Types of Microsoft Licenses

Types of Microsoft Licenses: Benefits and Uses

  • Volume Licensing: Bulk purchasing for cost savings.
  • Subscription Licensing: Monthly/annual payments with updates.
  • Perpetual Licensing: One-time purchase, indefinite use.
  • Academic Licensing: Special terms for educational institutions.
  • Nonprofit Licensing: Discounted licenses for eligible nonprofits.
Table Of Contents
  1. Introduction Types of Microsoft Licenses
  2. Volume Licensing
  3. Subscription Licensing
  4. Perpetual Licensing
  5. Specialized Licensing Programs
  6. Choosing the Right Licensing Model
  7. Managing Microsoft Licenses
  8. Compliance and Audits
  9. Top 10 Real-Life Examples of the Use of Types of Microsoft Licenses
  10. FAQ: Types of Microsoft Licenses

Introduction Types of Microsoft Licenses

Introduction to Types of Microsoft Licenses

Understanding Microsoft licensing is crucial for organizations of all sizes.

Effective licensing management ensures that businesses can optimize their software investments, maintain compliance, and access the latest technologies.

With a variety of licensing models available, each tailored to specific needs and scenarios, knowing which model suits your organization can significantly impact operational efficiency and cost management.

Brief Overview of the Importance of Understanding Microsoft Licensing

Microsoft licensing provides the framework through which businesses acquire and use Microsoft software. Proper comprehension of these licenses helps organizations:

  • Avoid legal complications and potential fines by ensuring compliance.
  • Make informed decisions on software purchases and upgrades.
  • Utilize software features that can enhance productivity and collaboration.
  • Budget more accurately by understanding licensing costs and structures.

Explanation of Different Licensing Models and Their Relevance

Microsoft offers several licensing models designed to accommodate diverse organizational needs.

Each model has specific features and benefits that cater to different types of businesses and operational requirements.

Volume Licensing

Volume licensing is intended for organizations needing multiple software copies. It offers significant cost savings and simplified management.

This model is highly relevant for businesses that:

  • Require bulk software deployments.
  • Need flexible licensing terms.
  • Seek cost-effective solutions for large-scale operations.

Subscription Licensing

Subscription licensing allows businesses to pay for software over time, usually on a monthly or annual basis. This model is particularly beneficial for organizations that:

  • Prefer spreading out costs rather than making large upfront payments.
  • Want access to the latest software updates and features.
  • Require scalable solutions that can grow with the business.

Perpetual Licensing

Perpetual licenses involve a one-time purchase, allowing indefinite use of the software. This model is ideal for organizations that:

  • Prefer owning their software outright.
  • Aim to avoid recurring subscription fees.
  • Need stable, long-term software solutions without the necessity for frequent updates.
Volume Licensing

Volume Licensing

Definition and Benefits

Volume licensing is a program designed for organizations that need multiple copies of Microsoft software. It offers a cost-effective and simplified approach to managing software licenses.

By purchasing in bulk, organizations can achieve significant savings and streamline the process of license management.

Cost Savings

  • Bulk Discounts: Volume licensing provides substantial discounts for purchasing large quantities of software.
  • Budget Efficiency: Reduces overall IT expenditure by allowing organizations to allocate resources more effectively.

Simplified Management

  • Centralized Control: Facilitates easier tracking and management of licenses through centralized platforms.
  • Ease of Updates: Simplifies the process of deploying updates and new versions across the organization.

Types of Volume Licensing

Open License

Target Audience: Small to mid-sized businesses


  • Flexibility: Organizations can start with a minimum number of licenses and purchase more as needed, allowing for gradual expansion.
  • Affordability: Offers an affordable entry point for smaller businesses to access necessary software without large upfront costs.

Enterprise Agreement (EA)

Target Audience: Large enterprises


  • Extensive Benefits: Provides comprehensive coverage, including access to the latest software versions and additional services.
  • Scalability: Easily adaptable to accommodate the changing needs of large enterprises.
  • Cost-Effective: Offers significant discounts for organizations with over 500 users or devices, making it a cost-effective solution for large-scale operations.

