Introduction to Microsoft Licensing

Introduction to Microsoft Licensing Models and Benefits

  • Different licensing models: Volume, Subscription, Perpetual
  • Tailored for various organizational needs
  • Helps manage software costs and compliance
  • Provides access to latest software updates and features
  • Simplifies license management and tracking
Table Of Contents
  1. Overview of Microsoft Licensing
  2. Types of Microsoft Licenses
  3. Key Microsoft Licensing Programs
  4. Licensing for Specific Needs
  5. Understanding License Compliance
  6. Top 10 Real-Life Examples of Using Microsoft Licensing
  7. FAQ: Introduction to Microsoft Licensing

Overview of Microsoft Licensing

Overview of Microsoft Licensing

Understanding Microsoft licensing is critical for any organization aiming to manage its software expenses efficiently.

Microsoft’s licensing framework is designed to cater to diverse organizational needs, providing flexibility and scalability.

In this section, we explore the various licensing models, their features, and the specific contexts in which they are most beneficial.

Licensing Models and Their Uses

Volume Licensing

Volume licensing is ideal for organizations needing multiple software copies. It offers significant cost savings and simplifies license management. There are several types within this category:

  • Open License: This model is suitable for small to mid-sized businesses. It provides flexibility and affordability, allowing organizations to start with a minimum number of licenses and expand as needed.
  • Enterprise Agreement (EA): Tailored for large enterprises, this agreement offers comprehensive benefits, including access to the latest software updates and additional services. It’s perfect for organizations with over 500 users or devices.
  • Select Plus: Designed for larger organizations, Select Plus offers a flexible approach to purchasing licenses. It allows for the spread of costs over time and simplifies the procurement process.

Subscription Licensing

Subscription licensing is becoming increasingly popular as it allows businesses to pay for software over a period, either monthly or annually. Key options include:

  • Microsoft 365: This subscription bundles Office applications, cloud services, and advanced security features. It suits businesses of all sizes, offering different plans tailored to specific needs.
  • Enterprise Mobility + Security (EMS): A comprehensive suite for enterprise security and management. It provides advanced threat protection, identity and access management, and information protection.
  • Windows Enterprise E3/E5: These editions offer advanced security features, device management, and productivity tools. They are designed for organizations looking to enhance their security posture and streamline operations.

Perpetual Licensing

Perpetual licenses involve a one-time purchase, granting indefinite usage of the software. This model is suitable for organizations that prefer owning their software outright.

  • Office 2019: A one-time purchase model for classic Office applications. It’s ideal for users who do not need the additional features and services offered by a Microsoft 365 subscription.
  • Windows Server: This license allows organizations to purchase server operating systems with a one-time fee, providing robust server management capabilities without ongoing subscription costs.

Choosing the Right Licensing Model

Selecting the appropriate licensing model depends on various factors, including the size of the organization, specific software needs, and budget constraints.

Here’s a brief guide to help determine the best fit:

  • Small to Mid-Sized Businesses: Open License or Microsoft 365 subscriptions are typically the best options due to their flexibility and cost-effectiveness.
  • Large Enterprises: Enterprise Agreements or Select Plus offer the most benefits, including bulk purchasing discounts and additional services.
  • Educational Institutions: Special academic licensing terms can provide significant savings and access to educational tools.
  • Nonprofit Organizations: Microsoft offers discounted licenses for eligible nonprofits, enabling them to leverage powerful software at reduced costs.

Types of Microsoft Licenses

Types of Microsoft Licenses

Understanding the different types of Microsoft licenses is essential for selecting the right one to meet your organization’s needs.

Here, we outline the three primary licensing categories: Volume Licensing, Subscription Licensing, and Perpetual Licensing.

Volume Licensing

Volume Licensing is designed for organizations that require multiple copies of Microsoft software. This model provides cost savings and simplified management through various tailored programs.

Open License

  • Target Audience: Small to mid-sized organizations
  • Benefits:
    • Flexible and affordable
    • Easy to manage
    • Allows for incremental purchasing
  • Ideal Use: Businesses that anticipate gradual growth and need the ability to add licenses as they expand.

Enterprise Agreement (EA)

  • Target Audience: Large enterprises
  • Benefits:
    • Extensive range of benefits and services
    • Access to the latest software versions and updates
    • Cost-effective for organizations with over 500 users or devices
  • Ideal Use: Large organizations seeking comprehensive coverage and added value from bundled services.

