprise Services focuses on organizations of any size or those with more legacy dependencies.

  Descriptions Qualifications
Business Small and medium business without a need for specific products and online services within the Enterprise Service Contracts. There are no requirements.
Enterprise The Enterprise Service Contracts align with the most features available and for the needs of most organizations. There are no requirements.
Education Microsoft provides pricing tailored to the user model in education for authorized educational institutions and, in certain circumstances, libraries.
Government Microsoft provides particular strategies to comply with these compliance demands, given the multiple regulatory regulations for cloud services.
Nonprofit As a charitable discount, Microsoft provides discounts to nonprofit organizations.
China Within mainland China there are additional requirements for cloud services, Microsoft offers M365 Service Contracts through 21Vianet Group. The ability to do business with 21Vianet

There is no Service Plan.

Although far less common, you’ll sometimes see products with There is no Service Plan.. These products are generally marketed as products but are commonly just features of other products. The best way to identify these requirements and dependencies is through the Microsoft documentation for the specific service you’d like to use.

Delve and Core eDiscovery are two stand-alone solutions that both need an O365 service contract.

Recognize your surroundings

Before you can figure out what kind of license you need, you must first figure out what you’re asking for! Microsoft 365 licensing is dependent on a number of criteria, and you’ll need to know more about your individual setup before diving into the licensing quagmire.

Asset management is seldom a glamourous subject, but it is always useful. Taking the effort to inventory your systems, software, and user assignments can assist you in ways other than licensing, such as security and other purposes.

To begin, make sure you have a complete inventory of all devices and users in your company. You’ll need this number as well as information on how users interact with each device.

  • A ‘device’ is the computer on which a user interacts with a product. A licensed device is a physical hardware system to which you have assigned a license. A qualified operating system is also required for a licensed device. In most cases, a qualified operating system is lawfully delivered by Microsoft, an authorized reseller, or the Original Equipment Manufacturer (OEM) who sold you the device.
  • User – A user is the electronic user object representing a person. The critical relationships are the user to person and the user to the devices. Without understanding these relationships licensing becomes even more complex and can introduce risk. There are situations where you may want a non-real person, like a virtual assistant, or possibly a single individual to have multiple user objects. Proper licensing in these situations is possible but may require specific Service Contracts. For situations like this you may require a Teams Common Area Phone service plan, another similar service plan, or may even require multiple subscriptions for a single user.

Understanding M365 Service Contracts

Microsoft 365 Suites of Service Plans are the core of the M365 licensing. You must understand each category of service plan to help your organization decide which ones are for. There are three different categories of Service Contracts; Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office, Enterprise Mobility & Security, and Windows 10 is the latest version of Microsoft’s operating.

In each category below, you’ll see a table that contains the majority of the Service Contracts available for the business and Enterprise Families of Military Personnel.

These tables are divided into four sections:

  • The name of the service package is called a product.
  • A Description of the service that the product delivers.
  • Add-On — Indicates whether the service plan is a “child” plan that necessitates the purchase of another service plan.
  • Versions – Each service plan has different “buckets” of functionality.
  • Link – This is a link to a page where you may learn more about that specific service package.

Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office

Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office services focus on end-user productivity solutions. Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office services include collaboration tools like the common Online Exchanging for email, SharePoint Online is a web-based version of SharePoint and OneDrive for document management, and Teams for collaboration products.

Sometimes people get Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office and Microsoft 365 confused and think they are the same. Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office is a subset of Microsoft 365 and only includes end-user productivity solutions.