Select Plus

Target Audience: Larger organizations with complex needs


  • Flexible Purchasing Options: Allows organizations to purchase licenses as needed, spreading out costs over time rather than making large upfront investments.
  • Simplified Management: Streamlines the procurement process, making it easier to manage multiple licenses across various departments.
  • Global Reach: Ideal for organizations with a global presence, providing a consistent licensing solution across multiple locations.

Subscription Licensing

Subscription Licensing

Definition and Benefits

Subscription licensing allows organizations to pay for software over time, usually on a monthly or annual basis, rather than making a large upfront investment. This model is beneficial for businesses looking for flexibility and access to the latest software updates and support.

Pay Over Time

  • Financial Flexibility: Spreads out the cost of software over manageable periods, making it easier to budget for IT expenses.
  • Predictable Costs: Provides a predictable expense model, helping organizations plan their finances more effectively.

Regular Updates and Support

  • Continuous Updates: Ensures access to the latest software features, security patches, and improvements, keeping the organization’s software up-to-date.
  • Comprehensive Support: Includes technical support and services, assisting with any issues that arise and ensuring smooth operation.

Key Subscription Licenses

Microsoft 365

Overview: Microsoft 365 is a comprehensive subscription service that combines Office applications, cloud services, and advanced security features.


  • Office Apps: Provides access to the latest versions of Word, Excel, PowerPoint, Outlook, and other Office applications.
  • Cloud Services: Includes OneDrive for cloud storage, Microsoft Teams for collaboration, and other cloud-based services.
  • Security: Offers robust security features to protect data and manage user access.

Ideal For:

  • Businesses of All Sizes: Suitable for small startups to large enterprises, offering various plans tailored to different business needs.

Enterprise Mobility + Security (EMS)

Overview: EMS is an advanced suite of security and management tools designed to protect corporate data and manage user access.


  • Identity and Access Management: Ensures secure access to resources with tools like Azure Active Directory.
  • Threat Protection: Provides advanced threat detection and response capabilities.
  • Information Protection: Helps safeguard sensitive information through encryption and rights management.

Ideal For:

  • Organizations Seeking Enhanced Security: Suitable for businesses that need advanced security and management solutions to protect their data and infrastructure.

Windows Enterprise E3/E5

Overview: Windows Enterprise E3 and E5 are subscription licenses that offer advanced security features and productivity tools for businesses.


  • Advanced Security: Includes features like Windows Defender Advanced Threat Protection and BitLocker encryption.
  • Productivity Tools: Enhances productivity with tools such as Microsoft Edge, Windows Autopilot, and more.
  • Management: Provides comprehensive device and application management capabilities.

Ideal For:

  • Businesses Focused on Security and Productivity: Suitable for organizations that require robust security measures and advanced tools to enhance productivity and manage their IT environment effectively.
Perpetual Licensing

Perpetual Licensing

Definition and Benefits

Perpetual licensing involves a one-time purchase, granting the organization indefinite use of the software.

This model is suitable for businesses that prefer ownership of their software without recurring fees.

One-Time Purchase Model

  • Upfront Cost: Pay once for the software and use it indefinitely without ongoing subscription fees.
  • Budget Predictability: Helps in long-term financial planning as the cost is a single expenditure.

Indefinite Software Usage

  • No Expiration: Use the software as long as needed without worrying about license renewal.
  • Stable Environment: Ideal for organizations that prefer not to deal with frequent updates or changes to software versions.

Popular Perpetual Licenses

Office 2019

Overview: Office 2019 is a one-time purchase version of Microsoft Office, offering the classic Office applications that users are familiar with.


  • Classic Applications: Includes Word, Excel, PowerPoint, Outlook, and other essential Office tools.
  • No Subscription: One-time payment grants indefinite use without the need for ongoing subscription fees.
  • Stability: Provides a stable environment with features that do not change over time, making it easier for users to adapt.

Ideal For:

  • Businesses and Individuals: Those who need reliable Office applications without the need for cloud services or regular updates.

