If you have given up on the 63-page license guide for Business Central, this video is for you. I read it and extracted the Business Central information, so you don’t have to. Check out the video:
Licensing is one of those topics that trips up even experienced Business Central professionals. In this video, Erik walks through the Business Central License Guide, breaking down the key license types, entitlements, limitations, and common questions he encounters regularly. Whether you’re a partner, developer, or customer, understanding these licensing fundamentals is essential to avoiding costly mistakes and ensuring compliance.
The Two Main License Types: Essential and Premium
Every Business Central cloud tenant needs at least one of two main license types: Essential or Premium. You can have all Essential users, all Premium users, or even a mix — but you must have at least one of either to have a valid tenant.
The difference between the two is straightforward:
- Premium adds Service Order Management and Manufacturing (production orders, machine centers, etc.)
- Essential covers everything else
If you don’t need service orders or manufacturing capabilities, Essential is all you need. Even if you just need simple sales orders, Essential has you covered.
Custom Development Objects
With a cloud license, you have access to all objects between 50,000 and 99,999 for custom development. These objects are available without any additional license fees. For those who’ve been around since the NAV days, this is worth noting — it’s a departure from how things worked on-premises.
Microsoft 365 Access (Read-Only via Teams)
If a user does not have a dedicated Business Central license but has a Microsoft 365 Business, Enterprise, or select other plans, they can access Business Central through Microsoft Teams. This is completely read-only access to everything.
Important: This is different from a Team Member license, which has nothing to do with Microsoft Teams. Don’t confuse the two.
External Accountant Access
You can configure up to three users with an External Accountant license at no additional cost. These users get essentially full access minus certain administrative tasks — they can’t work in the Admin Center or manage users, for example.
The intended use case is right there in the name: external accountants. However, other external parties could potentially use this license type to gain access to Business Central as well.
Mixing Essential and Premium
Yes, you can mix Essential and Premium licenses within the same tenant. In cases where you have multiple environments within the same tenant, you can have a set of Premium users accessing a Premium environment and another set of Essential users accessing an Essential environment.
However, the license guide states that licensed users can only access the environments for which they are entitled. It’s not entirely clear what happens when users need access to both types of environments. Erik hasn’t tested this scenario and invites feedback from anyone who has.
Team Member License
The Team Member license is not the same as the old NAV Limited User. Don’t assume you can simply upgrade Limited Users to Team Members and maintain the same functionality — the rules are different.
Before discussing what Team Members can do, Erik makes an important distinction: licensing operates at the entitlement level. Entitlements define what you’re entitled to access with your license. Permissions can then restrict that access further, but you can never grant a user more access than their entitlement allows.
A Team Member has:
- Full read access to everything
- Update access to records like customers, vendors, items, etc.
- Ability to approve and reject workflows
- Ability to create sales quotes and purchase quotes
- Ability to edit their own information in the Employee module
- Ability to work with timesheets in the Jobs module
- Right to use Power Apps and Power Automate
The 15 Custom Tables Rule
There’s a peculiar rule in the license guide: the Business Central Team Member application module may be customized with a maximum of 15 additional custom tables, plus standard database tables available to the Team Member license.
Erik has asked Microsoft what this means in practice. The intent is that Team Members are designed for specific, limited operations. If you have a large customization involving more than 15 custom tables, Team Members aren’t supposed to access it. However, it’s unclear whether there’s an actual technical limitation enforcing this, especially with apps and extensions. Erik believes Microsoft’s intent is for Business Central Team Members to mirror how Team Members work in CRM, where there’s a specific list of permitted actions and nothing outside that list is allowed.
Device License
The Device license is intended for scenarios where multiple users share the same terminal — think cash registers at a point of sale, shop floor terminals, or warehouse stations where a machine sits in the middle and multiple users take turns logging in.
This is not a shared user account. Every person is still an individual user, but they share one device. They can never work simultaneously — it’s essentially one concurrent user that a pool of 10, 15, 20, or 40 people might access.
Key limitations of Device licenses:
- Device users cannot use the Job Queue. Microsoft’s concern is that they cannot ensure the involved user is present in the system when a scheduled task executes.
- Device users cannot be the only license type on a tenant — you still need at least one Essential or Premium user.
- You must create a group in the Microsoft 365 Admin Center named exactly: “Dynamics 365 Business Central Device Users” (with capital starting letters). Users must be assigned to this specifically named group to consume device licenses.
