How to Assign a License in Office 365 Step by Step?

Every IT admin whose organization uses the Microsoft 365 cloud must know how to assign a license in Office 365. Without a valid M365 license, users can’t access the various apps and features like Word, OneDrive, Outlook, and more.

Don’t worry, through this write-up, we will teach you exactly what you must do to add licenses to M365 users in a simple step-by-step manner.

However, before we can learn how to assign a new license, we must first understand who can assign one and to whom.

Who is Allowed to Assign Licenses in Office 365?

The answer seems obvious: it is the admins. Unlike a personal account, where license assignment happens automatically, organizational M365 license assignment requires more steps that a user can’t complete on their own.

Therefore, you must have one of these three roles to add the O365 license to users:

• Global Admin
• User Admin
• License Admin

In small organizations, most of the time, it is the Global admin who looks after license assignments. However, in large multinational organizations, the Global and User admins typically have a lot of other responsibilities. That is why a separate License Admin role is made that performs all the assignment and unassignment duties.

Also Read: What to Do If Office 365 Mailbox Full?

There is also the Billing admin; although they can’t assign the licenses directly, they have the most in-depth knowledge about what licenses are available, how many are assigned, and how many are free. So in most organizations, the same person is both the billing as well as licensing administrator.

Regarding the criteria for receiving licenses, the account must be a user. Although Shared Mailboxes can also have a license assigned to them, it’s not a typical behavior.

Now that we know the basic requirement, let’s see the steps that you need to take on the admin center.

How to Assign a License in the Office 365 Admin Center?

Earlier, it was possible to do a license assignment via the Entra ID and Azure portal, but in September 2024, Microsoft revoked this ability. More importantly, all license assignments are done from the Microsoft 365 admin center, not the Exchange admin center.

We have two approaches:

First is to Add a License to the User

I was able to select more than 20 days and assign the free license to those users.

Step 1. Log in to M365 Admin Center > Expand Users > Click on Active Users > Select a User > Manage product licenses.

Step 2. Mark the checkbox next to the license you want this user to have > Save changes.

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You can use the same method to assign licenses to multiple people at once.

Step 1. Use the Shift key for simultaneous selection or use your cursor for staggered selection, then > Manage product licenses.

Step 2. The pane appears a bit different this time > Click the assign more radio button > select the license > and Save Changes.

The second is to Add Users to the License

This method has an explicit warning that no more than 20 entities can be added at once.

Step 1. Billing > Licenses > Select the License.

Step 2. Add Licenses > On the right side pane > select users (up to 20 at a time) > Click on Assign.

Note: When you do a bulk assignment, all users must not have had the license previously. Otherwise, the steps would fail.

Use PowerShell to Add Licenses in Office 365

The syntax is simple.

Connect to the Graph API

Connect-MgGraph -Scopes User.ReadWrite.All, Organization.Read.All

Then type:

Set-MgUserLicense -UserId $userUPN -AddLicenses @{SkuId = "<YourSkuID>"} -RemoveLicenses @()

Keep the RemoveLicenses part empty.

Group-Based License Assignment in O365

Those organizations that subscribe to the Microsoft Entra ID P1 or higher get the facility to set up a process that automatically assigns licenses in Office 365. It works something like this:

• You assign one or more product licenses to a security group in Microsoft Entra ID.
• Any user who becomes a member of that group is automatically assigned the corresponding licenses.
• When a user is removed from the group, the licenses are automatically revoked and freed up

For more information, visit the official page.

Best Practices to Follow while Assigning a License in Office 365

• Ensure that you have procured enough licenses before you begin the assignment.
• Check that the ID on which you are assigning a license is a user or not.
• If you are using the PowerShell cmdlet, make sure you have the necessary preparation, like connecting to the API and installing all modules.
• The user must not have the same license already assigned before.
• If your organization operates in different geographical areas, you must know which applications/services are available in which areas.
• Use professional Office 365 backup software to keep a safe copy of all the user data post-live-license assignment at regular intervals.

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Conclusion

Here I taught you how to assign a license in the Office 365 cloud. This covered all the possible methods that IT administrators can use to add O365 licenses to the user accounts.

More importantly, by managing your unassigned licenses and understanding the billing cycle, you can prevent unnecessary spending and ensure your investment in Microsoft 365 is both efficient and effective.