How to Optimize Licensing Costs During a Dynamics 365 Implementation

June 9, 2025

rob pat

Introduction

A Microsoft Dynamics 365 implementation can transform how businesses operate, integrate systems, and drive digital efficiency. However, with its modular architecture and various pricing tiers, Dynamics 365 licensing can quickly become a significant portion of the implementation cost if not strategically managed. Many organizations overlook this vital area during planning, only to face budget overruns or underutilized resources later.

This article provides practical strategies to optimize licensing costs during a microsoft dynamics 365 business central partner helping you balance functionality with financial efficiency while still meeting business requirements.

Understanding Dynamics 365 Licensing Basics

Before diving into cost optimization techniques, it’s essential to understand the licensing structure of Dynamics 365. Microsoft offers various applications under Dynamics 365, categorized broadly into:

Customer Engagement (CE): Includes modules like Sales, Marketing, Customer Service, and Field Service
Finance and Operations (FO): Covers Finance, Supply Chain Management, Commerce, and Human Resources
Project Operations
Business Central: An all-in-one solution for small to medium-sized enterprises
Power Platform: Often used alongside Dynamics 365 for automation and analytics

Licensing is typically offered per user/month, and plans are tiered according to functionality. There are also device licenses, activity licenses, and team member licenses for light users.

Start with a Detailed User Role Analysis

A common mistake during Microsoft Dynamics 365 implementation is assigning expensive licenses to users who don’t need full access. To avoid this:

Map out all user roles across departments
Identify what tasks each role performs in Dynamics 365
Match each role to the most appropriate and cost-effective license type

For example, a field technician may only need a Field Service license, while a customer support agent might be fine with a Team Member license rather than a full Customer Service license.

By aligning licenses with actual responsibilities, you can avoid over-licensing and reduce ongoing subscription costs.

Use Team Member Licenses Strategically

Team Member licenses are a budget-friendly option for users who only need limited functionality—such as reading data, running reports, or updating contact records. They’re priced significantly lower than full licenses and are ideal for:

Executives who only need dashboards or reports
Back-office staff with limited system interaction
Temporary or part-time employees

During your Microsoft Dynamics 365 implementation, review use cases carefully and assign Team Member licenses where appropriate. But ensure you remain compliant with Microsoft’s guidelines on what these licenses can and cannot do.

Bundle Licenses Where Possible

Microsoft offers a base-and-attach licensing model for customers needing access to multiple applications. In this model:

The base license is the primary application (e.g., Dynamics 365 Sales)
The attach license is offered at a discounted rate for additional applications (e.g., Customer Service or Marketing)

This structure allows for substantial savings if users require multiple modules. For instance, instead of purchasing two full licenses, you pay for one base and one attach license, reducing your monthly licensing cost.

Always plan licensing bundles based on anticipated user activity across different apps.

Leverage Microsoft Volume Licensing or Enterprise Agreements

Organizations with a large number of users may benefit from Microsoft Volume Licensing or Enterprise Agreements (EA). These contracts offer discounts based on user volume and typically include:

Price locking for the contract period
Flexible user counts
Licensing for multiple Microsoft products (Office 365, Azure, etc.)

During a Microsoft Dynamics 365 implementation, enterprise agreements can offer significant savings—especially for companies operating across multiple departments or geographies.

Conduct a License Utilization Audit

Post-implementation, companies often realize that some licenses are underutilized or not used at all. To prevent this:

Regularly audit license usage using Microsoft’s Admin Center
Track user logins, app access, and activity logs
Deactivate or downgrade licenses for dormant or low-activity accounts

Implementing a monthly or quarterly license review process ensures that your licensing spend aligns with real usage and helps you reallocate resources effectively.

Choose Between Business Central and F&O Modules Wisely

When implementing ERP functions, many businesses are torn between Dynamics 365 Business Central and the Finance and Operations (F&O) suite.

Business Central is ideal for SMEs and is more affordable
F&O is designed for larger enterprises with complex requirements and higher licensing costs

Choose the one that fits your operational scale. Starting with Business Central during early phases of Microsoft Dynamics 365 implementation can significantly cut costs, especially if your organization doesn’t require advanced functionalities out of the gate.

Control Costs with Device Licensing for Shared Workstations

In environments such as retail, manufacturing, or field operations where multiple users share a device, device-based licensing may be more cost-effective than user-based licensing.

For example, in a warehouse where several staff members log into a single workstation to update inventory, a single device license can serve all users—helping reduce per-user expenses.

Minimize Customizations That Require Premium Licensing

Custom development or integrations sometimes require more expensive licenses or add-on services. To control costs:

Avoid unnecessary customizations that can trigger premium license requirements
Use built-in Power Platform capabilities for automation and workflows instead of costly third-party apps
Stick with standard connectors wherever possible

Every customization should be evaluated for cost impact on licensing and long-term support.

Use Implementation Partners with Licensing Expertise

An experienced implementation partner can help you navigate licensing complexities and save money. Look for partners who:

Offer licensing assessments as part of the implementation process
Understand the nuances of Microsoft’s licensing models
Can advise on licensing bundling, promotions, and EA options

Their knowledge can be a valuable asset in ensuring your Microsoft Dynamics 365 implementation is both functional and cost-optimized.

Take Advantage of Microsoft Promotions and Nonprofit Discounts

Microsoft frequently runs promotions, especially for new customers or during the fiscal year-end. Nonprofits, educational institutions, and startups may qualify for additional discounts.

Keep an eye on:

Microsoft-led campaigns
Partner-exclusive bundles
Free trial-to-paid conversion offers
Promotions tied to cloud migration or bundling with Microsoft 365

Your implementation partner or Microsoft account manager can alert you to relevant offers.

Monitor Licensing Changes Over Time

Microsoft occasionally updates its pricing, terms, and available license types. Post-implementation, assign a stakeholder or team to:

Stay updated on Microsoft licensing announcements
Evaluate whether new plans or pricing models can lower current spend
Adjust licenses as the business evolves

Being proactive ensures that your licensing strategy adapts to both business changes and Microsoft’s evolving model.

Final Thoughts

A successful Microsoft Dynamics 365 implementation isn’t just about functionality—it’s also about financial sustainability. Licensing costs can account for a substantial share of total ownership cost, but with careful planning, these costs can be optimized without sacrificing capability.

Start with a detailed user-role analysis, leverage cost-effective license types like Team Member or device licenses, and continuously audit and adapt post-implementation. Engage experienced implementation partners and make full use of available bundles, agreements, and promotions.

With the right strategy, businesses can achieve a fully functional Dynamics 365 environment that meets their needs while remaining within budget—maximizing both ROI and operational agility.

Would you like this formatted for a blog, LinkedIn article, or marketing content? I can tailor it accordingly!