Select Plus

  • Target Audience: Larger organizations with complex needs
  • Benefits:
    • Flexible purchasing options
    • Allows for spread-out costs over time
    • Simplified license management
  • Ideal Use: Businesses that require flexibility in purchasing and managing multiple software licenses across various departments.

Subscription Licensing

Subscription Licensing allows organizations to spread the cost of software over time, typically on a monthly or annual basis.

This model is beneficial for businesses looking for financial flexibility and access to ongoing updates and support.

Microsoft 365

  • Features:
    • Combines Office applications, cloud services, and security
    • Regular updates and feature enhancements
  • Ideal For: Businesses of all sizes needing a comprehensive, up-to-date software suite.

Enterprise Mobility + Security (EMS)

  • Features:
    • Advanced security and management suite
    • Includes identity and access management, threat protection, and information security
  • Ideal For: Organizations seeking robust security and management tools to protect their digital environment.

Windows Enterprise E3/E5

  • Features:
    • Advanced security features
    • Enhanced productivity tools
  • Ideal For: Businesses aiming to enhance security and streamline operations with advanced tools and features.

Perpetual Licensing

Perpetual Licensing involves a one-time purchase, allowing indefinite use of the software without recurring subscription fees.

This model is ideal for organizations that prefer ownership of their software.

Office 2019

  • Features:
    • One-time purchase model
    • Includes classic Office applications like Word, Excel, and PowerPoint
  • Ideal For: Users who do not require the additional services and updates provided by a Microsoft 365 subscription.

Windows Server

  • Features:
    • One-time purchase for server operating systems
    • Robust server management capabilities
  • Ideal For: Organizations needing a reliable server solution without ongoing subscription costs.
Key Microsoft Licensing Programs

Key Microsoft Licensing Programs

Microsoft offers several licensing programs tailored to meet the diverse needs of organizations.

Two of the most prominent programs are the Microsoft Enterprise Agreement and the Microsoft Open License.

Microsoft Enterprise Agreement

The Microsoft Enterprise Agreement (EA) is designed for large organizations that require a comprehensive suite of software and services.

This program provides significant benefits that cater to the complex needs of large-scale operations.

Benefits of the Microsoft Enterprise Agreement

Cost Savings:

  • Offers substantial discounts on volume purchases, making it a cost-effective solution for large enterprises.
  • Provides the ability to spread payments over the term of the agreement, easing budget constraints.


  • Allows organizations to easily add or adjust licenses as their needs evolve, ensuring they only pay for what they use.
  • Facilitates the transition to newer software versions and technologies without additional costs.

Comprehensive Coverage:

  • Grants access to the latest Microsoft technologies, ensuring that organizations stay current with the most advanced software solutions.
  • Includes a range of services and support options to help maximize the value of the software investment.

Ideal For:

  • Large organizations with over 500 users or devices that require extensive software deployments and ongoing updates.
  • Enterprises seeking to manage their IT assets more efficiently through a unified licensing agreement.

Microsoft Open License

The Microsoft Open License program is tailored for smaller businesses that need a simple and cost-effective way to acquire and manage software licenses.

This program provides the flexibility and scalability necessary for growing organizations.

Benefits of the Microsoft Open License

Ease of Use:

  • Simplifies license management with a straightforward process for purchasing and tracking software licenses.
  • Offers a user-friendly platform for managing licenses, making it accessible even for businesses without dedicated IT staff.


  • Allows organizations to purchase additional licenses as their needs grow, providing a scalable solution that evolves with the business.
  • Offers the flexibility to acquire licenses incrementally, avoiding large upfront costs.

Two-Year Term:

  • Features a two-year term with flexible payment options, enabling businesses to manage their software investments more effectively.
  • Provides the option to renew the agreement or make new purchases at any time during the term, ensuring continuous access to necessary software.

Ideal For:

  • Small to mid-sized businesses looking for an affordable and manageable way to license Microsoft software.
  • Organizations seeking a licensing solution that can adapt to their changing needs without requiring long-term commitments or large upfront investments.
Licensing for Specific Needs

Licensing for Specific Needs

Microsoft offers tailored licensing programs to meet the unique requirements of various sectors, including educational institutions and nonprofit organizations.

These programs provide significant benefits and cost savings, ensuring that specific needs are met effectively.

Academic Licensing

Microsoft’s academic licensing programs are designed to support educational institutions by providing access to essential software and services at reduced costs.

These programs help schools and universities enhance their educational offerings through advanced technology.