Windows Server

Overview: Windows Server is a robust server operating system that provides comprehensive management capabilities for networked environments.


  • Server Management: Offers powerful tools for managing server infrastructure, including Active Directory, DHCP, and DNS services.
  • Scalability: Suitable for various business sizes, from small businesses to large enterprises.
  • Reliability: Ensures a stable and secure environment for hosting applications, databases, and websites.

Ideal For:

  • Organizations with In-House Servers: Businesses that require a reliable server solution for managing network resources and applications without ongoing subscription costs.
Specialized Licensing Programs

Specialized Licensing Programs

Academic Licensing

Microsoft offers specialized licensing terms tailored specifically for educational institutions.

These programs provide schools, colleges, and universities with the software and tools they need to support learning and administration at reduced costs.

Special Terms for Educational Institutions

  • Reduced Costs: Educational institutions receive significant discounts on Microsoft products.
  • Access to Tools: Provides access to a wide range of educational tools and software to enhance teaching and learning.

Programs: Microsoft Education Solutions, Office 365 Education

  • Microsoft Education Solutions:
    • Includes a suite of tools designed to support educational activities.
    • Features applications like Microsoft Teams for Education, OneNote, and other collaborative tools.
    • Offers cloud services to facilitate remote learning and administrative management.
  • Office 365 Education:
    • Provides students and educators with free access to Office applications like Word, Excel, PowerPoint, and OneNote.
    • Includes cloud storage through OneDrive and collaboration tools through Microsoft Teams.
    • Ensures students have the same tools as professionals, preparing them for future careers.

Nonprofit Licensing

Microsoft’s nonprofit licensing program offers discounted licenses to eligible nonprofit organizations.

This program is designed to help nonprofits access essential technology and tools at a fraction of the cost, enabling them to focus more resources on their missions.

Discounted Licenses for Eligible Nonprofits

  • Cost Savings: Provides substantial discounts on a wide range of Microsoft products.
  • Support for Mission: Helps nonprofits leverage technology to enhance their operations and services.

Eligibility Requirements and Benefits

  • Eligibility Requirements:
    • Nonprofits must meet specific criteria, such as being a recognized charitable organization in their respective country.
    • Organizations must have a mission to benefit the broader community, such as providing social services, supporting education, or promoting cultural activities.
  • Benefits:
    • Microsoft 365 Nonprofit: Offers access to Office applications, email, file storage, and collaboration tools at reduced prices.
    • Azure Nonprofit: Provides cloud services to help nonprofits build, deploy, and manage applications efficiently.
    • Training and Support: Free and discounted training resources to help staff and volunteers make the most of the software.
Choosing the Right Licensing Model

Choosing the Right Licensing Model

Selecting the appropriate Microsoft licensing model is crucial for optimizing software usage and managing costs effectively.

The right choice depends on several factors, including organizational size, specific needs, budget constraints, and future growth plans.

Factors to Consider

Organizational Size and Needs

  • Small to Mid-Sized Businesses: Typically require flexible and affordable licensing options that can grow with the business.
  • Large Enterprises: Need comprehensive solutions with extensive benefits, such as volume discounts and advanced support services.
  • Specific Industry Requirements: Consider any industry-specific needs that might influence the type of licenses required.

Budget Constraints

  • Initial Costs vs. Ongoing Costs: Determine whether a one-time purchase or a subscription model fits better within the budget.
  • Cost Savings Opportunities: Look for volume discounts, educational discounts, or nonprofit pricing to optimize spending.

Future Growth and Scalability

  • Scalability: Choose a licensing model that allows for easy expansion as the organization grows.
  • Long-Term Planning: Consider future software needs and potential changes in the organizational structure that might impact licensing requirements.

Guidelines for Selection

Small to Mid-Sized Businesses

  • Open License: Offers flexibility and affordability, allowing businesses to start with a minimum number of licenses and add more as needed.
  • Microsoft 365: Provides a comprehensive suite of tools, including Office apps, cloud services, and security features, on a subscription basis, making it suitable for businesses that prefer spreading out costs.

