Base licensing and add-on licensing represent two fundamental approaches to acquiring Microsoft 365 services and features. Understanding the distinction between these licensing models helps organizations optimize their technology investments and ensure users have access to the tools they need.
Bas…Base licensing and add-on licensing represent two fundamental approaches to acquiring Microsoft 365 services and features. Understanding the distinction between these licensing models helps organizations optimize their technology investments and ensure users have access to the tools they need.
Base licensing refers to the foundational subscription plans that provide core functionality and services. These plans, such as Microsoft 365 Business Basic, Business Standard, Business Premium, E3, or E5, include a predetermined bundle of applications and services. For example, a Microsoft 365 E3 license includes access to Office applications, Exchange Online, SharePoint, Teams, and various security features. Base licenses are designed to meet the primary productivity and collaboration needs of most users within an organization. They serve as the starting point for accessing the Microsoft 365 ecosystem.
Add-on licensing, conversely, allows organizations to extend capabilities beyond what the base license provides. These supplementary licenses enable customers to purchase additional features, services, or increased capacity on top of their existing subscription. Common examples include Microsoft Defender for Endpoint Plan 2, Power BI Pro, additional cloud storage, advanced compliance solutions, or audio conferencing capabilities. Add-ons offer flexibility by letting organizations tailor their licensing to specific departmental or user requirements.
The key benefit of this two-tier approach is cost optimization. Organizations can assign base licenses to all users while selectively providing add-ons only to those who require enhanced functionality. For instance, a company might provide E3 licenses to general staff while adding Power BI Pro licenses only to data analysts who need advanced analytics capabilities.
When planning Microsoft 365 deployments, administrators should evaluate which features are essential for different user groups, compare the cost of upgrading to a higher-tier base license versus purchasing individual add-ons, and consider future scalability needs. This strategic approach ensures efficient budget allocation while meeting diverse organizational requirements.
Base Licensing vs Add-on Licensing in Microsoft 365
Why This Topic Is Important
Understanding the difference between base licensing and add-on licensing is crucial for the MS-900 exam because it forms the foundation of Microsoft 365's pricing model. Organizations must make informed decisions about which licenses to purchase, and IT professionals need to advise on cost-effective licensing strategies. This knowledge helps you understand how Microsoft structures its offerings and how businesses can customize their Microsoft 365 experience.
What Is Base Licensing?
Base licensing refers to the core Microsoft 365 subscription plans that provide a foundational set of features and services. These include:
• Microsoft 365 Business Basic - Web and mobile versions of Office apps, Teams, SharePoint, OneDrive • Microsoft 365 Business Standard - Desktop Office apps plus Business Basic features • Microsoft 365 Business Premium - Business Standard plus advanced security • Microsoft 365 E3 - Enterprise-level features and compliance tools • Microsoft 365 E5 - Most comprehensive with advanced security and analytics
Base licenses are standalone subscriptions that can function independently and provide a complete productivity solution.
What Is Add-on Licensing?
Add-on licensing allows organizations to extend the capabilities of their base license by purchasing additional features or services. Add-ons require an existing base license to function. Common examples include:
• Microsoft Defender for Office 365 - Enhanced email and collaboration protection • Azure Active Directory Premium - Advanced identity management • Microsoft Intune - Device management capabilities • Power BI Pro - Advanced business intelligence • Audio Conferencing - Dial-in meeting capabilities for Teams • Additional storage - Extra OneDrive or Exchange storage
How It Works
The licensing model follows a building block approach:
1. Organizations first select a base license that meets their primary needs 2. They then evaluate which additional capabilities are required 3. Add-ons are purchased separately and assigned to users who need them 4. Not all users need every add-on, allowing for cost optimization
This modular approach provides flexibility, as companies only pay for what they need. Some features included as add-ons in lower-tier plans may be bundled into higher-tier base licenses.
Key Differences to Remember
• Base licenses work independently; add-ons require a base license • Add-ons provide specialized functionality beyond core productivity • Higher-tier base licenses often include features that are add-ons for lower tiers • Add-ons can be assigned to specific users rather than the entire organization
Exam Tips: Answering Questions on Base Licensing vs Add-on Licensing
1. Look for dependency keywords - If a question mentions a feature that requires another subscription first, it is likely describing an add-on
2. Remember the hierarchy - E5 includes more features natively than E3, which includes more than E1. Features that are add-ons at one level may be included at higher levels
3. Focus on scenarios - Exam questions often present business scenarios asking which licensing option is most cost-effective. Consider whether the organization needs features for all users or just some
4. Identify standalone vs dependent - Base licenses are always described as complete solutions, while add-ons are described as enhancements or extensions
5. Watch for common add-ons - Audio Conferencing, Defender plans, and Compliance add-ons are frequently tested topics
6. Consider cost optimization - Questions may test whether upgrading to a higher base license is more economical than purchasing multiple add-ons
7. Know what is included - Familiarize yourself with which features come standard in each base license to identify when an add-on would be necessary