Licensing Dynamics 365 CRM & ERP Applications
Microsoft Dynamics 365 encompasses a broad suite of CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning) applications, ranging from sales and customer service tools to financial and supply chain systems.
Navigating Dynamics 365 licensing is critical for CIOs to control costs. The model is modular—you license only the apps you need—but this flexibility can lead to overspending if not managed carefully.
This article provides a blunt overview of how core CRM and ERP apps are licensed, including user license options, bundling strategies, and tips to avoid over-licensing.
Core Dynamics 365 Modules (CRM vs ERP)
Dynamics 365 is divided into CRM-focused apps (often called Customer Engagement apps) and ERP-focused apps (the Finance & Operations suite).
Key modules include:
- CRM Applications: Dynamics 365 Sales, Customer Service, Field Service, Marketing, and Project Operations. These handle front-office processes like sales pipeline management, customer support, field service operations, marketing campaigns, and project-based services.
- ERP Applications: Dynamics 365 Finance, Supply Chain Management, Commerce, and Human Resources. These support back-office operations such as financial management, inventory/production, retail and e-commerce, and HR management. (Note: Dynamics 365 Human Resources has gradually merged into the Finance & Operations suite.)
Each application is licensed separately as a cloud service. This granularity lets organizations tailor licenses to needs, but demands careful planning. Some users will need multiple modules, while others only require one or very limited access.
User Licensing Basics
Most Dynamics 365 modules use a per-user, per-month subscription model (named user licensing).
Key license types include:
- Full User: The standard license provides complete functionality for a given Dynamics 365 app. For example, a sales rep needs a full Dynamics 365 Sales license; an accountant needs a full Dynamics 365 Finance license. Full user licenses (Enterprise licenses) are the most expensive and should be reserved for users needing that app’s features.
- Team Member: A low-cost “light use” license (around $8 per user/month) for users who only need limited Dynamics 365 access. Team Members can read data and perform basic tasks across modules (e.g., update a field, view a report), but cannot use core functional areas like creating sales opportunities or support cases. This license is suitable for occasional users or those who just consume information. Strict limitations apply to prevent misuse (e.g., maximum number of custom entities that can be accessed).
- Device License: A license permits one device (e.g., a shared terminal in a warehouse or store) to access a Dynamics 365 app instead of licensing a user. Any user on that device can use the app under that license. Device licenses exist for a few modules and can save costs in shift-based scenarios, though they are less common than user licenses.
Note: Dynamics 365 online requires each individual user to be licensed. Sharing one user account among multiple people to save costs violates the terms and can lead to compliance issues. Each person using the system should have an appropriate user or device license.
Read Common Dynamics 365 Licensing Mistakes.
Base and Attach Licensing (Modern Bundling)
Microsoft offered bundled plans (like the Customer Engagement Plan for CRM apps and the Unified Operations Plan for ERP) that allowed users to use multiple apps under one license.
Those plans were retired in 2019 in favor of a more flexible “Base + Attach” model:
- Base License: Every Dynamics 365 user must have at least one “base” license – their primary app – at full price. This is the foundation for that user’s access. Typically, you assign as the base whichever app is highest-priced among those the user needs.
- Attach License: If the user needs additional Dynamics 365 apps, you can license those as “attach” licenses at a steep discount instead of paying full price again. An attach license gives the user full rights to the secondary app but usually costs only ~$20 per user/month (a fraction of the normal price), as long as the user has the required base license.
For example, if a customer service agent also needs sales functionality, you could purchase Dynamics 365 Customer Service as the base license (say ~$100/month) and add Dynamics 365 Sales as an add-on (around $20). The user gets both for ~$120 instead of ~$200 if you bought both at full price.
The base+attach approach ensures you never pay twice for the same user. A user can have multiple attached licenses on top of one base, but a Team Member license cannot serve as a base (only full licenses qualify). You cannot assign an attach license without the corresponding base in place.
CIOs should exploit this model to avoid needless costs. No user requiring two or more apps should be stuck with two full-price licenses. Always designate the most expensive app as the base and attach the others.
Avoiding Over-Licensing
With so many modules and options, overspending on Dynamics 365 is a real risk. Strategies to avoid over-licensing include:
- Right-Size License Type: Don’t automatically give everyone a full license. Many users (e.g., read-only roles or occasional users) might be fine with a Team Member license. Reserve costly full licenses for those who genuinely need them.
- Use Attach for Multi-App Users: Whenever a user needs access to multiple Dynamics 365 apps, implement base+attach. Paying full price twice for one person is a waste of budget. Verify that you are utilizing the attached licenses in all eligible cases.
- Audit License Usage: Regularly review who is using what. It’s not unusual to find licenses assigned to users who rarely log in or use only a small fraction of the features. Identify these cases and consider downgrading or removing licenses. Monitoring actual usage (via admin center reports or third-party tools) can reveal over-provisioning.
- Eliminate Legacy Bundles: If you still have any legacy “Plan” licenses grandfathered from earlier contracts, scrutinize their usage. Often, organizations continue renewing them without realizing they could cut costs by moving those users to individual app licenses plus attachments. Don’t pay for broad entitlements that aren’t needed.
- Consult Experts: Given the complexity, consider periodic license reviews with a third-party expert (such as Redress Compliance). They can identify over-licensing and compliance gaps and ensure you’re aligned with the latest rules. This is especially worthwhile before renewal negotiations or if your Dynamics usage has grown or changed.
Recommendations for CIOs
- Map User Roles to Licenses: Thoroughly map your users, their roles, and the Dynamics functionality they need. To avoid overpaying, assign the cheapest license that meets each user’s requirements (e.g., Team Member vs. full user).
- Optimize Multi-App Licensing: Implement the base-and-attach model across your licensing strategy. Make it a policy that no user gets a second Dynamics 365 app as a standalone license. Always apply the attached model to multi-app users to capitalize on Microsoft’s discount.
- Audit and Adjust Regularly: Set up a quarterly or biannual review of Dynamics 365 license usage. Look for unused or underused licenses to reclaim and identify compliance risks (such as users doing more than their license allows). Adjust your license counts ahead of renewals to prevent wasted spending.
- Stay Educated on Licensing Changes: Stay updated with changes in Microsoft’s licensing (new editions, pricing adjustments, enforcement of limitations). When Microsoft updates its licensing guide or pricing, reassess your deployments to see if there are new savings opportunities or requirements.
- Use Independent Advice: Leverage third-party licensing advisors (e.g., Redress Compliance) for an outside perspective, especially before big purchases or renewals. They can provide benchmarks and help ensure you only buy what you truly need.