Microsoft Education Solutions

  • Overview: Microsoft Education Solutions are tailored specifically for schools and universities, offering a comprehensive suite of tools to support teaching and learning.
  • Includes:
    • Office 365 Education: Provides access to familiar Office applications and powerful educational tools, such as Microsoft Teams for Education, OneNote, and more.
    • Azure for Education: Offers cloud services that support a wide range of educational scenarios, from virtual labs to collaborative projects.

Student Use Benefit

  • Overview: This benefit allows students to access Microsoft software at no additional cost, ensuring that they have the necessary tools to succeed in their studies.
  • Benefits:
    • Free Access: Students can use Office 365 Education, which includes Word, Excel, PowerPoint, and OneNote, for free.
    • Enhanced Learning: Provides students with the same tools used by professionals, preparing them for future careers.

Ideal For:

  • Schools and Universities: Institutions looking to provide their students and staff with cutting-edge technology to enhance the educational experience.
  • Students: Individuals who need access to professional-grade software for their studies.

Nonprofit Licensing

Microsoft’s nonprofit licensing program is designed to help eligible nonprofit organizations gain access to essential software at significantly reduced prices.

This program ensures that nonprofits can leverage technology to achieve their missions without straining their budgets.

Eligibility Requirements

  • Criteria: Nonprofits must meet specific criteria to be eligible for discounted Microsoft licenses. This typically includes:
    • Being a recognized charitable organization in their respective country.
    • Having a mission to benefit the broader community, such as providing social services, supporting education, or promoting cultural activities.

Benefits of Nonprofit Licensing

  • Access to Products:
    • Microsoft 365 Nonprofit: Provides access to Office applications, email, file storage, and collaboration tools at reduced prices.
    • Azure Nonprofit: Offers cloud services that help nonprofits build, deploy, and manage applications more efficiently.
  • Reduced Costs:
    • Significantly lower prices on a wide range of Microsoft products, making it easier for nonprofits to access the technology they need.
    • Free and discounted training resources to help staff and volunteers make the most of the software.

Ideal For:

  • Nonprofit Organizations: Charitable entities that need affordable access to technology to support their operations and advance their missions.
  • Nonprofit Staff and Volunteers: Individuals who benefit from using professional-grade tools to enhance productivity and collaboration within their organizations.
Understanding License Compliance

Understanding License Compliance

Maintaining compliance with Microsoft licensing is essential for avoiding penalties and ensuring the legal use of software.

Proper license management not only helps in adhering to legal standards but also optimizes software usage within the organization.

Importance of Compliance

Ensuring compliance with Microsoft licensing agreements is critical for organizations. Here are key reasons why:

Regular Audits

  • Overview: Microsoft regularly conducts audits to verify that organizations comply with their licensing agreements.
  • Purpose: These audits ensure that all software used by the organization is properly licensed.
  • Preparation: Organizations must keep accurate records of their software licenses and usage to pass these audits without issues.

Software Asset Management (SAM)

  • Overview: SAM is a set of proven processes and procedures for managing and optimizing an organization’s IT assets.
  • Benefits:
    • Effective Tracking: Helps track and manage software licenses, ensuring that all software is accounted for and properly licensed.
    • Cost Optimization: Identifies unused or underutilized software, helping to optimize costs and make better purchasing decisions.

Penalties for Non-Compliance

  • Overview: Non-compliance with Microsoft licensing can lead to significant consequences.
  • Potential Penalties:
    • Fines: Organizations may face substantial fines for using unlicensed software.
    • Legal Actions: Legal proceedings can be initiated against organizations that fail to comply with licensing agreements.
    • Reputational Damage: Non-compliance can harm an organization’s reputation and lead to loss of trust from customers and partners.

Licensing Tools and Resources

Microsoft provides several tools and resources to help organizations manage their licenses effectively.

These tools facilitate license tracking, cost estimation, and compliance.

Microsoft Volume Licensing Service Center (VLSC)

The Microsoft Volume Licensing Service Center (VLSC) is a crucial tool for managing volume licenses. It offers various functionalities to streamline license management.

License Management

  • Overview: VLSC allows organizations to view and manage their volume licenses.
  • Features:
    • Centralized Management: All licenses are managed from a single platform, providing a comprehensive overview.
    • License Tracking: Easily track license usage and ensure compliance with agreements.

