Introduction To Microsoft Commercial Licensing


Microsoft offers commitment-based and transactional options for organizations that want to purchase Microsoft cloud services, on-premises software, and/or Software Assurance through Microsoft-assisted, partner value-added, or self-service web options.

Programs For The Type And Size Of An Organization

At the most basic level, the Microsoft Commercial Licensing agreement models address organizations in the following main categories:

  1. Organizations with 500 or more users or devices.
  2. Organizations with 250 or more users or devices.
  3. Organizations with more than five but fewer than 250 users or devices.
  1. For organizations with 500 or more users or devices:
    1. Microsoft Enterprise Agreement
      The Enterprise Agreement model offers the best value to large commercial and government organizations and provides the flexibility to buy cloud services and software licenses under one agreement in response to the changing technology landscape. It offers a subscription option, which lowers initial licensing costs based on ​subscribing ​to the rights to use Microsoft products and services instead of ​owning t​ hem. The subscription option allows for an increase or decrease of subscription counts annually. With the subscription option, an organization can access Microsoft software for the duration of their subscription.
  2. For organizations with 250 or more users or devices:
    1. Enrolment for Education Solutions (EES)
      This model provides qualified academic customers of all sizes a way to acquire Microsoft software and services under a single subscription agreement. The EES provides coverage for Desktop Platform Products through one annual count of employees, the ability to add additional products as needed, student licensing options, and the benefits of Microsoft Software Assurance.
    2. Microsoft Products and Services Agreement (MPSA)
      The MPSA is available for midsize and large commercial and government organizations that require 250 or more licenses for online services, software, and Software Assurance (optional), and do not want an Enterprise Agreement. It’s also for organizations looking to make as-needed purchases.
    3. Microsoft Select Plus
      This solution is for midsize and large government and academic organizations with 250 or more users or devices and multiple affiliates that want to license software and services at any business unit level, while still getting the price saving advantages of being a single organization. Select Plus for commercial organizations is no longer available to new customers
  3. For public sector organizations with fewer than 250 users or devices:
    1. Open License
      The Open License model is for commercial, government, and education customers who want a minimum initial purchase of only five software licenses. This program is ideal if an organization prefers to pay as they consume services or use licenses, and to change their licensing agreement as the organization grows. Qualifying for volume purchasing also occurs under the volume feature of Open License. Open volume purchasing is for customers who can meet minimum purchase levels based on a system of product pools and points. With an entry minimum of 500 points from a single product pool, this program offers deeper discounts for a greater savings.
    2. Open Value Subscription
      It is for commercial customers who want to subscribe to, rather than acquire, Microsoft product licenses. Available in selected countries or regions, Microsoft Open Value Subscription provides the lowest up-front costs of the Open options with the flexibility for customers to reduce their total licensing costs in years when their desktop PC count declines.
    3. Open Value
      Open Value is for commercial customers with as few as five PCs and offers the advantages of Software Assurance, simplified license management, and an annual payment structure. Open Value offers organization-wide and non–organization-wide options. In addition to size, it also considers an organization’s primary function. For example, special pricing is available for government, academic, and non-profit organizations.
  4. For education institutions that prefer to license software on an annual subscription basis, Microsoft offers
    1. Open Value Subscription for Education Solutions
      This agreement is for eligible education customers that want to subscribe to Microsoft licenses and cloud services. It offers low up-front costs with access to Microsoft software licenses and cloud services for the term of the agreement through subscription-based licensing.

Software Assurance

Software Assurance (SA) is included in many Microsoft Volume Licensing programs and is an optional purchase in others. SA contains a range of benefits which provide technology services and support to manage the software lifecycle. Typically, for Microsoft server products, SA costs around 25% of the license price for each year of coverage, and for Microsoft desktop products, it costs around 29% of the license price for each year of coverage.

Licensing on-premises software

Another key factor to consider—aside from organizational type and size—is which products and services an organization wants to license. Different product families fall under different licensing models. For example:

  1. Desktop application
    Microsoft Office Professional 2016, for example, requires a license for each device that is running the program locally or accessing the program on a network server. Customers can install any number of copies locally on licensed devices or on a network device for remote use by licensed devices. Only one user can use the software on, or from, a licensed device at any one time.
  2. Desktop PC operating system
    The Windows 10 Professional operating system, for example, allows a customer to install one copy of the software on a licensed device or within a local virtual hardware system on a licensed device for each license the customer acquires. In Commercial Licensing, the desktop PC operating system license is an upgrade license. Upgrade licenses can be acquired only for devices for which an organization already has licensed a qualifying operating system, either preinstalled on a PC through a PC manufacturer or as full packaged product from retail. The Product Terms show the qualifying operating systems that qualify for an upgrade license.
  3. Server products
    Server products are licensed by server, processor, or core, and, in some cases, by access points. Some server products require a license for each running instance of the server software that an organization uses on a server—whether in a physical or virtual operating system environment. Other server products require licenses for each physical processor on the server or each core in the physical processors on the server. For example, the Windows Server 2016 Standard is licensed by physical core and permits a running instance in up to two virtual operating system environments, plus one host instance on the physical device solely to manage the virtual instances on the licensed server. The Windows Server 2016 Datacenter edition is also licensed by physical core but allows use of any number of instances of the software. Note that the processor-based server licensing model has been retired.
  4. Windows Server
    Some of the server application products (e.g., Microsoft Exchange Server or Microsoft SharePoint Server) requires a Microsoft Client Access License (CAL) for each user or device that accesses the server software. CALs are version specific and must be the same version or later than the server software being accessed. CALs permit access to servers licensed by the same entity. They do not permit access to another entity’s licensed servers.

License Types

  1. License (L)
    License gives rights only to use a specific version of a product, i.e. Office Professional Plus 2007. There are two ways to purchase the license as the following:
    1. Perpetual license:
      The organization owns the license and can use the software throughout the term of the Volume Licensing agreement and forever afterwards.
    2. Non-perpetual license
      The organization can only use the software throughout the term of the Volume Licensing agreement.
  2. Software Assurance (SA)
    Software Assurance is exclusively available to purchase through the Volume Licensing Programs. It is available for most Microsoft products and can be purchased with a License (at the same time), which gives rights to any new versions of a product released during the term of your agreement. PLUS offers a range of other benefits such as annual payments and, in some cases, training vouchers and home use. Some products, such as Office purchased pre-installed on your new PC (OEM), can be enrolled into Software Assurance within 90 days of purchase of that OEM software.
  3. License bundled with Software Assurance (L&SA)
    This option combines License and Software Assurance.
  4. Windows Upgrade
    For customers wishing to upgrade to the latest version of Windows but who are not buying new hardware, an upgrade through volume licensing is a cost-effective.

Licenses Purchasing Ways

You need a license for each Microsoft software program you use. Microsoft offers a range of licensing options to meet the different needs of our customers. The terms and conditions that accompany each licensing option vary, as does the price, according to the type of license purchased. As a general rule of thumb, licenses with the greatest flexibility will cost more than the licenses that have less flexibility.


For more information please visit Microsoft Website

Disclaimer: The information is provided for general informational and educational purposes only and is not a substitute for professional advice. The use or reliance of any information contained on this site is solely at your own risk. ​All information has been provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information, as the information provided does not contain software licensing advice.

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