Managing Licenses and Subscriptions in Office 365

8 February 11, 2025

Tips on Assigning, Reassigning, and Managing Office 365 Licenses

Introduction

Effectively managing Office 365 licenses ensures that your organization optimizes costs, provides employees with the right tools, and maintains compliance. This guide explains how to assign, reassign, and manage Office 365 licenses through the Microsoft 365 admin center.

Requirements

  • Admin access to the Microsoft 365 admin center.
  • Office 365 Business or Enterprise subscription.

Step 1: Accessing the Microsoft 365 Admin Center

  1. Log in to the Microsoft 365 admin center.
  2. In the left menu, go to Billing > Licenses to view the available licenses.
  3. Click Billing > Your products to see active subscriptions.

Step 2: Assigning Licenses to Users

  1. In the Microsoft 365 admin center, go to Users > Active users.
  2. Select a user, then click Licenses and apps.
  3. Under Licenses, toggle on the licenses you want to assign.
  4. Click Save changes.

📌 Tip: You can assign multiple licenses at once by selecting multiple users and using the Bulk Edit option.

Step 3: Reassigning Licenses

If an employee leaves or no longer needs a specific Office 365 plan, you can reassign the license:

  1. Remove the license:
    • Go to Users > Active users.
    • Select the user, then go to Licenses and apps.
    • Toggle off the assigned license and click Save changes.
  2. Assign the license to a new user:
    • Follow the steps under Assigning Licenses to Users.

📌 Tip: Removing a license does not immediately delete user data. Files in OneDrive and email are retained for 30 days, allowing reallocation if needed.

Step 4: Purchasing Additional Licenses

If you need more licenses, follow these steps:

  1. Go to Billing > Your products.
  2. Select the subscription you need additional licenses for.
  3. Click Add or remove licenses.
  4. Enter the number of licenses needed and confirm payment details.

📌 Tip: If you consistently need additional licenses, consider switching to auto-renewal in Billing > Payment settings.

Step 5: Monitoring License Usage

  1. In the Microsoft 365 admin center, go to Billing > Licenses.
  2. Check the number of assigned and available licenses.
  3. Use Reports > Usage reports to analyze which services are actively used.

📌 Tip: If many licenses are unused, consider removing or downgrading subscriptions to optimize costs.

Step 6: Canceling or Changing Subscriptions

  1. Go to Billing > Your products.
  2. Select the subscription you want to cancel or downgrade.
  3. Click Cancel subscription or Change plan to modify the license type.

📌 Tip: Microsoft may charge early termination fees for some subscriptions, so review terms before canceling.

Best Practices for License Management

✅ Review licenses quarterly: Ensure employees have the right access and remove unused licenses.
✅ Enable self-service license requests: Allow users to request licenses for apps like Power BI or Visio.
✅ Use Azure AD groups for automated assignments: Assign licenses dynamically based on user roles.
✅ Monitor billing: Keep track of renewal dates to avoid unexpected charges.

Properly managing Office 365 licenses ensures cost efficiency, regulatory compliance, and smooth user access. By regularly reviewing assignments and monitoring usage, you can optimize your organization’s Office 365 environment.

For further details, visit Microsoft’s official licensing guide:
Microsoft 365 License Management