Microsoft licensing basics: tenants, subscriptions, SKUs and seats

• A tenant is your organisation’s Microsoft cloud environment. It is where users, groups, services and policies are managed.
• A subscription is a purchased Microsoft service or product plan. Examples include Microsoft 365 E3, Microsoft Teams Phone Standard or Microsoft 365 Copilot.
• A SKU is the specific Microsoft product plan being purchased. Different SKUs include different services, features and eligibility rules.
• A seat is an individual licence quantity that can usually be assigned to a user, subject to the product rules.
• An add-on is a licence that is layered onto an eligible base licence, such as Microsoft 365 Copilot or Teams Phone in some scenarios.

Why it matters

• Most licensing questions come down to three checks: which subscription is held, how many seats exist, and which users are assigned.
• Not every Microsoft product works as a standalone licence. Some products require an eligible base licence first.
• If a user cannot access a feature, the issue may be assignment, eligibility, service enablement or product configuration rather than the purchase itself.

What to include in a licensing request

• Tenant name or tenant ID if available.
• Product or subscription name.
• Number of seats required.
• Which users need the licence, or whether the request is for spare capacity.
• The date the change is needed.