To install and run the Microsoft 365 components and access the Microsoft 365 cloud services, each user in an organization must have a Microsoft 365 user subscription license (USL). Typically, an administrator for an organization deploying Microsoft 365 creates a tenancy in Microsoft Entra ID (Azure Active Directory), purchases a specific number of USLs, and then assigns them to users in the Microsoft 365 admin center console by selecting Licenses in the Billing menu, as shown in Figure 4-12.

FIGURE 4-12 A License Details page in Microsoft 365 admin center

Global administrators or user management administrators can assign licenses to up to 20 users at once from this interface. It is also possible to assign licenses to hybrid user accounts created through Active Directory synchronization or federation or while creating new user accounts in the Microsoft 365 admin center.

Assigning a Microsoft 365 license to a user causes the following events to occur:

• Exchange Online creates a mailbox for the user
• SharePoint grants the user edit permissions for the default team site
• Microsoft 365 enables the user to download and install the Office productivity applications on up to five devices

From the Purchase Services page in the admin center, administrators can also purchase additional Microsoft 365 USLs or licenses for add-on products, as shown in Figure 4-13.

FIGURE 4-13 The Purchase Services page in Microsoft 365 admin center

Microsoft offers four different USL types for each of the Microsoft 365 products, depending on the purchaser’s existing relationship with the company, as follows:

• Full USL This is a complete Microsoft 365 license for new purchasers who do not have existing Microsoft product licenses or for owners of on-premises Microsoft product licenses that do not include Software Assurance—Microsoft’s software maintenance agreement.
• Add-on USL This is a license for purchasers with existing on-premises Microsoft product licenses, including Software Assurance, who want to maintain their infrastructure while adding Microsoft 365 cloud services in a pilot or hybrid deployment.
• From SA USL This is a license for purchasers with existing perpetual Microsoft product licenses, including Software Assurance, who want to transition to a cloud-based infrastructure with continued Software Assurance for the Microsoft 365 product. Qualifying purchasers can only obtain From SA USLs at their contract renewal time and must maintain their existing Software Assurance agreement. A Microsoft 365 Software Assurance agreement includes cloud-oriented benefits, such as Deployment Planning Services, Home Use Program, online user training courses, and additional support incidents.
• Step-up USL This is a license for current Microsoft customers who want to upgrade their subscriptions during an existing enrollment or agreement period, such as from Office 365 to Microsoft 365 or from Microsoft 365 Business to Microsoft 365 Enterprise E3.

Because the Add-on USLs, From SA USLs, and Step-up USLs are intended for existing Microsoft customers, their prices reflect significant discounts from the Full USL price.