License & Subscription Issues

Microsoft Entra ID P1 vs. P2: Licensing and Billing Explained

Maira Mehtab Sep 28, 2026 869 views

Question details

The user wants to understand the feature and billing differences between Microsoft Entra ID P1 and P2, specifically regarding Conditional Access capabilities and charges for unassigned licenses.

Microsoft Entra ID P1 vs. P2 Licensing and Billing Explained

Product: Microsoft Entra ID
Device & OS: not provided
Scenario: Evaluating licensing requirements for location-based Conditional Access and determining why bills include charges for unassigned P2 licenses.
Observed behavior: Microsoft Entra ID P2 is billed as a separate, higher-tier paid license and does not automatically come bundled with P1. Unassigned licenses purchased in the admin center may still incur active billing charges.

Before you start

Before modifying your organization's licensing, ensure you have Global Administrator or Billing Administrator access in the Microsoft 365 admin center to view active subscriptions.

Solution 1Recommended

Check your active licenses and billing in Microsoft 365

Verify whether you have Entra ID P1 or P2 licenses active and check if you are paying for unassigned licenses.

Log into the admin center

Navigate to the Microsoft 365 admin center and log in with your administrator credentials.

Access billing products

Click on 'Billing' in the left-hand navigation menu, then select 'Your products'.

Review active subscriptions

Look for 'Microsoft Entra ID P1' or 'Microsoft Entra ID P2' in your list of active subscriptions.

Check license assignment

Compare the 'assigned' quantity versus the 'purchased' quantity. Keep in mind that you are billed for the total purchased quantity regardless of whether those licenses are assigned to users.

Check your active licenses and billing in Microsoft 365

Name Change Reminder: Azure Active Directory Premium has been renamed to Microsoft Entra ID. You will see the new naming convention in your billing dashboard.

Solution 2

Evaluate P1 vs. P2 feature differences

Determine whether your organization needs P1 or P2 based on specific security and access requirements.

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Frequently Asked Questions

Does Microsoft Entra ID P2 come free with P1?

No, Microsoft Entra ID P2 is a separate, higher-tier paid license and is not included automatically when you purchase Microsoft Entra ID P1.

Am I billed for unassigned Microsoft Entra ID licenses?

Yes, in most Microsoft 365 subscription agreements, you are billed for the total number of licenses purchased, regardless of whether they have actually been assigned to users.

Which Entra ID license do I need for location-based Conditional Access?

Microsoft Entra ID P1 includes location-based and IP-based Conditional Access. You only need to upgrade to P2 if you require advanced features like risk-based Conditional Access or Privileged Identity Management.

Why is Azure Active Directory Premium not showing up in my billing?

Azure Active Directory has been officially renamed to Microsoft Entra ID. You should look for 'Microsoft Entra ID P1' or 'Microsoft Entra ID P2' under the 'Your products' section in the Microsoft 365 admin center.

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