Microsoft Dynamics 365 Licensing: A Guide

An in-depth look at Microsoft Dynamics 365 licensing: how to choose between all-in-one and modular applications, navigate licensing models, and optimize rising costs. 

Dynamics 365 is Microsoft’s suite of business applications designed to manage every area of business in an integrated way: sales, marketing, customer service, accounting, supply chain, and more.

Unlike traditional software, it combines the features of CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning) systems into a single cloud platform, allowing businesses to activate only the applications they actually need.

Understanding how licensing works is not just a technical detail, but a strategic decision: it directly affects costs, scalability, and the platform's ability to grow with the company. With recent price increases, identifying the right model and optimizing purchases has become even more critical.

Two approaches, one platform 

Microsoft designed Dynamics 365 with two distinct paths to meet the needs of different company sizes and structures.

On one side, there’s Business Central, the “all-in-one” ERP aimed at small and medium-sized businesses: a single solution that integrates accounting, sales, purchasing, inventory management, and a basic CRM, while keeping management simple and centralized.

On the other, we find modular enterprise applications, organized by functional areas like Customer Experience, Service, Finance, and Supply Chain. These are purchased individually and can be freely combined to build a tailored ecosystem that grows with the company.

The choice between the two approaches depends not only on budget or employee count, but also on the level of specialization required and process complexity.

Business Central follows the “all under one roof” philosophy: ideal for those seeking simplicity and operational speed. The modular approach, by contrast, is based on specialization: each app is designed to excel in its specific area and integrate seamlessly with others across Microsoft Cloud.

Many companies start with standalone Business Central and keep it for years, striking a great balance between features and ease of management. For example, a retail chain with a few stores and a small e-commerce can manage accounting, inventory, and sales without added complexity using Business Central. 

But if the company grows—opening dozens of retail points, expanding the online catalog, and building a B2B sales team—needs evolve. In such cases, a hybrid solution like Dynamics 365 Sales + Business Central equips the sales team with advanced CRM tools (lead scoring, campaign automation, LinkedIn Sales Navigator integration), while retaining a streamlined ERP for the back office.

For enterprise organizations already using complex ERPs like SAP or Oracle NetSuite, integrating Dynamics 365 Sales (or other modular apps) can boost sales and marketing, leveraging the best of both worlds: a consolidated ERP for operations and specialized Microsoft apps to grow the business. 

Ultimately, Microsoft’s “dual-track strategy” is a flexible approach: start small and scale gradually, adding modules only when necessary, and adapting the platform to the company's evolution without introducing unnecessary complexity.

The Three Licensing Models in Dynamics 365 

L’offerta di licenze in Dynamics 365 si articola in tre modelli principali, ciascuno pensato per diversi scenari di utilizzo. 

1) Per-User License

This is the most common model, assigned to a specific person. It is a named license that provides personalized access to product features including dashboards, workflows, individual permissions, and integration with Microsoft 365 and mobile apps. There are two types:
 

• Full-access User: For those who need full functionality in one or more Dynamics 365 apps.

• Additional User (or "light user"): For those with more limited needs. This includes the Team Members license, ideal for supporting multiple departments without belonging to one specific team. It allows data access but only basic actions like entering expenses or updating contacts.

For Full Users, there's also the Base & Attach licensing mechanism: purchase a Base license (the most expensive), then add other apps at a reduced Attach license price, offering the same features but without additional platform rights.

Some modular applications come in multiple tiers (pricing and functionality), such as Dynamics 365 Sales Professional, Sales Enterprise, and Sales Premium—but they remain per-user licenses.

2) Per-Device License

Instead of being assigned to a person, this license is associated with a shared fixed terminal—like a warehouse PC or point-of-sale terminal. Anyone using the device can access the app, using either personal or shared credentials depending on the product. It’s useful in shift-based or shared workstation scenarios where assigning a license to each user would be excessive.

3) Per-Tenant License

This type of license covers the entire organization, regardless of the number of users or devices. It's available for certain applications such as Customer Insights or Electronic Invoicing. There's also a Capacity version, designed to increase shared resources (e.g., Dataverse storage or transaction volumes) when subscription-included resources aren't enough.

Note: Business Central does not include tenant-based licensing. Access is only via named licenses (Full or Team Members) or device-based licenses with limited functionality. Unlike many ERPs, it doesn’t use a modular model: all functionality is included in two all-inclusive plans (Essentials and Premium). Modular applications, however, are purchased individually and can mix and match the three licensing models where available.