Large Enterprises

  • Enterprise Agreement (EA): Ideal for large organizations with over 500 users or devices. It offers significant discounts, comprehensive coverage, and the flexibility to adjust licenses as needs change.
  • Select Plus: Provides flexible purchasing options, making it suitable for larger organizations that require scalable and manageable licensing solutions.

Educational Institutions

  • Academic Licensing: Microsoft Education Solutions and Office 365 Education offer discounted and free access to essential tools, enhancing the educational experience for students and staff.
  • Microsoft 365 for Education: Provides access to the latest Office applications, collaboration tools, and cloud services tailored for the educational sector.

Nonprofit Organizations

  • Nonprofit Licensing: Eligible nonprofits can access discounted licenses through Microsoft’s nonprofit program. This includes products like Microsoft 365 Nonprofit and Azure Nonprofit, which provide essential tools at reduced prices.
  • Eligibility Considerations: Ensure the organization meets the specific criteria set by Microsoft for nonprofit licensing to take full advantage of the discounts and benefits.
Managing Microsoft Licenses

Managing Microsoft Licenses

Effective management of Microsoft licenses is essential for ensuring compliance, optimizing usage, and controlling costs. Microsoft provides several tools and resources to assist organizations in managing their licenses efficiently.

Tools and Resources

Microsoft Volume Licensing Service Center (VLSC)

The Microsoft Volume Licensing Service Center (VLSC) is a crucial tool for organizations that use volume licensing. It offers various features to streamline license management.

License Management

  • Centralized Control: VLSC provides a comprehensive platform to view and manage all volume licenses in one place.
  • Tracking and Reporting: Helps track license usage and generate reports, ensuring that the organization remains compliant with licensing agreements.

Software Downloads

  • Access to Downloads: Authorized users can download software directly from VLSC, ensuring they have access to the latest versions.
  • Product Keys: VLSC provides product keys required for software installation and activation, simplifying the deployment process.

Agreement Renewals

  • Renewal Management: Easily manage and renew licensing agreements through the VLSC, avoiding lapses in compliance.
  • Notifications: Receive notifications about upcoming renewals and changes to agreements, ensuring that licenses are always up to date.

Microsoft License Advisor

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

Cost Estimation

  • Budget Planning: Provides cost estimates for different licensing scenarios, helping organizations plan their budgets effectively.
  • Detailed Breakdown: Offers a detailed breakdown of costs, making it easier to understand the financial implications of various licensing options.

Option Comparison

  • Side-by-Side Comparison: Allows organizations to compare different licensing programs and their features side by side.
  • Informed Decision-Making: Facilitates informed decision-making by highlighting the benefits and limitations of each option.

Quote Generation

  • Custom Quotes: Helps generate detailed quotes tailored to the organization’s specific requirements.
  • Proposal Support: Assists in creating proposals for budgeting and approval processes, ensuring that all stakeholders have a clear understanding of the licensing costs and benefits.
Compliance and Audits

Compliance and Audits

Importance of Compliance

Maintaining compliance with Microsoft licensing agreements is essential for any organization. Proper compliance ensures that all software is used legally, which is crucial for both legal and financial reasons.

Legal Use of Software

  • Adherence to Agreements: Compliance ensures that all software is used in accordance with Microsoft’s licensing terms and conditions.
  • Legal Protection: Using licensed software protects the organization from legal issues that may arise from using unlicensed or pirated software.

Avoiding Penalties

  • Financial Consequences: Non-compliance can lead to substantial fines and penalties.
  • Reputational Risk: Organizations found to be using unlicensed software may suffer reputational damage, affecting their trustworthiness and credibility.

Software Asset Management (SAM)

Software Asset Management (SAM) is a set of practices that helps organizations manage, control, and protect their software assets. Implementing SAM is critical for maintaining compliance and optimizing software usage.

Tracking and Managing Licenses

  • Inventory Management: SAM helps keep an accurate inventory of all software licenses, ensuring that the organization knows exactly what it owns and uses.
  • Usage Monitoring: Tracks how software is used across the organization, helping to identify any instances of overuse or underuse.

