Step 5: License Users
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Licensing user accounts in Office 365 is important, because users can't use any Office 365 services until their accounts have been licensed. There are three ways to license users:
Group-based licensing: Recommended Path
Until now, licenses could only be assigned at the individual user level, which can make large-scale management difficult. With group-based licensing, administrators no longer have to write a complex PowerShell script that makes individual calls to the cloud service when a user joins or leaves a school. Instead, you can assign one or more product licenses to a group. Azure AD ensures that the licenses are assigned to all members of the group. Any new members who join the group are assigned the appropriate licenses. When they leave the group, those licenses are removed. This licensing management eliminates the need for automating license management via PowerShell to reflect changes in the organization and departmental structure on a per-user basis. To use group-based licensing, you must have one of the following licenses:
Paid or trial subscription for Azure AD Basic
Paid or trial edition of Office 365 Enterprise E3 or Office 365 A3 and above
Office 365 Powershell
If you've more than 50 users, and don't have one of the licenses listed in option 1 above, you'll have to use Office 365 PowerShell to efficiently assign licenses to unlicensed accounts, especially multiple accounts. Here are directions on how to license users with PowerShell.