License & Subscription Issues

Microsoft Entra Single Sign-On Licensing Requirements for Business Users

Khadija Khan Oct 12, 2026 868 views

Question details

The organization wants to know if a single Microsoft Entra ID P1 license covers all users for Single Sign-On, or if every user requires an individual license.

Microsoft Entra Single Sign-On Licensing Requirements for Business Users

Product: Microsoft 365 Business
Device & OS: not provided
Scenario: An organization using a mix of Microsoft 365 Business Premium and Business Basic is planning its identity management and Single Sign-On (SSO) configuration.
Observed behavior: Seeking clarification on licensing compliance regarding whether one tenant-level Microsoft Entra ID P1 license legally covers SSO for all users, including those on Business Basic.

Before you start

Before adjusting your organization's licensing structure, gather an inventory of which users actively require premium Single Sign-On and identity protection features, and verify your current Microsoft 365 subscription tiers.

Solution 1Recommended

Assign Individual Microsoft Entra ID P1 Licenses

Microsoft's licensing model requires that every user who benefits from premium Entra ID features (like advanced SSO and Conditional Access) has an appropriate individual license.

A common misconception is that purchasing a single tenant-level Microsoft Entra ID P1 license unlocks premium features for all users in the organization. While the technical features might become active in the tenant, Microsoft's licensing agreement requires a user-based assignment.

If your organization uses Microsoft 365 Business Premium (which includes Entra ID P1) alongside Business Basic, the Business Basic users are not legally covered for premium Entra features just because the tenant has a P1 license.

Review Current License Inventory

Log in to the Microsoft 365 admin center and navigate to 'Billing' followed by 'Your products' or 'Licenses' to check how many Business Premium and standalone Entra ID P1 licenses you hold.

Identify Benefiting Users

Determine which specific users need the premium Single Sign-On features, Conditional Access policies, or advanced identity protection.

Assign Licenses to Accounts

Go to 'Users' > 'Active users' in the admin center, select the users who need these features, click 'Licenses and apps', and assign the necessary Microsoft Entra ID P1 license.

Verify Compliance with Microsoft

Because Microsoft's licensing terms can be complex and subject to change, it is highly recommended to reach out to a Microsoft licensing specialist or post your specific scenario on Microsoft Q&A for authoritative confirmation.

Assign Individual Microsoft Entra ID P1 Licenses

Licensing Compliance: Users who benefit from paid P1 features must be appropriately licensed to maintain compliance with Microsoft's terms of service. Relying on a single license to activate tenant-wide features can result in compliance penalties.

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Frequently Asked Questions

Does Microsoft 365 Business Premium include Entra ID P1?

Yes, Microsoft 365 Business Premium includes Microsoft Entra ID P1 (formerly Azure AD Premium P1), providing advanced identity and access management features like Conditional Access for the licensed user.

Can Business Basic users use SSO if the tenant has one P1 license?

While basic SSO capabilities are available to all Microsoft 365 users, utilizing premium P1 features (like advanced SSO integrations requiring Conditional Access) requires every benefiting Business Basic user to have their own standalone P1 license.

How do I purchase standalone Microsoft Entra ID P1 licenses?

You can purchase standalone Entra ID P1 licenses through the Microsoft 365 Admin Center under Billing > Purchase services, or by contacting your certified Microsoft licensing partner.

What happens if users utilize P1 features without a license?

Using premium features without properly licensing every benefiting user puts the organization out of compliance with Microsoft's licensing agreements, which could result in financial penalties or forced true-ups during a software audit.

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