Named licenses remain the most common model in Dynamics 365, but as we've seen, they’re not the only option. Many companies combine different models to suit each department and role: 

• A Full User license is best for managing key processes that require full functionality.

• A Team Member license is ideal for limited or support tasks without full access.

• A Device License works well for shared stations, like warehouses or checkouts, where multiple users access a single terminal.

• A Tenant License is best for cases where many users need access to the same application, such as Customer Insights for customer data analysis or Electronic Invoicing for managing company-wide e-invoicing, avoiding individual licenses.

Il segreto per ottimizzare costi e scalabilità sta nel mappare con precisione chi fa cosa e quali funzioni servono davvero. Questo è particolarmente importante perché il costo delle licenze non è trascurabile e, negli ultimi tempi, abbiamo assistito a diversi aumenti di prezzo che rendono ancora più strategica una gestione attenta del licensing. 

Pricing and Cost Increases 

Microsoft has announced new price hikes, in addition to those introduced in October 2024, previously covered in another article. A year ago, several Dynamics 365 applications experienced price increases of 9% to 17%.

To illustrate the impact, a large organization with 2,000 users holding a Microsoft Dynamics 365 Sales Device licenses would face an additional €28,000 per month—over €336,000 per year—just from the price increase.

This time, however, the price adjustment will not impact the most popular enterprise modular apps, but rather Business Central, Microsoft’s ERP for small and medium businesses. Starting October 1, 2025, prices will rise by 10% to 14%, directly affecting SMB IT budgets.

Based on current pricing (August 2025) for 100 users: 

Business Central Essentials 

• Current cost: €6,550/month

• After 14% increase: €7,480/month

• Increase: +€930/month → +€11,160/year

Business Central Premium 

• Current cost: €9,360/month

• After 10% increase: €10,300/month

• Increase: +€940/month → +€11,280/year

This is significant because many SMBs adopt Business Central specifically to avoid the modular app price hikes. Microsoft justifies the increase by citing numerous innovations, including Copilot AI, sustainability modules, advanced analytics, and UI improvements.

Additionally, Microsoft confirmed a 5% increase on annual and 3-year subscriptions billed monthly, effective April 1, 2025. This applies to all purchase channels (Buy Online, CSP, MCA-E) and affects products like Dynamics 365, Microsoft 365, and Power Platform. Therefore, if a company opts for monthly billing on an annual Dynamics 365 contract, it will end up paying about 5% more compared to upfront payment.

Dynamics 365 Licensing: Optimization Strategies 

With rising costs and the central role that Dynamics 365 plays in business processes, adopting a proactive approach to license management has become essential. Occasional reviews are not enough: continuous monitoring, periodic analysis of actual usage, and the ability to recalibrate the licensing model whenever prices or operational needs change are all required.

Effective optimization starts with a thorough assessment of the organization’s size and concrete needs, calibrating licenses based on roles and processes, and verifying that actual usage aligns with real requirements. The first requires targeted consulting, the second appropriate SAM (Software Asset Management) tools, specifically for SaaS Management.

At WEGG, we offer both: expertise to define the strategy and solutions to continuously monitor and optimize. Below is an example of a usage report we can generate thanks to the Snow Atlas platform by Flexera, with whom we are a partner. This is useful for identifying waste, reallocating licenses, and optimizing Dynamics 365-related costs in real time.

Snow Software integrates with Dynamics, providing access to detailed usage analytics: you can see who is using which applications, when, and how often. Dynamics che permette di accedere a usage analytics dettagliati: si vede chi utilizza quali applicazioni, in quali momenti e con quale frequenza.  
 

What We Can Do in Practice
 

• Reallocate Licenses from Full User to Team Member 
  
  Analizzando l’uso effettivo delle licenze, individuiamo utenti che, pur avendo una licenza completa, utilizzano solo una parte minima delle funzionalità. In questi casi, il passaggio a una licenza Team Member, molto più economica, permette di ridurre i costi senza compromettere la produttività.

  Un utente con licenza Full User di un’applicazione Dynamics 365 (costo indicativo tra 60 € e 100 € al mese) che si limita a consultare report, approvare richieste o inserire poche informazioni, infatti, potrebbe passare a una Team Member da circa 8 € al mese. Questo significa un risparmio potenziale di oltre 50-90 € per utente ogni mese, che su decine o centinaia di licenze può trasformarsi in migliaia di euro l’anno. 

  Il monitoraggio è fondamentale perché permette anche di identify pattern stagionali: magari alcuni utenti hanno bisogno di accesso completo solo durante i periodi di budget o di chiusura trimestrale. In base al tipo di contratto sottoscritto, Microsoft permette di fare upgrade e downgrade mensili, quindi è possibile ottimizzare dinamicamente. 
   

