Overview of Microsoft Dynamics 365 Licensing – March 2021

In its continuous effort to be the market leader, Microsoft is regularly updating the business products line, which immediately affects their pricing and licensing. This post highlights key licensing points for Dynamics 365 product lineup as of March 2021 and is structured as a quick reference guide. It does NOT apply to Microsoft Dynamics on-premises solutions, Microsoft Dynamics CRM Online and Microsoft Dynamics AX Online services. If you have a legacy system, you might be eligible for the discounts, should you decide on an upgrade. Please contact us for more information.

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Aaron Klein

This post covers the entire lineup of Microsoft Dynamics 365 products and briefly describes key features and licensing mechanism of each one, highlighting any changes that are described in the March 2021 Microsoft Dynamics 365 Licensing Gude. Please note that Microsoft reserves the right to update and review the guide at any time and without prior notice. 

Microsoft Dynamics 365 Licensing Overview

Dynamics applications are licensed under a variety of models consisting of assigned licenses that are dedicated to a named user or device and unassigned licenses that provide access to a feature or service at tenant level. Mixing the old and new licenses is not encouraged: the clients are offered a discount for upgrading their existing product licenses to a current version when purchasing a new app.

Purchase of a full user assigned license for a core business Dynamics 365 application makes you eligible for additional user licenses at a discounted price. You can also attach additional product licenses to that full user at a nominal fee. Microsoft has introduced three categories of the full user license: Principal (Enterprise) for the extended functionality, Professional for core features access and Team Member as a lowest tier. Regardless of which one you have selected, the licensed user is allowed to access respective products from any device on any platform.

The device license on a Dynamics 365 product allows every user of that device to access it. The users can have shared or individual login. To better serve the needs of your organization, Microsoft allows customers to mix both user and device licenses.

For ultimate flexibility, it is possible to purchase an unassigned license not fixed to a specific user or a device. These are primarily sold as Full Application Access license aimed for use inside one organization. Microsoft addresses licensing for indirect access by partners, customers, connected automated systems, loT devices and bots on a transactional level with Cross Application licenses. Please note that the use of multiplexing hardware or software to pool connections, reroute information, or reduce the number of devices or users that directly access or use the Dynamics 365 service does NOT reduce the number of licenses of any type required to access the Dynamics 365 service.

The first subscription (base license) of a Dynamics 365 application includes the default capacity which is shared per tenant. Default capacity is not cumulative, therefore additional subscriptions do not increase the customers default capacity. Should you require more storage for your data, additional Capacity license can be purchased.

One of the advantages of Dynamics 365 is dual use rights which give customers the option to deploy the server software either in Microsoft’s cloud or in a private on-premises or partner-hosted cloud. In some cases, customers may want to deploy both types of environments simultaneously. This might be done to help with migrating a Dynamics 365 on-premises deployment to Dynamics 365, running private Dev/Test deployments in Microsoft Azure. With dual use rights, Dynamics 365 licensed users do not need to acquire Client Access Licenses (CALs) to access server environments.

Dual write enables customers to synchronize data from Commerce, Finance, and Supply Chain Management applications into Dataverse (formerly Common Data Service). Dual write is configured at the entity level, enabling customers to designate the specific entities that it will synchronize with Dataverse. A specific license is not required to enable dual write. However, in order to enable dual write for certain tables in Dynamics 365 applications, a Dynamics 365 license is required for that corresponding restricted table.

Complete List of Microsoft Dynamics 365 Licenses

Microsoft Dynamics 365 Licensing Details

Application Licensing - Assigned

MIcrosoft Dynamics 365 Business Central

Microsoft Business Central Essentials includes the following products under a single user license:  

(i) Financial Management

(iv) Human Resources Management

(ii) Supply Chain Management 

(v) Project Management

(iii) Customer Relationship Management

(vi) Warehouse Management

Microsoft Business Central Premium also includes Service Management and Manufacturing modules in addition to everything included in Essentials suite.

