License & Subscription Issues

Should You Use Onmicrosoft.com or Custom Domains for Microsoft 365 Licenses?

Kushani Nimanthika Oct 10, 2026 869 views

Question details

The user needs to know whether Microsoft 365 licenses should be assigned using the default onmicrosoft.com address or a custom domain address.

Should Microsoft 365 Licenses Use an Onmicrosoft.com or Custom Domain Address?

Product: Microsoft 365
Device & OS: not provided
Scenario: Setting up user accounts and configuring email domains for Microsoft 365 license assignment within an organization.
Observed behavior: Clarification is needed on how domain choices affect licensing, and whether users can sign in with custom domains for their daily work instead of the tenant domain.

Before you start

Ensure you have Global Administrator or User Administrator privileges in the Microsoft 365 admin center before assigning licenses or modifying user domains.

Solution 1Recommended

Assign Licenses Using a Custom Domain Address

Configure users with a professional custom domain while ensuring they have the necessary Microsoft 365 licenses for daily work.

Microsoft 365 licenses are assigned to individual user accounts rather than specific domains. You can freely change a user's domain from onmicrosoft.com to a custom domain without losing their assigned license. Users can then seamlessly sign in and work using their customized email address.

Access the Active Users list

Log in to the Microsoft 365 admin center using your administrator credentials. In the left-hand navigation menu, go to 'Users' and then select 'Active users'.

Select or create a user account

Click on an existing user to open their properties pane, or click 'Add a user' to create a new account for your custom domain.

Set the primary domain

Under the Account tab, ensure the username dropdown reflects your custom domain (e.g., user@yourcompany.com) rather than the default onmicrosoft.com domain. You can also add the onmicrosoft.com address as an alias if needed.

Assign the appropriate license

Navigate to the 'Licenses and apps' tab for the selected user. Check the box for the required Microsoft 365 subscription, and then click 'Save changes'.

Assign Licenses Using a Custom Domain Address

Administrative Accounts: The default onmicrosoft.com address belongs to the tenant and is normally used for administration. Administrator accounts do not necessarily require a daily-use license unless the admin also needs to use the desktop Office applications.

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Frequently Asked Questions

Do I need to buy separate licenses for different domains?

No, Microsoft 365 licenses are assigned per user, not per domain. A single user can have multiple domain aliases attached to their account while only consuming one active license.

Can a user continue to sign in with their onmicrosoft.com address?

Yes, users can sign in using their onmicrosoft.com address if it is configured as their primary username or kept as an alias. However, most organizations prefer configuring custom domains for everyday professional communication.

What happens to a license if I change a user's primary domain address?

Changing a user's primary email address or domain does not remove or invalidate their assigned license. The license remains securely attached to the user's underlying account object in Microsoft 365.

Login & Account Issues