Benefits of SAM

  • Cost Optimization: Identifies unused or underutilized licenses, allowing organizations to reallocate or discontinue them, thereby saving costs.
  • Compliance Assurance: Regular audits and checks ensure that the organization remains compliant with all licensing agreements.
  • Improved Planning: Provides insights into software needs, helping with future planning and budgeting.

Handling Audits

Microsoft conducts regular audits to ensure that organizations comply with their licensing agreements. Proper preparation and understanding of the audit process are crucial for a smooth experience.

Preparing for Microsoft Audits

  • Documentation: Keep detailed records of all software licenses, purchases, and deployments.
  • Internal Audits: Conduct regular internal audits to ensure all software usage aligns with licensing agreements.
  • SAM Implementation: Utilize Software Asset Management practices to maintain accurate records and streamline the audit process.

Consequences of Non-Compliance

  • Fines and Penalties: Non-compliance can result in significant financial penalties and fines imposed by Microsoft.
  • Legal Action: Severe cases of non-compliance may lead to legal action, including lawsuits and settlements.
  • Reputational Damage: Being found non-compliant can damage the organization’s reputation, affecting business relationships and customer trust.
Top 10 Real-Life Examples of the Use of Types of Microsoft Licenses

Top 10 Real-Life Examples of the Use of Types of Microsoft Licenses

1. Large Financial Institution: Enterprise Agreement

Use Case

A multinational bank uses the Microsoft Enterprise Agreement (EA) to manage its software licenses across thousands of employees and multiple branches worldwide.


  • Cost Savings: Significant discounts on bulk software purchases.
  • Flexibility: Easily adjust licenses to accommodate changing employee numbers.
  • Comprehensive Support: Access to the latest updates and dedicated support services.

2. Mid-Sized Manufacturing Company: Open License

Use Case

A mid-sized manufacturing company with 200 employees opts for the Microsoft Open License program to manage its software needs.


  • Affordability: Cost-effective entry point for essential software.
  • Flexibility: Ability to purchase additional licenses as the company grows.
  • Simplified Management: Centralized license tracking and management.

3. University: Academic Licensing

Use Case

A university with multiple campuses implements Microsoft Education Solutions to provide software tools to students and staff.


  • Reduced Costs: Significant discounts on educational software.
  • Enhanced Learning: Access to Office 365 Education and collaboration tools.
  • Broad Accessibility: Students and staff can use professional-grade software.

4. Nonprofit Organization: Nonprofit Licensing

Use Case

A global nonprofit dedicated to disaster relief utilizes Microsoft’s nonprofit licensing to access essential software at reduced prices.


  • Cost Efficiency: Substantial discounts on Microsoft products.
  • Enhanced Operations: Access to tools like Microsoft 365 Nonprofit for better project management.
  • Support for Mission: More funds can be allocated to direct relief efforts.

5. Healthcare Provider: Microsoft 365 Subscription

Use Case

A healthcare provider with several clinics subscribes to Microsoft 365 to ensure that all staff have access to the latest software and collaboration tools.


  • Continuous Updates: Regular software updates ensure the latest features and security patches.
  • Improved Collaboration: Tools like Microsoft Teams enhance communication among staff.
  • Budget-Friendly: Subscription model allows for predictable, manageable expenses.

6. Government Agency: Enterprise Agreement

Use Case

A national government agency responsible for public infrastructure adopts the Microsoft Enterprise Agreement to standardize its IT environment.


  • Standardization: Consistent software versions across all departments.
  • Advanced Security: Access to the latest security features and updates.
  • Comprehensive Support: Includes extensive support services from Microsoft.

7. Tech Startup: Microsoft 365 Subscription

Use Case

A rapidly growing tech startup subscribes to Microsoft 365 to provide its team with essential software and collaboration tools.


  • Scalability: Easily add or remove licenses as the team changes.
  • Collaboration Tools: Microsoft Teams and OneDrive enhance teamwork.
  • Cost Management: Subscription model spreads costs over time.