Microsoft Dynamics 365 Commerce

March 2021 Microsoft Dynamics 365 Commerce License Explained

The Commerce application is licensed per user and is designed to help retailers manage their operations, deliver a connected employee experience, and offer exceptional shopping experiences. The Commerce application simplifies the process of unifying customer shopping experience through an end-to-end commerce platform that brings together eCommerce, in-store, back office, and call center along with enabling easier integration to emerging channels through an API driven headless commerce engine. The application is aimed to:

  •  Improve in-store and e-commerce profitability
  • Drive intelligent business insights to optimize strategy and cost
  • Accelerate buying behavior through ubiquitous customer experiences

Commerce customers receive free Fraud Protection entitlements and do not need the Fraud Protection base license if they want to buy additional capacity.

Microsoft Dynamics 365 Commerce Scale Unit - cloud

The Cloud Scale Unit is provisioned to support the customers who have:

  • bought an eCommerce tier
  • bought one or more of the Commerce Devices
  • already have a Cloud Scale Unit and require extra performance, co-location or customization

Additional Scale Unit – Cloud may only be applied to support eCommerce transactions OR Commerce Devices, a single unit may not support both.

When a Default Commerce Scale Unit – Cloud is provisioned it will be sized appropriately for the number of purchased eCommerce transactions or the number of purchased Point of Sale (POS) devices. An additional Scale Unit – Cloud will be sized according to which tier was purchased.
Commerce deployments may also utilize the Commerce Scale Unit – Self Hosted, which is a retail server, cloud Point of Sale (POS) website, and channel database deployed locally in a store. It maintains connectivity with and extends a retail deployment, providing improved performance, business continuity and hybrid capabilities in store.

The Commerce Scale Unit – Self Hosted installation and use rights are included with a qualifying minimum purchase of Commerce Application SLs and may be downloaded and installed at no additional cost. All servers, users and devices accessing the Commerce Scale Unit – Self Hosted must be appropriately licensed. The Commerce Scale Unit – Self Hosted is not available as a standalone license. Required hardware, Windows Client or Windows Server and SQL licenses must be acquired and licensed separately.

If dual use rights are being exercised and downgrade rights are utilized to downgrade to AX 2012, the Retail Store Server is not an included use right and appropriate licensing must be obtained.

Microsoft Dynamics 365 eCommerce Tiers
The Dynamics 365 eCommerce application add-on enables eCommerce capabilities for Dynamics 365 Commerce. The eCommerce add-on requires a Dynamics 365 Commerce deployment with at least one Dynamics 365 commerce base or attach user and a sufficient minimum user purchase. To enable eCommerce capabilities at least one eCommerce tier must be purchased, which will deploy a single cloud scale unit and include a specified allowance of eCommerce transactions, with a transaction counted as the final purchase of an eCommerce shopping cart (irrespective of the number of items in the cart). Subscriptions have a minimum of a one-year commitment.
Microsoft Dynamics 365 Commerce Recommendations

Microsoft Dynamics 365 Commerce Recommendations let customers easily and quickly find products that they want while they have an experience that serves them well. Commerce Recommendations is a tenant-based add-on license which requires a Commerce deployment with at least one Dynamics 365 commerce base or attach user and a sufficient minimum user purchase. To enable Commerce Recommendations capability, at least one Recommendations unit must be purchased, which will cover 20K transactions per month, with a transaction counted as the final checkout of a shopping order (irrespective in-store or online purchase).
Subscription has a minimum of a one-year commitment and transactions are sold as an annual allowance i.e. one unit includes 20K transactions per month which provide the customer with 240K transactions (20K x 12 months) which can be consumed at any point in the year.

Dynamics 365 Commerce Ratings and Reviews

The Commerce Ratings and Reviews solution lets retailers capture product reviews and ratings from customers. Retailers can then show average ratings and review information across their e-Commerce website. Commerce Ratings and Reviews is a tenant-based add-on license which requires a Commerce deployment with at least one Dynamics 365 commerce base or attach user and a sufficient minimum user purchase.  To enable Commerce Ratings and Reviews capability, at least one Ratings and Reviews unit must be purchased, which will cover up to 250K ratings and reviews active in the commerce system.

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Microsoft Dynamics 365 Customer Service

Microsort Dynamics 365 Customer Service helps you manage customer relationships, empower your customer service agents, and provide a branded, personalized self-service experience through a searchable knowledge base that delivers consistent, up-to-date answers. Streamline customer support and help customers find the understanding they need to ensure product satisfaction and build customer loyalty. Dynamics 365 licensing for Customer Service is available at either an enterprise or professional level and with several optional add-ons to deliver the capabilities needed for your situation. Choose user licenses for one or the other; you can only buy both licenses if you deploy them in separate environments. Customer Service Enterprise may also be licensed by device.

