Manage user licenses in Microsoft 365


One of the most basic tasks for Microsoft 365 Enterprise Administrators is user management. To manage users, you must understand how to manage their licenses. Your organization’s users need licenses to use Microsoft 365 services, such as Microsoft Outlook and Microsoft SharePoint Online. When a license is assigned to a user, the service is automatically set up for that user. For example, when a license for SharePoint Online is assigned to a user, the user is assigned edit permissions on the default team site.

Only members of the Microsoft 365 Global admin and User Management admin roles can assign or remove licenses. A license can be assigned or removed for single or multiple users.


When a license is removed from a user, any service data that's associated with that user is deleted. You then have a 30-day grace period in which you can recover that data. After the grace period, the data isn't recoverable.

Assigning a license

Both the Microsoft 365 admin center and Windows PowerShell can be used to assign a license to a user. The prior unit provided instruction on how to edit the license(s) for an individual user. However, products licenses can also be maintained for multiple users at one time. To assign or remove licenses for multiple users in the Microsoft 365 admin center, complete the following steps:

  1. In the Microsoft 365 admin center, in the left-hand navigation pane, select Users and then select Active users.
  2. Select the users that you want to assign or remove licenses, and then in the menu bar, select the ellipsis (More actions) icon. In the drop-down menu that appears, select Manage product licenses.
  3. On the Manage product licenses page, you must first specify whether to replace or add to existing licenses. You can change the user location and select the services that you want to modify.

Using Azure Active Directory PowerShell to assign a usage location and license

Users can't use any Microsoft 365 services until their account has been assigned a license from a licensing plan. However, to do so, you must first assign the user a usage location. Assigning a user license within Azure AD PowerShell is a two step process.

Step 1 - Assign the usage location

You can assign the location at the same time that you create the user account by using the -UsageLocation parameter with the New-AzureADUser cmdlet. For existing accounts without a location, you can use the -UsageLocation parameter with the Set-AzureADUser cmdlet. Once the location is assigned, you can then assign the user license.

For example, the following cmdlet creates a user account for Patti Fernandez and assigns Patti's usage location to the US.

New-AzureADUser –UserPrincipalName –DisplayName “Patti Fernandez” – FirstName “Patti” –LastName “Fernandez” –UsageLocation “US” –LicenseAssignment “Adatum: ENTERPRISEPREMIUM”

If Patti's user account already existed but it didn't have a usage location, you could assign a location by running the following command:

Set-AzureADUser –ObjectId –UsageLocation “US”

Step 2 - Assign the license

Once the user account is created and the usage location is assigned, you can then assign the user a license by running the following commands:

$userUPN="<user sign-in name (UPN)>"
$planName="<license plan name from the list of license plans>"
$License = New-Object -TypeName Microsoft.Open.AzureAD.Model.AssignedLicense
$License.SkuId = (Get-AzureADSubscribedSku | Where-Object -Property SkuPartNumber -Value $planName -EQ).SkuID
$LicensesToAssign = New-Object -TypeName Microsoft.Open.AzureAD.Model.AssignedLicenses
$LicensesToAssign.AddLicenses = $License
Set-AzureADUserLicense -ObjectId $userUPN -AssignedLicenses $LicensesToAssign

View license information

The Microsoft 365 admin center can be used to view important information about an organization's user license usage. For example, you can see how many licenses have been used, how many are remaining, and which users are currently unlicensed.

To view the number of licenses remaining:

  1. In the Microsoft 365 admin center, on the left-hand navigation pane, select Billing and then select Licenses.
  2. In the Subscriptions tab, note how many licenses are available for each subscription and how many licenses have been assigned.

To view any unlicensed users:

  1. In the Microsoft 365 admin center, on the left-hand navigation pane, select Users and then select Active users.
  2. In the menu bar, select Filter.
  3. In the drop-down menu that appears, note all the various options that you can select to view the users with these respective properties. To view unlicensed users, select Unlicensed users.

Using Windows PowerShell, you can use the Get-MsolAccountSku cmdlet to view the current licensing information for your Microsoft 365 tenant. This cmdlet also displays the number of licenses that are currently available and how many are in use. You can use the Get-MsolUser cmdlet with the -UnlicensedUsersOnly switch to view a list of users who don't have a license.

Knowledge check

Choose the best response for the following question. Then select “Check your answers.”

Check your knowledge


You're the Enterprise Administrator for Tailspin Toys. When a member of the Sales team recently left the company, you removed the Office 365 E3 license from the user's Microsoft 365 account. What will happen to any service data associated with that user?