Manage licenses


Microsoft paid cloud services, such as Microsoft 365, Enterprise Mobility + Security, Dynamics 365, and other similar products, require licenses. These licenses are assigned to each user who needs access to these services. To manage licenses, administrators use one of the management portals (Office or Azure) and PowerShell cmdlets. Microsoft Entra ID is the underlying infrastructure that supports identity management for all Microsoft cloud services. Microsoft Entra ID stores information about license assignment states for users.

Until now, licenses could only be assigned at the individual user level, which can make large-scale management difficult. For example, to add or remove user licenses based on organizational changes, such as users joining or leaving the organization or a department, an administrator often must write a complex PowerShell script. This script makes individual calls to the cloud service.

To address those challenges, Microsoft Entra ID now includes group-based licensing. You can assign one or more product licenses to a group. Microsoft Entra ID 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.

License requirements

You must have one of the following licenses to use group-based licensing:

  • Paid or trial subscription for Microsoft Entra ID Premium P1 and above
  • Paid or trial edition of Office 365 Enterprise E3 or Office 365 A3 or Office 365 GCC G3 or Office 365 E3 for GCCH or Office 365 E3 for DOD and above

Required number of licenses

For any groups assigned a license, you must also have a license for each unique member. While you don't have to assign each member of the group a license, you must have at least enough licenses to include all of the members. For example, if you have 1,000 unique members who are part of licensed groups in your tenant, you must have at least 1,000 licenses to meet the licensing agreement.


Here are the main features of group-based licensing:

  • Licenses can be assigned to any security group in Microsoft Entra ID. Security groups can be synced from on-premises, by using Microsoft Entra Connect. You can also create security groups directly in Microsoft Entra ID (also called cloud-only groups), or automatically via the Microsoft Entra dynamic group feature.
  • When a product license is assigned to a group, the administrator can disable one or more service plans in the product. Typically, this assignment is done when the organization is not yet ready to start using a service included in a product. For example, the administrator might assign Microsoft 365 to a department, but temporarily disable the Yammer service.
  • All Microsoft cloud services that require user-level licensing are supported. This support includes all Microsoft 365 products, Enterprise Mobility + Security, and Dynamics 365.
  • Group-based licensing is currently available only through the Azure portal. (coming soon to the Microsoft Entra admin center)
  • Microsoft Entra ID automatically manages license modifications that result from group membership changes. Typically, license modifications are effective within minutes of a membership change.
  • A user can be a member of multiple groups with license policies specified. A user can also have some licenses that were directly assigned, outside of any groups. The resulting user state is a combination of all assigned product and service licenses. If a user is assigned same license from multiple sources, the license will be consumed only once.
  • In some cases, licenses cannot be assigned to a user. For example, there might not be enough available licenses in the tenant, or conflicting services might have been assigned at the same time. Administrators have access to information about users for whom Microsoft Entra ID could not fully process group licenses. They can then take corrective action based on that information.

Some Microsoft services are not available in all locations. The administrator, before assigning a license to a user, should specify usage location in the User Profile.

For group license assignment, any users without a usage location specified inherit the location of the directory. If you have users in multiple locations, we recommend that you always set usage location as part of your user creation flow in Microsoft Entra ID (for example, via Microsoft Entra Connect configuration) - that ensures the result of license assignment is always correct and users do not receive services in locations that are not allowed.