At KAMIND IT, we frequently hear a common misconception about Microsoft 365 licensing:

“If I buy one E5 license, the whole tenant gets E5 features. Some of our Basic users seem to get Conditional Access—so is that allowed?”

It’s a reasonable question, given how complex licensing has become. However, the answer is clear:

Microsoft licenses features per user—not per tenant. One E5 license provides E5 capabilities only to the user assigned to that license.

Microsoft’s current licensing model under the New Commerce Experience (NCE) reinforces this principle to ensure fairness, transparency, and consistent security across all customers.

How Microsoft Licensing Actually Works

Microsoft licenses are assigned individually. Each user must have a license that includes the features they use. Security and compliance capabilities—such as Conditional Access, Defender for Endpoint, Defender for Identity, and advanced compliance tools—are not tenant-wide entitlements.

This user-based model allows organizations to tailor licensing to job roles, reducing unnecessary cost while maintaining appropriate security levels.

Why One E5 License Doesn’t “Upgrade” Everyone

One E5 license gives one user access to the full E5 feature set. It does not activate features for other users, elevate lower-tier licenses, or grant tenant-wide advanced entitlements.

What Changed Under NCE

The New Commerce Experience improves clarity and consistency by reducing ambiguity, enforcing appropriate licensing, and protecting customers through clearer verification processes.

Best Practices for Licensing

Map licenses to job roles, ensure all users impacted by Conditional Access have Azure AD Premium P1 or higher, avoid accidental activation of features, and review licensing regularly.

Bottom Line

Microsoft features are licensed per user—not per tenant. One E5 license does not extend E5 capabilities to the rest of the organization.

Need Help Untangling Licensing?

KAMIND IT helps organizations optimize licensing, remain compliant, and build secure, cost-effective Microsoft environments. For help, contact us at licensing@kamind.com or call us at 506-726-5933 and ask for “licensing support”.