  Description Add On Versions Link
Online Exchanging As a Service (Email) Plan 1 Kiosk Plan 2
Online Exchanging Archiving Email Archiving as a Service is a service that allows you to archive your emails. For Online Exchanging For Exchange Server
Online Exchanging Protection Security as a Service for Email
Apps for Microsoft 365 Desktop programs from the Office Productivity Suite For Business For Business  
Audio Conferencing with Microsoft 365 Dial-In Meetings on the Public Switched Telephone Network (PSTN)    
Microsoft 365 Business Voice (Microsoft 365 Business Voice) Audio Conferencing Software, Phone System, and Calling Plan Without a Calling Plan with a Calling Plan with a Calling Plan with a Calling  
Microsoft 365 Calling Plan (Microsoft 365 Calling Plan) PSTN Circuit Access Per Minute Domestic Calling Plan Domestic & International Calling Plan  
365 Phone System by Microsoft Private Branch Exchange (PBX) (PBX)    
Microsoft Defender for Office 365 is a cloud-based version of Microsoft Office is a security program developed by Microsoft. is a cloud-based version of Microsoft Office Advanced security services for the Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office services Plan one and plan two
Plan 2 of Microsoft Stream Service for Corporate Video Distribution    
Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office Suite including majority of other Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office Service Contracts E1 E3 E5 F3 E1 E3 E5 F3 E1 E3 E5 F
Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office Data Loss Prevention Email and File Policy Engine at the Core    
Web-based office Access to Office Productivity Suite is only available via a web browser.
OneDrive for Business is a cloud storage service for businesses. Cloud Storage as a Service for Individuals Plan one and plan two
Project Enterprise Project Management Software Plan 1 Plan 3 Plan 5 Online Essentials
SharePoint Online is a web-based version of SharePoint Platform as a Service for Document Management Plan 1 Kiosk Plan 2
Syntex for SharePoint Automation of the documentation process
Visio Diagramming Software Package Plan one and plan two

Enterprise Mobility & Security

Within M365, the EM+S products are focused on end-user security solutions. These applications control and secure user access to systems.

Azure Active Directory (AD) for employee identification and access management and Microsoft Endpoint Manager Intune are two of the most popular offerings.

Product Description Version Link
Azure AD Several identity and access management (IAM) services are available. P1 Premium P2 Premium P3 Premium P4 Premium P5 Premium P6 Premium P
Information Security in Azure Additional data loss prevention (DLP) capabilities, with an emphasis on endpoint identification, categorization, and protection. P1 (premium)
Security + Enterprise Mobility Suite including majority of other EM+S Service Contracts E3 E5
Intune Platform for mobile device management (MDM) and mobile app management (MAM).
App Security on the Microsoft Cloud With an emphasis on being a secure web gateway and direct connectors to the wider M365 suite for other features, the Cloud Access Security Broker (CASB) is a cloud access security broker (CASB).
Microsoft Identity Protection User and entity behavior analytics (UEBA) service with a focus on Azure AD, App Security on the Microsoft Cloud, and hybrid authentication sources
Endpoint Configuration Manager by Microsoft (formerly System Center Configuration Manager) For both conventional and cloud use scenarios, a robust asset configuration management platform is available.
Microsoft Identity Manager is a program that allows you to manage your (MIM) IAM platform with a broad scope

Windows 10 is the latest version of Microsoft’s operating

The current primary desktop operating system environment is the emphasis of Windows products (OSE). Upgrade rights are emphasized in the M365 ecosystem’s Windows products. An upgrade right allows an organization to utilize a certain feature on a device that has previously been certified.

A qualified device uses rights already acquired through a different product on the same agreement or an entirely separate agreement. Microsoft has a great comparison of the feature differences between the different Windows 10 is the latest version of Microsoft’s operating products offered.

Product Desctiption Version Link
Microsoft Endpoint Security Endpoint detection and response platform of the future
Windows 10 is the latest version of Microsoft’s operating Enterprise Upgrade entitlement for qualifying Windows 10 is the latest version of Microsoft’s operating Pro installations to Windows 10 is the latest version of Microsoft’s operating Enterprise. ‘Windows 10 is the latest version of Microsoft’s operating Enterprise refers to the Windows 10 is the latest version of Microsoft’s operating product type of Enterprise and not the M365 Family of Enterprise Services. E3 E3 VDA E5 E3 E3 VDA

Your Company and Business Options for M365 Licensing

If you work for a company that isn’t classified as educational or government, you’ll need to check into the Business and Enterprise service plans.

