License & Subscription Issues

How to Use Monthly and Annual Microsoft 365 Subscriptions for Different Users

Maira Mehtab Sep 21, 2026 869 views

Question details

The organization needs to assign monthly Microsoft 365 subscriptions to temporary employees and annual subscriptions to long-term employees to optimize billing flexibility.

Product: Microsoft 365
Device & OS: not provided
Scenario: Managing software licenses for a mix of temporary and long-term staff to control costs without disrupting ongoing work.
Observed behavior: The administrator wants to ensure that setting up flexible cancellation for short-term employees will not negatively impact the licensing structure or pricing for long-term users.

Before you start

Ensure you are logged into the Microsoft 365 Admin Center with an account that has Global Administrator or Billing Administrator privileges, as these are required to purchase and assign new licenses.

Solution 1Recommended

Assign Different Subscription Terms via Microsoft 365 Admin Center

You can purchase multiple subscriptions (both monthly and annual) within the same organization tenant and manually assign licenses from each pool to specific users based on their tenure.

Microsoft allows a single organization to hold multiple active subscription plans simultaneously. This means you can keep your annual commitments for permanent staff to secure better pricing, while purchasing a separate block of licenses on a month-to-month commitment for temporary workers.

Access the Billing section

Log in to the Microsoft 365 Admin Center, expand the left-hand navigation menu, and go to 'Billing' > 'Purchase services'.

Purchase the necessary subscriptions

Locate the Microsoft 365 plan you need. Purchase a set of licenses with an 'Annual' commitment for your permanent staff, and a separate set of licenses with a 'Monthly' commitment for temporary staff.

Navigate to Active Users

Once the licenses are active in your tenant, go to 'Users' > 'Active users' in the left menu to view your employee list.

Assign licenses accordingly

Select an employee's name, navigate to the 'Licenses and apps' tab, and check the box for the appropriate license (monthly for temporary, annual for long-term). Click 'Save changes'.

Remove licenses upon departure

When a temporary employee leaves, simply uncheck their license in the 'Licenses and apps' tab. You can then go back to the Billing section to reduce your monthly license count to stop paying for it, without affecting the annual users.

Billing Agreements: Ensure you verify the terms of your specific Microsoft billing agreement or Cloud Solution Provider (CSP) contract, as some enterprise agreements may have specific restrictions on mixing commitment terms.

Free Microsoft Office alternative

Reduce Licensing Costs by Switching to WPS Office

Instead of juggling complex Microsoft 365 monthly and annual billing cycles, consider WPS Office. It provides a lightweight, highly compatible, and free alternative to Microsoft Office, reducing the administrative burden of license management while providing familiar tools for your entire team.

1. Download the software: Visit the official WPS Office website to download the free installer for your operating system.
2. Deploy to your team: Install WPS Office on your employees' devices without worrying about tracking individual monthly or annual seat assignments.
3. Open existing files: Open all your organization's existing Microsoft Office documents directly in WPS Office to continue working seamlessly.

Eliminates complex subscription management and billing adjustments for temporary staff.Highly compatible with Microsoft Office formats (.docx, .xlsx, .pptx).Free and lightweight, perfect for scaling teams on a budget.Familiar user interface ensures seamless migration with zero training costs.

microsoft office alternative - wps office

Frequently Asked Questions

Can I change an existing annual Microsoft 365 user to a monthly plan?

Yes, but you typically need to wait until the annual commitment period ends to avoid early termination fees. Once the term ends, you can assign them a license from your monthly pool and cancel their annual renewal.

Will mixing subscription types affect team collaboration in Microsoft 365?

No. As long as all users are in the same organization tenant and have active licenses that include the necessary cloud services (like Teams, SharePoint, or OneDrive), collaboration works seamlessly regardless of how their license is billed.

How do I ensure I don't get billed for a monthly license after an employee leaves?

First, remove the license from the departing user under 'Active users'. Then, importantly, go to 'Billing' > 'Your products', select the monthly subscription, and reduce the total number of licenses by one. Simply removing it from the user does not automatically reduce your bill.

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