Microsoft Dynamics 365 Customer Service Professional
Customer Service Professional provides a self-service customer portal and knowledge base, as well as basic resources for customer support agents and analytics. It’s meant for less complex scenarios that need streamlined capabilities to support customers and customer service teams.
Microsoft Dynamics 365 Customer Service Enterprise

Customer Service Enterprise licenses expand on the functionality of Customer Service Professional. In particular, the enterprise license grants use rights that give users the ability to schedule and dispatch service, create teams, and manage resources through integration with other Dynamics 365 applications such as Field Service and Project Operations, when the organization also licenses them. An enterprise license also includes free access to the capabilities of Customer Service Insights. Customer Service Insights provides integrated analytics and AI capabilities to help you better understand support engagements and emerging trends. Identify opportunities for enhancing your automated support system and track the performance of support options and agents.

Chats for Microsoft Dynamics 365 Customer Service

Chat for Dynamics 365 Customer Service is an add-on capability for the Customer Service Enterprise application that helps agents engage in real-time with customers and resolve issues faster. Chat is licensed per user.

Microsoft Dynamics 365 Digital Messaging

Dynamics 365 Digital Messaging is an add-on capability for Customer Service Enterprise licenses. It includes Chat for Dynamics 365 Customer Service and third-party SMS. Digital Messaging is licensed per user, with capacity limits for routing requests and for Azure bot sessions (when used with the Azure Bot Service).

Microsoft Dynamics 365 Customer Voice

Customer Voice is a feedback management solution that empowers everyone in the organization to develop enterprise-grade surveys to collect timely feedback from key customers across channels. Customer Voice is licensed per tenant, with capacity entitlements based on the number of responses that distributed surveys receive. Survey respondents do not need to be licensed. Only the survey designer/editor must be licensed for the tenant. Users with Dynamics 365 licenses for enterprise products (Sales Enterprise, Customer Service Enterprise, Field Service, Marketing, and Human Resources) and Customer Insights are automatically entitled to Customer Voice capabilities and 2,000 responses/tenant/month.

Microsoft Dynamics 365 Field Service

The Field Service application is licensed per user and/or device and is the recommended choice for your field-based service teams, strengthening tight integration between Customer Service case management capabilities and field service work orders to deliver business process driven, best in class field service management. This user license also includes the latest version of Field Service Mobile, exclusively designed for Field Service, to replace the use of Dynamics 365 Mobile Client application. The Field Service Mobile application will no longer have a limit on the number of custom entities that can be used so long as the application is being used in the context of Field Service. Legacy versions of Field Service Mobile (2016, 2017) will continue to have a maximum limit of 10 custom entities.

Microsoft Dynamics 365 Field Service - Resource Schedule Optimization

Resource Scheduling Optimization is an add-on capability for the Field Service application that enables customers to automatically create a schedule for the appropriate resource, while simultaneously optimizing appointment setting for travel time, mileage, and many other constraints. Resource Schedule Optimization is licensed per resource included in the optimization process and will typically be accessed by a scheduler or dispatcher user who will designate any number of resources to be included. Resources may be individuals (field technicians or other human resources) or parts and materials (or other non-human resources). The add-on license allows for unlimited use of schedule optimization, which may be on a regular cadence such as daily or weekly, or ad-hoc.

Microsoft Dynamics 365 Finance

The Finance application is licensed per user and enables medium and enterprise organizations to monitor the performance of global financial operations in real-time, predict future outcomes, and make data-driven decisions to drive growth. Finance provides deep data and process integrations across Dynamics 365, Office 365, and partner applications to offer a centralized source of information that saves time, facilitates collaboration across your organization, and enables faster, more informed decisions. Potential uses include, but are not limited to:

  • reviews of the financial and operational performance
  • creating, updating and reviewing the budget plans
  • documenting accounting events and responding to accounting inquiries
  • invoicing and audits
  • taxation and collections

Microsoft Dynamics 365 Guides

Guides is a mixed-reality application that utilizes Microsoft HoloLens for on-the-job training. It provides holographic instructions when and where they need them. A series of step-by-step instruction cards with image and video support are visually tethered to the place where the work needs to be done. One of the many advanced features that we have noticed was the gaze interface that allows the end user to control the app hands-free, just by the eye movement. Additional guidance in the form of holographic 3D models shows what needs to be done where, so workers can get the job done faster, with fewer errors and greater retention of learned skills. Complete integration into the Dynamics 365 suite of apps and the Dataverse allows the usage data to be stored, shared and analyzed. For example, the data could be pulled into the Power BI to identify process improvement opportunities. Guides is licensed on a per-user basis only.