8. Retail Chain: Open License

Use Case

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


  • Flexibility: Licenses can be purchased as new stores open.
  • Centralized Management: Simplifies tracking and managing licenses.
  • Affordability: Cost-effective licensing for growing business needs.

9. Legal Firm: Microsoft 365 and EMS

Use Case

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


  • Enhanced Security: Advanced security features protect sensitive client data.
  • Productivity Tools: Access to Office applications and collaboration tools.
  • Remote Access: EMS allows secure access to data from anywhere.

10. Educational Nonprofit: Academic and Nonprofit Licensing

Use Case

An educational nonprofit organization combines academic and nonprofit licensing to provide tools to both its staff and the schools it supports.


  • Cost Savings: Discounts available for both educational and nonprofit sectors.
  • Enhanced Services: Access to Office 365 Education for schools and Microsoft 365 Nonprofit for staff.
  • Resource Allocation: More funds can be directed towards educational programs.

FAQ: Types of Microsoft Licenses

What is Volume Licensing?

Volume Licensing is designed for organizations that need multiple copies of software. It offers cost savings and simplified management through programs like Open License, Enterprise Agreement, and Select Plus.

Who benefits from Subscription Licensing?

Subscription Licensing is ideal for businesses of all sizes that prefer to pay for software over time and need regular updates and support. Examples include Microsoft 365 and Enterprise Mobility + Security (EMS).

What is Perpetual Licensing?

Perpetual Licensing involves a one-time purchase that allows indefinite use of the software. This model is suitable for organizations that prefer owning their software outright, such as Office 2019 and Windows Server.

How does Academic Licensing work?

Academic Licensing provides special terms for educational institutions, offering discounted or free access to tools like Office 365 Education. It supports schools, colleges, and universities in providing technology to students and staff.

What are the benefits of Nonprofit Licensing?

Nonprofit Licensing offers significant discounts on Microsoft products for eligible organizations. This helps nonprofits access essential software at reduced prices, allowing them to focus more resources on their missions.

How do I choose the right Microsoft license for my business?

Consider factors like organizational size, specific needs, budget constraints, and future growth. Small businesses may benefit from Open License or Microsoft 365, while large enterprises might prefer Enterprise Agreement or Select Plus.

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, providing centralized control over licensing assets.

What does the Microsoft License Advisor do?

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

How important is compliance with Microsoft licensing?

Compliance ensures legal use of software and helps avoid penalties. It protects organizations from fines, legal actions, and reputational damage associated with using unlicensed software.

What is Software Asset Management (SAM)?

Software Asset Management (SAM) involves tracking and managing software licenses to ensure compliance and optimize usage. SAM helps organizations maintain accurate records, reduce costs, and prepare for audits.

How can I prepare for a Microsoft audit?

Maintain detailed records of all software licenses, conduct regular internal audits, and implement Software Asset Management (SAM) practices. Being well-prepared helps ensure a smooth audit process and compliance.

What happens if my organization is non-compliant?

Non-compliance can result in significant penalties, including fines and legal action. It can also damage the organization’s reputation, affecting business relationships and customer trust.

What are the key features of Microsoft 365?

Microsoft 365 includes Office applications, cloud services like OneDrive and Teams, and advanced security features. It supports collaboration, productivity, and data protection for businesses of all sizes.

What is Enterprise Mobility + Security (EMS)?

EMS is an advanced suite of security and management tools. It includes identity and access management, threat protection, and information security, designed to protect corporate data and manage user access.

What are the benefits of using Windows Server?

Windows Server provides robust server management capabilities, including Active Directory, DHCP, and DNS services. It offers a reliable environment for hosting applications, databases, and websites.

How does Office 2019 differ from Microsoft 365?

Office 2019 is a one-time purchase that includes classic Office applications like Word, Excel, and PowerPoint. Microsoft 365 is a subscription service that offers the latest versions of these applications, along with cloud services and regular updates.

How can I determine if my organization qualifies for nonprofit licensing?

Check Microsoft’s eligibility criteria for nonprofit licensing. Typically, organizations must be recognized as charitable entities in their respective countries and have missions that benefit the broader community.