Assigning a license to every new employee by hand is a lot of clicking, and it's easy to forget. With group-based licensing you link a license to a group. Anyone in the group gets the license automatically; anyone who leaves loses it. Combine that with a dynamic group per persona, such as Sales, Office or Frontline, and assigning licenses runs by itself. This article explains how to set it up, what you need first and how to fix errors.
What do you need?
- A License Administrator, User Administrator or higher role.
- Group-based licensing requires Entra ID P1 or a subscription that includes the feature. P1 is included in Microsoft 365 Business Premium and E3, among others. Dynamic groups require P1 as well.
- A security group or a Microsoft 365 group with security enabled. Nested groups don't work: members of a group inside the group don't get a license.
- A usage location (country) on every user. Without a usage location, a license can't be assigned.
Define your personas
A persona is a group of employees with the same needs. Think of office workers with a full license, frontline workers who only need Teams and mobile apps, or interns with a limited set. Create one group per persona and link the right license to it. That way you see at a glance who gets what. Read more about groups in manage users and groups in Microsoft Entra ID, and use compare Microsoft 365 plans to choose the right product per persona.
1. Create a group per persona
- In the Entra admin center, go to Groups > All groups > New group.
- Choose the type Security and give the group a clear name, for example LIC-Sales-BusinessPremium.
- Choose the membership type Dynamic user and set a rule, for example
user.department -eq "Sales". Or choose Assigned and add members yourself. - Use Validate rules to test whether the right users fall into the group, then select Create.
A dynamic rule only works if the attributes are correct. Make sure fields such as department or job title are filled in, for example through your HR integration or when you bulk import users. Assigned groups also work well for a small persona; you can add multiple users at once in a similar way in Teams.
2. Link the license to the group
- Go to Billing > Licenses > All products and choose the product, such as Microsoft 365 Business Premium.
- Select Assign and pick the group.
- Optionally turn off components this group doesn't need, such as an app you don't use.
- Select Assign.
Microsoft is increasingly bringing license management together in the Microsoft 365 admin center. There you'll find the same option via Billing > Licenses, the product and the Groups tab. Menu names can differ slightly.
3. Check
Under Licenses on the group you see whether the assignment succeeded. Processing can take a while for large groups. If there aren't enough licenses, the affected users show an error. On a user you can see for each license whether it was assigned directly or inherited (through a group). Also read check which license a user has.
From direct to group licenses
Do your users already have a license assigned directly? First add them to the group and wait until the group license is active. Only then remove the direct assignment. That way nobody temporarily loses access to mail or files. If a user is in two groups with the same product, they get the combination of the enabled components and use only one license.
Common problems
- Not enough licenses: buy extra licenses or make the group smaller. Then select Reprocess on the group.
- No usage location: fill in the country on the user and reprocess.
- Conflicting service plans: two products contain components that can't coexist. Turn off the unnecessary component in one of them.
- License doesn't go away: you can't remove an inherited license on the user itself. Remove the user from the group or change the dynamic rule.
Tips for admins
- Use a fixed naming convention for license groups, so everyone knows what they're for.
- Test a new dynamic rule with a small group first, before you link an expensive license to it.
- Regularly check the groups with errors in the licenses overview.
Nederlandstalige versie: Microsoft 365-licenties automatisch toewijzen met groepen in Entra ID