For qualifying charitable organizations, Microsoft offers subsidized solutions that are equivalent to the corporate and enterprise offerings. Microsoft needs charitable groups to register in order to verify their eligibility.

Family of Business Services

The Family of Business Services offers subscriptions for small and medium businesses with less than 300 users. This service family offers five Suites of Service Plans:

  • M365 Business Essentials
  • Business Standard M365
  • Premium version of M365 for Business
  • Apps for Business in M365
  • Business Voice M365

The Business Suites of Service Plans are intended for customers without supporting “Enterprise” functionality such as any of the “Plan 2” Service Contracts.

The Premium version of M365 for Business service plan suite does not include Windows Server Client Access Licenses (CALs). The exclusion of the Windows Server CAL messages that the Family of Business Services is not intended for customers who still need to support Microsoft legacy products.

Family of Enterprise Services

Microsoft 365 Enterprise offerings align with the majority of organizations. There is no minimum or maximum user limit. This service family offers over 50 distinct Service Contracts and even more Service Contracts included but not as distinct subscriptions. This service family offers seven Suites of Service Plans:

M365 Licensing Options for Education

The Microsoft 365 Education Suites of Service Plans provide similar subscriptions as the Family of Enterprise Services. Still, they can only be used by educational institutions, administrative offices, boards of education, public libraries, and public museums.

Generally, the Education Service Contracts provide comparable experiences to those within the Enterprise Service Contracts. But, certain solutions, such as Teams, provide user experiences focused on educational institution needs rather than those within the Enterprise.

Educational Suites of Service Plans come with a Student Use Benefit. This privilege allows a free license for up to 40 students for every paid faculty or staff. The Student Use Benefit does not provide a direct license mapping and can map to lower feature sets for students, and the ratio may not always be 40 to 1 so always check the licensing provided.

The service family offers over 90 distinct subscriptions for online services or software, and even more, are included but not as distinct subscriptions. Although, many of these are duplicate subscription offerings, with one for faculty and one for students. The service family offers six Suites of Service Plans with any interesting information about each below:

Your M365 Licensing Options for the Government

If you’re in a Governmental organization, the Government M365 Suites of Service Plans will be for you. Although similar to the Enterprise offerings, the Government Suites of Service Plans have different offerings to meet your organization’s compliance attestation needs.

Given additional compliance requirements, not all features in Enterprise Service Contracts suites will be available in Government offerings.

The Government service family consists of six different Suites of Service Plans:

  • Security + Enterprise Mobility E3 for Government
  • Security + Enterprise Mobility E5 for Government
  • Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office GCC F3
  • Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office GCC G1
  • Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office GCC G3
  • Office 365 is a cloud-based version of Microsoft Office is a cloud-based version of Microsoft Office GCC G5

Within GCC, there are around 40 different subscriptions available, with many more in GCC-High and DoD.

For the GCC, GCC-High, and DoD products, Microsoft offers substantial compliance adherence. The key differences between these products are the enabling infrastructure, integrations, and feature availability.

There are common components between GCC and commercial products, however feature releases are delayed. Additional compliance requirements have caused feature releases to be delayed. With Microsoft, Richard Wakeman has created the finest reference for comprehending the complexity of these many solutions and their adherence to compliance.

How to Purchase Microsoft Software Licenses

Where can you get M365 license now that you’ve received a (hopefully) fair knowledge of your options? They are available for purchase directly through Microsoft’s Admin Center for M365 or via a Microsoft Business Partner.