Download Software

  • Overview: VLSC provides access to product keys and software downloads.
  • Features:
    • Ease of Access: Organizations can download software directly from VLSC.
    • Product Keys: Access to necessary product keys for software installation and activation.

Renew Agreements

  • Overview: VLSC simplifies the process of managing and renewing licensing agreements.
  • Features:
    • Renewal Management: Easily manage upcoming renewals and avoid lapses in licensing.
    • Agreement Updates: Keep track of any changes or updates to licensing agreements.

Microsoft License Advisor

The Microsoft License Advisor is a valuable tool that assists organizations in determining the best licensing options based on their specific needs.

Estimate Costs

  • Overview: Provides cost estimates for various licensing scenarios.
  • Features:
    • Cost Calculation: Input different scenarios to see potential costs, helping in budget planning.
    • Financial Planning: Assists in making informed financial decisions regarding software investments.

Compare Options

  • Overview: Allows organizations to compare different licensing programs.
  • Features:
    • Side-by-Side Comparison: Compare features and costs of different licensing options to choose the best fit.
    • Informed Decision-Making: Helps organizations select the most suitable licensing program based on their needs.

Generate Quotes

  • Overview: Facilitates the creation of detailed quotes for budgeting purposes.
  • Features:
    • Custom Quotes: Generate quotes tailored to specific licensing requirements.
    • Budget Planning: Helps in preparing accurate budget proposals for software investments.
Top 10 Real-Life Examples of Using Microsoft Licensing

Top 10 Real-Life Examples of Using Microsoft Licensing

1. Large Multinational Corporation: Enterprise Agreement

Use Case:

A multinational corporation with over 10,000 employees across various countries utilizes the Microsoft Enterprise Agreement (EA) to manage its software needs.


  • Cost Savings: Significant discounts on volume purchases, reducing overall IT expenses.
  • Flexibility: Ability to easily add or adjust licenses as the company grows or restructures.
  • Comprehensive Coverage: Access to the latest Microsoft technologies and updates, ensuring the company remains at the forefront of technological advancements.

2. Mid-Sized Business: Open License

Use Case:

A mid-sized manufacturing company with 200 employees uses the Microsoft Open License program to manage its software licenses.


  • Scalability: The company can purchase additional licenses as it expands, without major upfront costs.
  • Ease of Use: Simplified license management through a centralized platform, making it easy to track and manage software usage.
  • Cost-Effective: Affordable entry point for smaller businesses to access necessary software.

3. Educational Institution: Academic Licensing

Use Case:

A university with multiple campuses adopts Microsoft Education Solutions to provide students and faculty with essential software tools.


  • Enhanced Learning: Access to Office 365 Education, including collaboration tools like Microsoft Teams, enhances the learning experience.
  • Cost Savings: Reduced licensing costs for educational institutions, making it easier to budget for other educational resources.
  • Student Access: Students can use Office applications at no additional cost, supporting their academic activities.

4. Nonprofit Organization: Nonprofit Licensing

Use Case:

A global nonprofit organization focuses on humanitarian aid and uses Microsoft Nonprofit Licensing to access vital software at reduced prices.


  • Cost Efficiency: Significantly lower prices on a wide range of Microsoft products, allowing the organization to allocate more funds to its mission.
  • Access to Tools: Nonprofits gain access to powerful tools like Microsoft 365 and Azure, which aid in operational efficiency and project management.
  • Eligibility: The program is tailored to meet the specific criteria and needs of nonprofit organizations.

5. Healthcare Provider: Subscription Licensing

Use Case:

A healthcare provider with multiple clinics subscribes to Microsoft 365 to ensure all employees have access to up-to-date software and collaboration tools.


  • Regular Updates: Continuous access to the latest software features and security updates, crucial for handling sensitive patient information.
  • Collaboration: Enhanced communication and collaboration among healthcare staff through tools like Teams and OneDrive.
  • Budget Management: Monthly or annual subscription payments help in managing budgets more effectively.

6. Government Agency: Enterprise Agreement

Use Case:

A government agency responsible for public safety uses the Microsoft Enterprise Agreement to standardize its IT infrastructure.


  • Standardization: Ensures all departments use the same software versions, improving compatibility and efficiency.
  • Security: Access to the latest security features and updates, critical for protecting sensitive government data.
  • Support: Comprehensive support and services from Microsoft, aiding in smooth operations.

7. Financial Institution: Perpetual Licensing

Use Case:

A large bank chooses perpetual licensing for its server infrastructure, opting for Windows Server licenses.