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Microsoft Dynamics 365 Human Resources

Dynamics 365 Human Resources licenses are issued per user and enables optimization of, compensation, benefits, leave and absence, compliance, performance, feedback, standardized training, and self-service programs. It also enables HR to operate with the dexterity needed by the business using the Dataverse (formerly Common Data Service) and Power Platform to centralize people data and easily extend the solution. Employees who need self-serve HR access and the other non-HR users need to be licensed with the Team Members, Human Resources Self Service, or Operations – Activity user license.

Microsoft Dynamics 365 Human Resources Self Service

The Human Resources Self Service user license only applies to the Human Resources application and does not include the use rights of a full Human Resources but enables access to employee and manager self-serve capabilities, such as:

  • Update personal employee information
  • Manage human resources activities of direct employees or those reporting up through the users reporting chain
  • Report sick leave
  • Submit vacation request
  • View employee benefits
  • Approve employee leave as a manager
  • View employee information as a manager

Microsoft Dynamics 365 Project Operations

The Project Operations application is licensed per user and connects sales, resourcing, project management, and finance teams within a single application to win more deals, accelerate project delivery, and maximize profitability. Examples of full users include Account Managers, Project Managers, Project Assistants, and Project Accountants. Users who create and approve time and expenses like a Project Timesheet user need a Team Member license. Project Operations full users have rights to Activity level roles for other applications like Finance and Supply Chain Management without need for an additional license.

Microsoft Dynamics 365 Remote Assist

Remote Assist is a mixed reality application developed to collaborate during a video call using Microsoft Teams. The expert can see everything that the Dynamics 365 Remote Assist user sees, and they can holographically draw and annotate together using the Microsoft HoloLens.

Apart from the Dynamics 365 Remote Assist user license, the Dynamics 365 Remote Assist user (i.e., front line worker, field worker, technician, etc.) will not need  a separate license for Teams to make or receive calls. The HQ-based Expert on assisting the Dynamics 365 Remote Assist user on the other end will require a Teams license. Remote assist is licensed on a per-user basis only.

Microsoft Dynamics 365 Sales

Microsoft Dynamics 365 Sales application has the following license types:

  • Professional for core salesforce automation functionality
  • Enterprise for more complex sales processes that require forecasting, AI and customization
  • Premium – includes Enterprise and Sales Insights under one license
  • Microsoft Relationship Sales (MSR) Plus

Sales Insights  is an add-on application which includes:

  • Pipeline intelligence
  • Predictive scoring (lead and opportunity)
  • Predictive forecasting
  • Notes analysis
  • Conversation intelligence
  • Relationship analytics
  • Connection insights (who knows whom and talking points)
  • Assistant studio
  • Business card scanning

Please note that Sales Enterprise includes selected features of the Sales Insights at no extra cost.


Microsoft Dynamics 365 Supply Chain management

Supply Chain Management unifies data and uses predictive insights from AI and IoT—across order fulfillment, planning, procurement, production, inventory, warehousing, and transportation processes—to maximize operational efficiency, product quality, and profitability. It is licensed per user and provides manufacturers, distributors, and retailers with the real-time visibility and intelligence they need to move from reactive to proactive operations.

Asset Management is included in Supply Chain Management (out-of-the-box) for up to 100 assets.  Asset Management helps manage and maintain physical assets throughout the lifecycle.  If additional assets are required, Supply Chain Management customers may purchase Additional Asset Management. 

Additional Asset Management is licensed per tenant, customers must purchase a sufficient number of Asset Management add-ons to meet or exceed the number of assets under management of the Asset Management application (e.g., 1500 assets = 15 additional asset licenses).

