Microsoft subscription model

Subscription model Microsoft


When users purchase a Microsoft subscription this means that they can use one or multiple Microsoft services and/or cloud platforms, in return for a payment based on either a on cloud-based resource consumption or a per-user license costs. There are 2 options regarding a cloud-based resource consumption subscription which are Microsoft’s Platform as a Service (PaaS) and Infrastructure as a Service. As for charge per-user license costs, there is Microsoft’s Software as a Service (SaaS)-based cloud offerings in the form of Microsoft 365 or Dynamics 365.

Users also have the option to purchase a trial subscription. These subscriptions stop after a certain period or consumption costs and can easily be transformed into a normal subscription.


Microsoft started offering its costumers subscription licenses in January 2013 when Office 365 was launched. Half a year later in June, subscriptions were equipped with on-the-go access to PowerPoint, Word, and Excel. Almost a year later in April 2014, single-user subscriptions were added which translated to a more accessible Office 365. Two months later the amount of storage available for subscribers increased to 1 TB. Fast forward 4 years to October 2018; Office 365 Home subscriptions can be used by 6 people from this moment on. 

Key Microsoft Subscription models

The subscriptions offered by Microsoft can be divided into two categories; home and business. Depending on the amount of users a decision can be made between these categories and within these categories there are different types of subscriptions that each offer a different package. These packages will be explained in this paragraph.  

Microsoft for home

A Microsoft Home subscription would be the best fit, in case users need licenses for 2 to 6 people. The two Microsoft Home options are the same, but Microsoft 365 Family can be used by up to 6 people, whereas Microsoft 365 Personal can be used by one person only. Users can choose to pay a monthly or a yearly fee to purchase the subscription and from that moment on benefit from what the subscription has to offer. Users can sign in to a maximum of 5 devices at the same time on their Macs, PCs, Tablets, and phones. The Personal subscription offers 1 TB of cloud storage and since the Family subscription can be used by up to 6 people this subscription offers 6 TB of cloud storage. Moreover, it offers device and data security, secure email without adds and all apps contain premium features and can be used online.

Microsoft for business

If there is a need for a subscription for more than 6 people, mostly businesses, Microsoft 365 for Business subscriptions are the better option. Microsoft 365 for Business comes in 4 different types; Basic, Standard, Premium, and Apps for Business. The most simple one out of these for is Microsoft 365 Business basic. It offers web and mobile versions of PowerPoint, Excel, Word, and Outlook, 1 TB of cloud storage per user, Business-class email, the ability to have an online meeting including up to 300 people, standard security and web and/or phone support whenever it’s needed. The second, more extensive, subscription is Microsoft 365 Business Standard. This subscription includes the same as Microsoft 365 Business Basic but has some extras. Users can for instance host webinars on it, use Excel, Word, Outlook, and PowerPoint as a desktop version, and personalize layouts and documents. The third and most extensive subscription is Microsoft 365 Business Premium. Apart from everything that has been mentioned in this paragraph, this subscription comes with protection against cyberthreats, access and data control, and advanced security as well. The fourth subscription is Microsoft 365 Apps for business. This subscription contains applications only, online and on desktop. So there are no cloud services included. It includes PowerPoint, Word, Excel, OneDrive, Outlook, Access (PC only), and Publisher (PC only).

Comparison with traditional licensing

Apart from a subscription license model Microsoft also offers a perpetual license. This means that instead of paying a yearly or monthly fee, users pay a fee once, and afterwards they’ll get the right to use a certain software for as long as they want. The only time perpetual license owners will have more costs is if they’d need additional upgrades. Since software updates are not included in the perpetual licenses this could mean that there would be additional costs but in general it’s a one-time fee. A really important difference between the two licensing models is that a subscription license includes all upgrades, support, and maintenance for as long as the customer pays for the subscription, whereas owners of a perpetual license are the ones responsible for ensuring the license is supported, maintained and upgraded. Depending on the financial status of an organization, a decision can be made between these two licenses. They can either spread the costs over a longer period or pay a one-time fee and be done with (almost all) the costs.