  • Cost Control: One-time purchase eliminates recurring subscription fees, providing long-term cost stability.
  • Reliability: Indefinite use of software ensures uninterrupted operations for critical financial services.
  • Ownership: Full ownership of the software allows for customized configurations and integrations.

8. Retail Chain: Open License

Use Case:

A retail chain with 50 stores uses Microsoft Open License to equip its point-of-sale systems and office computers.


  • Flexibility: Ability to scale the number of licenses as new stores open, ensuring all systems are properly licensed.
  • Central Management: Simplified license tracking and management through a centralized system.
  • Affordability: Cost-effective licensing suitable for a growing business.

9. Technology Startup: Microsoft 365 Subscription

Use Case:

A technology startup with a rapidly growing team subscribes to Microsoft 365 to provide essential software tools to its employees.


  • Scalability: Easily add or remove licenses as the team expands or contracts.
  • Collaboration: Access to powerful collaboration tools like Microsoft Teams, boosting productivity and innovation.
  • Cost Management: Subscription model allows for predictable monthly expenses.

10. Law Firm: Microsoft 365 and EMS

Use Case:

A law firm specializing in corporate law uses Microsoft 365 and Enterprise Mobility + Security (EMS) to manage its IT needs securely.


  • Security: Advanced security features protect sensitive client information and ensure compliance with legal regulations.
  • Productivity: Office applications and collaboration tools improve efficiency and communication among legal teams.
  • Mobility: EMS provides secure access to information from anywhere, supporting remote work and client meetings.

FAQ: Introduction to Microsoft Licensing

What is Microsoft Volume Licensing?

Microsoft Volume Licensing is a program designed for organizations that need multiple copies of software. It offers discounts and simplified management for businesses that purchase licenses in bulk.

Who should use the Microsoft Enterprise Agreement?

The Microsoft Enterprise Agreement is ideal for large organizations with over 500 users or devices. It provides significant discounts, access to the latest software, and flexible licensing terms.

How does the Microsoft Open License work?

The Microsoft Open License program is designed for small to mid-sized businesses. It allows companies to purchase licenses incrementally, providing flexibility and ease of management.

What are the benefits of Microsoft 365 subscription licensing?

Microsoft 365 offers regular updates, cloud services, and advanced security features. It’s suitable for businesses of all sizes and supports collaboration through tools like Teams and OneDrive.

Can educational institutions get special Microsoft licensing?

Yes, Microsoft offers special licensing terms for educational institutions. Programs like Office 365 Education provide schools and universities with essential software tools at reduced costs.

What is the Student Use Benefit in Microsoft academic licensing?

The Student Use Benefit allows students to access Microsoft software, such as Office 365 Education, at no additional cost. This ensures students have the tools they need for their studies.

How does Microsoft’s nonprofit licensing work?

Nonprofit organizations can access discounted Microsoft licenses by meeting specific eligibility criteria. This program offers reduced prices on various Microsoft products, aiding nonprofits in their missions.

Why is maintaining Microsoft license compliance important?

Maintaining compliance ensures legal use of software and helps avoid penalties. It also protects organizations from fines and legal actions resulting from unlicensed software use.

What is the Microsoft Volume Licensing Service Center (VLSC)?

The VLSC is a tool for managing volume licenses. It allows organizations to view and manage their licenses, download software, and renew agreements efficiently.

How can the Microsoft License Advisor help my organization?

The Microsoft License Advisor helps determine the best licensing options by providing cost estimates, comparing different programs, and generating detailed quotes for budgeting.

What are the key features of a perpetual license?

A perpetual license involves a one-time purchase, granting indefinite use of the software. This model is suitable for organizations that prefer owning their software outright without ongoing fees.

What types of licenses are included in subscription licensing?

Subscription licensing includes options like Microsoft 365, Enterprise Mobility + Security (EMS), and Windows Enterprise E3/E5. These licenses provide access to software and services for a recurring fee.

How does the Select Plus program benefit larger organizations?

Select Plus offers flexible purchasing options, allowing larger organizations to spread out costs and manage multiple licenses across various departments more easily.

What support does Microsoft provide for license management?

Microsoft provides tools like the VLSC and License Advisor to help organizations manage their licenses, track usage, estimate costs, and ensure compliance.

What happens if my organization fails a Microsoft license audit?

Failing a Microsoft license audit can result in penalties, including fines and legal actions. It’s crucial to maintain accurate records and ensure all software is properly licensed to avoid these consequences.