6 Ideas to Reduce Microsoft Dynamics 365 Licensing Costs

Tips to reduce Dynamics 365 licensing costs

Prior to the renewal of a Microsoft Dynamics 365 Online agreement we recommend reviewing your licensing of the product to check that everyone is equipped with the best licence for their usage needs. 

Since your business originally implemented Dynamics 365, some usage requirements may have changed, perhaps to the extent that existing licenses are no longer the most cost effective.

Microsoft has also made important changes to its cloud licensing model in recent years. As a result, some users could potentially be migrated to a lower priced licence without losing the core functionality they rely on.

Assigning the wrong licence to use adds unnecessary monthly costs so in this post we’ve shared 6 ideas to help you optimize your Dynamics 365 licensing and minimize ongoing costs:

#1 Free Licence Check

Through our free license check, Preact will help you identify the best Dynamics 365 Customer Engagement licences for each user.

We'll review each Dynamics 365 instance and present a report that details what licence type each user should have based on their actual usage of the product. While this is just an estimate based on prior usage, it provides a good starting point to evaluate current licencing. Find out more and arrange your free review now.

#2 Review Plan Licenses

*** JULY 2019 UPDATE *** Dynamics 365 Plan Licences to be Withdrawn

The Customer Engagement Plan was designed for usage requirements that span multiple Dynamics 365 apps. For example, if a user needs to create cases and manage work orders a Plan licence will be recommended as this provides entitlement to the Customer Service and Field Service apps.

Other examples have been cited for customer service users who need to create leads, or sales users who also require the capability to log service cases.

However, the Dynamics licensing rules have since changed since the Plan licence was introduced. Previously, the Customer Engagement Plan would be recommended for these usage needs as neither the Customer Service or Sales app licences alone would give sufficient entitlement to handle these processes.

This has now changed to the extent that:

  • The Sales app licence now includes use rights to create cases
  • The Customer Service app licence includes basic permissions to create lead records

For similar scenarios where users are currently licensed with a Dynamics 365 Plan, administrators may be able to reduce costs by moving these users to a Sales or Customer Service app licence depending on specific usage needs.

As a comparison, the Customer Engagement Plan has been priced @ £86.70 per user / month and the individual Sales or Customer Service Enterprise apps @ £71.60 per user / month creating a potential saving of £15.10 per user / month.

Aside from Microsoft’s licensing changes, there may also be instances where users have been supplied with a Plan but their current and continuing usage no longer justifies this. As referenced above, our free license check will help to identify these scenarios.

Following Microsoft's decision to end Plan licensing in October 2019, administrators will need to re-evaluate licensing for any users currently equipped with the Customer Engagement Plan as Microsoft moves to a new base and attach model.

#3 Team Member Licensing

The Team Member licence is the lowest price point for accessing Dynamics 365 and is designed for light usage needs.

With a Team licence (priced @ £6 per user / month), users can read any data stored in Dynamics, create dashboards and views, and perform basic functions which includes create / edit / delete permissions for contacts, activities and up to as many as 15 custom entities.

If any current users are currently equipped with a Dynamics 365 app or plan but have basic usage needs which don’t include updating standard entities such as leads, accounts, cases, opportunities or work orders, switching them to a Team Member licence could enable significant savings to be made. We’ll help you identify these situations through our free licensing check.

#4 Evaluate the New Licensing Model to Reduce Storage Costs

In April 2019, Microsoft introduced a new approach to managing Dynamics 365 cloud storage and how additional capacity is accrued. We covered these changes in detail in an earlier post.

Under the new structure, default storage is split into 3 elements across database, file and log capacity to reflect how Dynamics data is stored in the Common Data Service. Additional database and file storage capacity will also accrue for each Dynamics 365 Enterprise user.

This new structure also enables administrators to deploy additional Dynamics 365 production or non-production instances at no additional cost, subject to sufficient available storage capacity. Previously, each Dynamics subscription was restricted to a single production environment and one sandbox with add-on costs incurred to deploy additional instances.

This new model is automatically available to new Dynamics 365 subscriptions activated from 1 April 2019. For existing customers billed through the Cloud Solution Provider program (CSP) or Web Direct the revised model will be available upon the renewal of their agreement. 

For organisations that have purchased additional Dynamics 365 storage capacity and/or are billed for an additional Dynamics instance, this change in storage licensing may reduce, or eliminate, these add-on costs.

Throughout 2019, Microsoft is offering customers the choice to renew their Dynamics 365 agreement on the same licensing terms, or adopt the new model to take advantage of the revised storage capacity and gain added entitlement to create further environments.

