Microsoft Dynamics 365 licence guide

Microsoft Dynamics 365 is one of the fastest-growing cloud-based CRM and ERP suites on the market. It boasts a wide range of modules and extensions that mean businesses can tailor the solution to meet the specific industry needs, processes, and compliance requirements.

But with so many applications to choose from, understanding how licensing works is essential. To help, we’ve put together a comprehensive Dynamics 365 Licence Guide for 2025. It breaks down licensing and how it works and highlights key Dynamics 365 licensing updates for 2025, so you can get maximum value from your licences.

Please note: Prices included in this guide will vary over time and per application. Pricing information should be verified against official Microsoft documentation.

The 3 main licence types in Microsoft Dynamics 365

Let’s start with the fundamentals – types of licences. There are three main kinds of licences for Dynamics 365, they are:

1. User Subscription Licences (USL)

These are assigned to named users and cover that user only. These kinds of licences are the most common and have three subtypes:

• – Full User: For employees who need full functionality—e.g., salespeople, finance managers, service agents.
• Team Member: For light users who need to view data, update personal info, or submit timesheets. These licences are cost-effective and work across most Dynamics apps.
• Activity Licence: Available only for Unified Operations apps, offering more functionality than Team Member but less than Full User.

2. Device Subscription Licences (DSL)

These licences are for shared environments like warehouses or retail counters. As multiple users can access Dynamics 365 via a licensed device without needing individual user licences.

3. Tenant-Based Licences

These kinds of licences apply to the entire organisation. Where Dynamics 365 Marketing is licensed per tenant (not per user) so that entire teams and departments can have access.

Understanding the Dynamics 365 Ecosystem

Before we look at how licences are costed, it’s important to understand how modular adoption in Dynamics 365 impacts licensing. So first of all, what is modular adoption?

Dynamics 365 is modular by design, which means businesses can start with one application (like Sales or Customer Service) and extend capabilities by adding new modules or applications like:

• Customer Engagement (CE): Sales, Customer Service, Field Service, Marketing, and Project Service Automation.
• Unified Operations (UO): Finance, Supply Chain Management, Commerce, and Human Resources.
• Power Platform: Power BI, Power Apps, Power Automate, and Power Virtual Agents.

Because integrations in Dynamics 365 are so powerful, businesses that use them tend to drive greater ROI and see more impact from their Microsoft investment.

As such, Microsoft uses the Base + Attach model to incentivise businesses to do just that. Here’s how that works:

How Microsoft’s Base + Attach licence model works in Dynamics 365

Microsoft’s Base + Attach means that:

• Each user must have a “Base” licence for their primary app.
• Additional applications are then added as an “Attach” licence at reduced cost.

As an example, a business needing both Dynamics 365 Sales and Customer Service might start with Sales and pay £95 per month (the “Base”). They can then add on Customer Service for a lower fee, like £20 per month (the “Attach:).

It’s worth noting, some solutions (like Project Service Automation and Talent) cannot be purchased through as an Attach and are considered standalone base licences.

Licensing for nonprofits and education

Nonprofits, government, and education institutions are eligible for specially discounted licensing options through Microsoft’s nonprofit and education programmes.

This means registered nonprofits and educational institutions can access Dynamics 365 licences at significantly reduced rates (compared to standard commercial pricing).

These licences offer full access to core Dynamics 365 applications, including Customer Engagement and Unified Operations modules – as well as Power Platform entitlements.

Institutions have to verify their eligibility through Microsoft’s validation process, of course. This can be done with help from an authorised partner or directly through Microsoft.

The latest eligibility criteria for nonprofits can be found here, and information for educational institutions is available here.

Understanding the Dynamics 365 Ecosystem

Microsoft announced two changes to Dynamics 365 licensing this year, specifically for Dynamics 365 Finance & Operations. These changes impact how compliance works in Dynamics 365 and are now in effect as of November 2025.

The two changes are:

• From 1 September 2025: Users without assigned licences will receive in-app warnings.
• From 1 November 2025: Access will be blocked for unlicensed users. This affects Finance, Supply Chain, Commerce, Project Operations, and HR apps.

Where Copilot fits in with Dynamics 365 licensing

Microsoft Copilot is an AI-powered assistant integrated into Dynamics 365 applications, designed to enhance productivity and decision-making. In Dynamics 365, businesses can use Copilot to:

• Automate tasks
• Instantly draft content, like email replies and record notes
• Summarise interactions and communications
• Get actionable insights from Dynamics 365 data (and any integrated systems)

As of 2025, Copilot is available as an add-on for several Dynamics 365 modules, including Sales, Customer Service, Finance, Supply Chain Management, and Project Operations.

However, Microsoft frequently releases new integrations between Copilot and Dynamics 365, so check Microsoft documentation or their website for the most up-to-date information.

How is Copilot licensed alongside Dynamics 365?

Copilot is typically licensed as a per-user add-on to existing Dynamics 365 licences. That means that users must have a qualifying Dynamics 365 licence (e.g., Sales, Customer Service) to purchase Copilot.

Not all licence types (e.g., Team Member) are eligible for Copilot. So make sure to check eligibility before purchasing.

How does the pricing work?

Pricing varies based on your existing subscriptions and what user types you need. For standard pricing, you can check the Microsoft website. To find out if you are eligible for discounted rates under your current licence structure, get in touch with a Microsoft Solution Partner like us.

What’s next?

Whether you’re a small UK business using Business Central or a large enterprise deploying Finance and Supply Chain Management, understanding your licensing options ensures you get the most value from your Microsoft investment.

Need help with your Dynamics 365 licensing, an implementation, or optimising an existing setup? Get in touch with our friendly, expert team.