Microsoft License Types
Microsoft license types. What each one means.
Microsoft sells the same software under several license types, and the type you pick changes the price, the rights, and the lock in. Here is what each one actually means.
Microsoft sells the same software under several license types, and the type you pick changes the price, the rights, and the lock in. Here is what each one actually means.
Microsoft license types split along user versus device, subscription versus perpetual, and base versus access, and each split changes your rights, your cost, and how easily you can leave.
This guide is for license managers mapping which Microsoft license type fits each role. Read it with the Microsoft licensing guide and the Microsoft Practice page.
A user license follows one named person across all their devices, while a device license covers one device used by any number of people. The right choice depends on how many devices each person uses. Microsoft sets out both models in its licensing terms.
Device licensing wins for shared terminals, shift work, and shop floor machines where many people use one device. For everyone else, user licensing is usually cheaper and simpler.
A subscription license rents the software for a term and stops when you stop paying. A perpetual license is owned outright for the version bought, with upgrades only through Software Assurance. The rights differ sharply at the end of the term.
Software Assurance adds upgrade rights and some benefits to perpetual licenses for an annual fee. The program detail sits in the Microsoft licensing documentation. If you never take an upgrade, the fee can be pure cost.
Microsoft license types compared
| Type | You get | Ends when |
|---|---|---|
| Subscription | Use for the term | Payment stops |
| Perpetual | Own the version | Never, version frozen |
| Perpetual plus SA | Version plus upgrades | SA lapses |
| CAL | Right to access a server | Server retired or lapse |
A Client Access License grants the right to access a Microsoft server product such as Windows Server or SQL Server. CALs come in user and device flavors, and they are easy to lose track of. Server licensing rules are in the product licensing terms.
CALs outlive the servers they covered when retirements are not reflected in the license position. The result is paid access rights for systems that no longer exist.
Start from the role and the device pattern, not from the price list. Decide user or device, then subscription or perpetual, then layer only the access licenses the workload truly needs.
Subscription ends cleanly when you stop paying, while perpetual leaves owned assets you can keep running. Type is therefore part of your exit planning, not just a purchase decision. The subscription terms sit in the Microsoft 365 licensing documentation.
The standard advice is to move everything to subscription because it is simpler and cloud aligned. We disagree with the blanket version. Across the 30 to 40 license mixes Fredrik Filipsson reviewed in 2024 to 2025, blanket subscription stranded perpetual assets that still ran fine and added cost for stable workloads. The buyer side move is to choose type by role and workload, keep perpetual where a workload is stable and owned, and use subscription where flexibility genuinely pays. The right answer is a deliberate mix, not one type everywhere.
Source: Redress Compliance advisory engagement file, 2024 to 2025.
The cheapest Microsoft license is the right type, not the deepest discount on the wrong one.
The main Microsoft license types split along user versus device, subscription versus perpetual, and base versus access licenses such as CALs. Each split changes your rights, your cost, and how easily you can leave.
A user license follows one named person across all their devices, while a device license covers one device used by any number of people. Device licensing wins for shared terminals and shift work, while user licensing is usually cheaper otherwise.
A subscription license rents the software for a term and ends when payment stops, while a perpetual license is owned outright for the version bought. Perpetual upgrades come only through Software Assurance.
Software Assurance adds upgrade rights and some benefits to perpetual licenses for an annual fee. If you never take an upgrade during the term, the Software Assurance fee can become pure cost with no return.
A Client Access License, or CAL, grants the right to access a Microsoft server product such as Windows Server or SQL Server. CALs come in user and device versions and are commonly left orphaned after servers retire.
CALs become orphaned when servers are retired but the license position is not updated. The organization then pays for access rights to systems that no longer exist, which a regular reconciliation recovers.
Not by default. Blanket subscription can strand perpetual assets that still run fine and add cost for stable workloads. The better approach chooses type by role and workload, keeping perpetual where it pays.
License type shapes exit cost because subscription ends cleanly when payment stops, while perpetual leaves owned assets you can keep running. Type is part of exit planning, not only a purchase decision.
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