Microsoft Dynamics 365 Sensor Data Intelligence Add-in (previously IoT Intelligence Scenario)

Sensor Data Intelligence Add-in helps shop floor workers to manage machine failures, shop floor managers to effectively manage operations across multiple production lines, and manufacturing executives to have a unified global view of operations.  Sensor Data Intelligence Add-in is a set of capabilities to enable a specific business process. For example, scenario ‘machine down’ enables the manufacturing system to detect machine failures through IoT signals and generate an alert. Customers may manage unlimited scenarios or machines with no additional purchase, after:

  • 6 Sensor Data Intelligence Add-ins (6 scenarios and 60 machines) have been purchased
  • 10 Sensor Data Intelligence Additional Machines (100 Machines) have been purchased

Please note that a machine only needs to be licensed once, so if a machine is being monitored by two scenarios, only one machine license is required.

Cross Application Licensing

Team Member Licenses

Team Member License is a cheaper way for an existing fully licensed user of one of the Microsoft Dynamics 365 apps to access another app for various types of activities, such as:

  • Update Personal Contact Information
  • Read, update and create activities, contacts and notes
  • Read, update and create expense reports
  • Respond to surveys
  • Use reports and dashboards

and many more.

Operations Activity Licenses

Operations Activity Licenses is a next tier to the Team Member Licenses and has all of its access privileges plus the rights to:

  • Update, delete and create the items related to budget, warehousing, shipping and receiving, maintenance, et cetera
  • Operate POS terminals, shop floor or store manager devices, warehouse or production devices
  •  Approve all activity-related transactions in a respective application

Application Licensing - Unassigned

Microsoft Dynamics 365 Customer Insights

Customer Insights is licensed per tenant and enables every organization to unify and understand their customer data to harness it for intelligent insights and actions. Customer Insights eliminates data silos, enabling customers to bring data from any source, unify their customer data, and view it from their Dynamics 365 applications. Customer Insights includes Customer Voice entitlements. Customer Insights may be deployed in the same tenant but does not share the same environment as Sales, Customer Service, Field Service, or Marketing and Finance, Supply Chain Management, or Commerce applications. 

Microsoft Dynamics 365 Fraud Protection

Microsoft Dynamics 365 Fraud Protection Account Loss Prevention Commerce

Fraud Protection is a cloud-based anti-fraud solution for medium to large-sized organizations worldwide, designed to help lower fraud-related costs, increase profits, and improve customer experience. Fraud Protection may be deployed in the same tenant but doesn’t share the same environment as Sales, Customer Service, Field Service, or Marketing and Finance, Supply Chain Management, or Commerce applications. Fraud Protection consists of:

  • Account Protection  to protect online customer accounts 
  • Purchase Protection to protect online transactions
  • Loss Prevention to reduce shrinkage of the retail stores

Microsoft Dynamics 365 Marketing

The Microsoft Dynamics 365 Marketing licensing is quite unique: it can not be assigned to the individual users and is only available on a per tenant base. Hence, only one Marketing app is allowed for install, configure and use per one Microsoft Dynamics 365 environment. A license for a separate Marketing Additional Application should be obtained by the clients willing to use the Microsoft Dynamics 365 Marketing app in another Microsoft Dynamics 365 environment.

A standalone license for the Microsoft Dynamics 365 Marketing is recommended for the clients new to the  Microsoft Dynamics 365 suite and those who have less than 10 full users of Sales Professional, Sales Enterprise, Customer Service Professional, Customer Service Enterprise, Field Service, Finance, Supply Chain Management, Commerce, or Project Operations. Those with 10 or more are allowed to purchase a cheaper attach license for the Microsoft Dynamics 365 Marketing. Both standalone and attach licenses come with an entitlement of ten thousand contacts. Additional capacity can be purchased via the capacity license named Dynamics 365 for Marketing Additional Contacts in tiers of five thousand contacts.

As a part of the Microsoft Dynamics 365 suite, the Marketing app can access all the contacts stored in an environment where it is deployed, but only counts those with signs of marketing activity towards the capacity quota, namely:

  • Marketing form submitted
  • LinkedIn form submitted
  • Marketing email sent
  • Contact event is registered
  • Event check-in occurred
  • Contact was used in customer journey

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