• Eliminate Duplicate or Overlapping Licenses We can verify if a device already covered by a Device license is also used by users with unnecessary User licenses, thereby eliminating unjustified double expenses.

• Check Functional Coverage We assess whether the features included in an application already meet needs that would otherwise lead to the purchase of another, thus avoiding redundant tools and unnecessary costs.

For example, Customer Service and Sales share many capabilities: both manage customers, include case management features, and offer reporting. In a team that handles both sales and post-sales support, the initial reaction might be to assign both licenses to everyone. In reality, Sales Enterprise is often enough to manage simple cases, reserving Customer Service only for more complex support.

The same applies to Finance and Business Central: if you're already using Business Central as your ERP, there's no need to buy Dynamics 365 Finance unless you have specific multinational-level needs. Yet many companies end up paying for both, wanting "the best of everything."

• Use Attach Licenses for Full Users We ensure that for roles working across multiple platform modules, the Attach licensing mechanism is applied correctly, avoiding full-price charges for each additional application.

• Identify Cost-Effective Scenarios for Using Device or Tenant Models In scenarios involving warehouses, checkouts, shared production workstations, or company-wide applications,a Device or Tenant license can replace several named licenses. This approach can lead to significant savings in departments with shared fixed workstations and simplify the management of universally accessed apps.

Practical Optimization Example: Project Operations App 

In August 2025, the Dynamics 365 Licensing Guide introduced a major update for the Project Operations app: native integration of purchase order approvals, timesheet approvals, and full time and expense management.

What does this mean? Thanks to these new features, many activities that previously required a Finance license can now be managed entirely within Project Operations, eliminating duplicate licenses and reducing costs.

We step in by analyzing Project Manager licenses and identifying optimization opportunities for roles such as Team Leads or process supervisors, aiming to significantly cut overall expenses.

According to our analysis, companies managing projects in Dynamics 365 can reduce their licensing budgets by ensuring every role is correctly aligned with the new tiered licensing model, assigning only the necessary functionality and avoiding unnecessary additional Finance licenses: 

• Project Operations Full for those managing the entire project lifecycle, from start to finish.

• Operations-Activity for those involved in approvals and monitoring. This is a separate cross-application license offering limited access to features across various Dynamics 365 apps.

• Team Member for roles focused solely on viewing or entering data.

Maximizing the Value of Dynamics with Power Platform and Copilot 

When talking about cost optimization in Dynamics 365, it’s important not to stop at core licenses: tools like Power Platform and Copilot, while not technically part of “Dynamics 365,” extend its capabilities and must be considered part of the same ecosystem.

The Power Platform provides key levers:

• Power BI allows you to create advanced reports and dashboards based on Dynamics 365 data. Many companies buy Power BI Premium without realizing that the Pro version already covers most needs. Also, for those who have or plan to purchase them, Power BI Pro is included in Microsoft 365 E5 and Office 365 E5 licenses. This is worth checking to avoid waste or duplicate purchases.

• Power Apps allows the development of custom applications at low cost, avoiding the need for full licenses for very specific processes. This strategy can result in up to 90% savings for users who don't need all Dynamics 365 features, only a targeted app for their workflow. For example, replacing 50 Sales Enterprise licenses at €95/month with Power Apps per-app licenses at €10/month reduces spending from €4,750 to €500 per month—a monthly saving of €4,250 in limited usage scenarios.

• Power Automate automates cross-app workflows, reducing manual workload and the need for full licenses for repetitive operations.

• Power Virtual Agents handle simple requests via integrated chatbots, freeing Customer Service agents for more complex cases and reducing license demand.

Copilot Should Be Evaluated with the Same Logic: many basic AI features are already included in Enterprise licenses for Sales, Customer Service, and Business Central. The Premium component (€30/month), a paid extension of the main Dynamics 365 license, adds advanced features like intelligent conversations and custom predictive models. Before purchasing it, however, it’s wise to check if the already included capabilities cover at least 80% of the needs—thus avoiding unnecessary extra costs.

We must therefore make sure to consider Dynamics 365 licensing from a 360° perspective, including extensions and connected tools like Power Platform (Power Apps, Power BI, Power Automate, Power Virtual Agents) and AI/Copilot features.

This approach makes it possible to identify more cost-effective alternatives to full licenses, fully leverage included capabilities, and optimize costs by avoiding redundant purchases.