Related: How to Get Microsoft Azure for Free: A Step-by-Step Guide

Admin Center for M365

One of the easiest ad-hoc ways to purchase licenses is through the Admin Center for M365. By purchasing directly through Microsoft, you forego the hassle of talking through options with a Microsoft Business Partner. This method can be easy when you know what you need, but may not be the most cost-effective.

Microsoft Business Partner

Most of the time, organizations choose to use a Microsoft Business Partner to help acquire licenses. A Microsoft Business Partner will help you navigate the complex world of M365 licensing.

Microsoft features a search tool if you’re searching for a partner. Microsoft also offers a bulk order sales team that may help businesses with their purchases.

Provider of Licensing Services (LSP) and Provider of Cloud Computing Services (CSP) are two active Microsoft partner programs that may sell M365 subscriptions (CSP).

Provider of Licensing Services

The LSP Partner Program is aging, but purchase agreements through this program are still viable for Enterprises with thousands of users. Provider of Licensing Servicess offer volume licensing contracts or agreements, one year or three years in term length.

Provider of Cloud Computing Services

The Provider of Cloud Computing Services program is the modern program set to replace the LSP Partner Program eventually. The notable difference with a CSP is there is only a single agreement, the Microsoft Customer Agreement (MCA); with LSPs, there were multiple agreements you could purchase. Provider of Cloud Computing Servicess offer subscriptions with a monthly or annual term period.

There is no conflict between the CSP and LSP Partner Programs. Your spouse may be able to provide you with either sort of agreement.

If you’re in a Government organization, you can purchase GCC-High Service Contracts directly from Microsoft or from a Microsoft Licensing Solution Provider (LSP). Subscriptions for DoD are only available from Microsoft directly. Microsoft requires customers to validate their Qualifications for GCC or GCC-High through a registration process. The DoD subscriptions are by invitation only.

Getting Technical Assistance

Because there are so many subtleties and nuances, you’ll want to know where to ask questions as they arise. The level of support you get is determined on where you purchased your licenses.

If you buy straight from Microsoft, Microsoft will also provide technical assistance. When you buy a typical volume licensing agreement, you’ll get direct assistance from Microsoft. You’ll have access to the included support either via your organization’s Unified or Premier Support agreements or through the included support.

The Unified and Premier Support agreements are help plans that feature extra advantages in addition to product technical support. If you buy from a CSP, the initial call for technical assistance will be handled by the CSP. When required, the CSP will be able to escalate to Advanced or Premier Support for Partners.

Portal for Admins

The M365 Portal for Admins is the easiest method to determine your support model. When you log in as a user with appropriate roles, you will access Support > New service request, and the support blade will pop out from the right side. You need to search for your topic before the contact support option becomes available. Once it becomes available, you will see a form to contact Microsoft support directly or the contact information of your partner.

Direct & Volume

When purchasing directly from Microsoft, you will be presented with a form similar to the one seen below. When you buy a vintage volume licensing agreement, such as an Enterprise Agreement, you’ll see the same form (EA). You’ll have a different experience whether your company uses Unified Support or Premier Support. Microsoft is your initial and most important point of contact in all circumstances.

Volume DirectedVolume Directed

Provider of Cloud Computing Services

When you purchase from a Provider of Cloud Computing Services (CSP) partner on a modern agreement, they will also provide support. In place of the form on the contact support tab, you will see your partner’s email and phone number. Your partner will maintain Advanced Support for Partners or Premier Support for Partners for escalation to Microsoft. Your partner will be your first and primary point of contact.


Wow! M365 licensing entails a lot. This Ultimate Guide should hopefully provide you with enough background knowledge to assist you on your licensure journey.

Microsoft licensing is complex. Take the knowledge in this article as a seed to help you understanding M365 licensing further but also consult Microsoft or a Microsoft Business Partner directly to verify you’re always licensed accurately and at the best cost possible.

The “office 365 business license agreement” is a document that outlines the licensing requirements for Microsoft’s Office 365 Business software. The document also provides information on how to get your license and what happens if you don’t have one.

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