External Users and Multiplexing
External users may or may not require a license, depending on their role:
- If you have a web shop with 10,000 customers, those customers do not need a Business Central license.
- If you have a contractor working on behalf of your business (not an employee, but doing work for your company), they do require a license.
The determining factor is whether someone is a consumer of your product or operating as part of your business.
Multiplexing
This is where it gets complicated. Multiplexing is what happens when you connect a web shop or portal to Business Central. The license guide states:
“Any user or device that accesses the service (a.k.a. Business Central), files, data, or content provided by the service that is made available through an automated process requires a Dynamics 365 license. The number of tiers of hardware and software between Business Central and the ultimate user or device does not affect the number of licenses required.”
This has interesting implications. For example, Microsoft loves to demo AI scenarios where a Power Virtual Agent or AI bot creates a sales order. Well, if that bot can create a sales order, then the person at the other end needs an Essential or Premium license — regardless of how many layers of technology sit between them and Business Central.
Azure AI Allocation
Each tenant gets 1,800 seconds (30 minutes) of access to Azure AI services — things like predictive features within Business Central. If you exceed that allotment, you’ll need to connect your own Azure account to continue consuming those services. Erik notes he’s never actually seen anyone hit this limit, and the measurement of “seconds” isn’t entirely clear.
Storage and Environments
When you get a Business Central environment, you start with:
- 80 GB of base database capacity
- 1 production environment and 3 sandboxes
Additional capacity is allocated per user:
- Premium users: 3 GB per user
- Device users: 1 GB per device
So if you have 10 Premium users, you get 30 GB + 80 GB = 110 GB total capacity. This capacity is shared across all your environments (production and sandboxes combined).
Need more? You can purchase:
- Additional environment sets (1 production + 3 sandboxes + 4 GB) for a flat monthly fee (approximately $500 USD)
- Extra database capacity in 1 GB or 100 GB increments
Erik’s advice: don’t store documents directly in your database — there are better solutions for that (he mentions his SharePoint connector as one example).
Dual Use Rights
While everything discussed is for the cloud, a valid cloud license grants dual use rights. Through your partner, you can obtain a license file to install Business Central on-premises. This includes download and downgrade rights for at least two versions. Some customers use this to run local copies for development and testing purposes.
Power Platform Rights
Business Central licenses include limited use rights to the Power Platform:
- Essential and Premium users get access to Power Apps, Power Automate, and Power Pages
- Team Member users only get access to Power Automate
Note that this is still limited use, and additional licensing may be required depending on your specific usage.
License Reassignment
Since every license is linked to a specific user, questions about reassignment come up frequently. The general rule: reassigning licenses is not allowed, with specific exceptions.
It is allowed when someone leaves or goes on extended sick leave — you can remove their license and assign it to their replacement (subject to a 90-day rule).
What is not allowed is rotating licenses among employees. For example, if you have 30 people in the company but only 10 in the office on any given day, you cannot buy 10 licenses and rotate them daily among whoever happens to be working.
Attach Licenses (Add-On Licensing)
Within the Dynamics 365 family, you can purchase attach licenses at a significantly discounted rate. The principle works like this:
- Start by purchasing the most expensive license as your base
- Attach other Dynamics 365 licenses at a reduced price
- You cannot attach something with a higher list price than your base license
For example, if you have Business Central Essential, you cannot attach Dynamics 365 Sales Enterprise at a discount because Sales Enterprise has a higher list price. You’d need to do it the other way around — purchase Sales Enterprise as your base and attach Business Central Essential.
The full details are covered in a large matrix within the CSP program documentation.
Summary
Business Central licensing may not be the most exciting topic, but getting it right is critical. Here are the key takeaways:
- Every tenant needs at least one Essential or Premium user
- Premium only adds Service Order Management and Manufacturing
- Custom development objects (50,000–99,999) are included at no extra cost
- Microsoft 365 users get read-only Teams access — not the same as a Team Member license
- Team Members have limited write access with a 15 custom table cap
- Device licenses require a specifically named group and can’t use Job Queues
- Multiplexing doesn’t eliminate the need for end-user licenses
- Cloud licenses include dual use rights for on-premises installations
- License reassignment is only permitted in specific circumstances
- Attach licenses can save money when combining Dynamics 365 products, but order matters
When in doubt, consult the official licensing guide or your Microsoft partner. And as Erik reminds us — if you think any of this is wrong, the comments section is always open!