From January 2020, these agreements will automatically be renewed using the new storage model. In the meantime, administrators can choose to stay on their current licensing terms or switch to the new version. With the potential to immediately increase storage capacity and reduce costs administrators are strongly recommended to review the new storage entitlements and compare this with their current Dynamics 365 capacity.

Speak to Preact before your next renewal to discuss these options and check which of these two licensing terms will be the most cost effective for your organisation.

The PowerApps Admin Center is a useful resource for this comparison as it provides a detailed view of current usage by tenant across the new storage types for database, files and logs stored in the CDS. This also shows the total capacity across each type to include the default level and the accrued storage entitlements across all qualifying user licences.

#5 PowerApps Plan - Platform Licence

Dynamics 365 for Sales Hub and Dynamics 365 for Customer Service Hub are examples of first party model-driven apps built by Microsoft.

More recently, PowerApps Plan 2 has been launched enabling bespoke apps to be created for handling specific workstreams. This is now the main platform licence as it provides the full power of Common Data Services for Apps to build model-driven apps using most standard Dynamics entities and unlimited custom entities.

For example, lets say a team of users is responsible for managing training courses but their usage needs exceed the entitlements of the Team Member licence. For this type of requirement, users would previously have been equipped with a Dynamics 365 Sales or Customer Service first party app and their system would then be adapted to handle their training processes. That’s because through the earlier Dynamics licensing model, one of these first-party apps would be the only viable licence but this would inevitably give users more functionality than they needed – especially if they only manage courses, delegates and trainers.

In this scenario, by using PowerApps P2, a streamlined course management hub could be created that would purely handle these processes. In addition to capacity for unlimited custom entities this hub would be able to reference standard Dynamics 365 entities such as contacts, accounts and activities.

Model-driven apps licensed through PowerApps P2 are created using the Dynamics 365 Unified Interface so they look consistent to the first party apps. Crucially, data is stored in the Common Data Service and so connects with other PowerApps, Dynamics 365 apps as well as hundreds of other apps and services.

PowerApps Plan 2 is priced at £30.20 per user / month in comparison Dynamics 365 Sales and Customer Service Enterprise first-party apps at £71.60 per user / month.

Some important differences do exist between a Common Data Service for Apps environment and a Dynamics 365 Customer Engagement instance so prior discussion would be needed to assess the suitability of PowerApps P2 for specific requirements. Also, while P2 provides access to most standard Dynamics 365 entities and forms, there are a small number of restricted entities which can’t be used in create / update / delete scenarios unless users hold a valid Dynamics 365 licence. This includes cases, goals, entitlements, SLAs and the schedule board.

It is important to note that because this isn't Dynamics 365 a model-driven app will need to be built in PowerApps. While there would be an upfront cost for the build this offers the prospect of a reduced expense per user / month.

#6 Professional SKUs

Another new licensing type is a Professional SKU for Dynamics 365 Sales and Customer Service apps.

Each offers core functionality at a reduced rate for businesses with simpler sales and customer service processes.

Depending on usage requirements, in some instances it might prove cost effective to downsize from the Enterprise SKU (priced at £71.60 per user / month) to Sales Professional @ £49 per user / month or Customer Service Professional @ £37.50 per user / month.

Professional licences have reduced functionality and exclude several of the entitlements available with Enterprise licences. For example, these don’t provide any additional storage capacity that is accrued for each Enterprise user and they do not count towards qualifying user licences for a Dynamics web portal.

Also, Professional licences do not include capability for Relationship Insights, knowledge articles or export to Excel and they are restricted to a maximum of 15 custom entities.

The Sales Professional licences does not include functionality for goals, territories or marketing lists while the Customer Service Professional SKU excludes Customer Service Insights and the universal schedule board.

Finally, it is important to note that Professional licences cannot be mixed and matched within the same instance. For example, all users would need to be equipped with Sales Professional or Sales Enterprise as it is not possible to licence some with the Enterprise and others with Pro SKU’s.

For most existing Dynamics 365 users, these restrictions will rule out the Professional option but in some scenarios they will be another option to minimize licensing costs. Depending on usage requirements, in some instances it might prove cost effective to downsize from the Enterprise SKU (priced at £71.60 per user / month) to Sales Professional @ £49 per user / month or Customer Service Professional @ £37.50 per user / month.

Next steps...

Speak to Preact before your Dynamics 365 Online agreement renewal. We’ll help you identify where savings can be made and make sure that each user has most cost-effective licence that reflects their usage needs.

All prices quoted in this post exclude VAT and reflect the standard Microsoft list price.


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