If you've ever tried to understand Microsoft Power Platform licensing, you're not alone. With multiple license types, use rights that come with other products, and pricing that varies by scenario, it's genuinely confusing.
This guide cuts through the complexity and explains what you actually need to know.
The Power Platform Components
First, let's clarify what we're talking about:
- Power Apps: Build custom applications without traditional coding
- Power Automate: Automate workflows and processes
- Power BI: Business intelligence and data visualisation
- Power Pages: Build external-facing websites and portals
- Copilot Studio: Build AI-powered chatbots and agents
Each component has its own licensing model, but there's significant overlap and bundling with other Microsoft products.
Power Apps Licensing
Power Apps has two main standalone licensing options:
Power Apps Premium
~$30 AUD per user/month
- Unlimited apps per user
- Access to premium connectors (Dataverse, SQL, etc.)
- Includes Dataverse capacity
- Access to on-premises data gateways
Power Apps per App
~$7.50 AUD per user/app/month
- Access to one specific app
- Good for single-purpose apps with many users
- Includes premium connectors for that app
Which to Choose?
If users need access to 4+ apps, Premium is more cost-effective. For single-purpose apps used by many occasional users, Per App can be cheaper.
What's Included with Dynamics 365?
Here's where it gets interesting. Dynamics 365 licenses include Power Apps rights:
- Dynamics 365 Enterprise licenses: Include Power Apps for customising and extending Dynamics 365
- This means: Users can build apps that connect to Dynamics 365 data without additional licensing
- Limitation: The app must be in context of Dynamics 365 use
Common Gotcha
If your Power App accesses data outside Dynamics 365 (like a separate SQL database), you may need standalone Power Apps licensing even if users have Dynamics 365 licenses.
Power Automate Licensing
Power Automate licensing has evolved significantly. Here's the current model:
Power Automate Premium
~$22 AUD per user/month
- Unlimited cloud flows
- Premium connectors
- Attended RPA (desktop flows)
- 5,000 AI Builder credits
Power Automate Process
~$225 AUD per bot/month
- For unattended automation
- Run automations without user interaction
- Good for scheduled, background processes
What's Included with Microsoft 365?
Microsoft 365 licenses include limited Power Automate capabilities:
- Standard connectors only: Office 365, SharePoint, Outlook, Teams, etc.
- No premium connectors: SQL, Dataverse, HTTP, and custom connectors require licensing
- No RPA: Desktop flows require premium licensing
| Feature | M365 Included | Premium Required |
|---|---|---|
| Standard connectors (O365, SharePoint) | Yes | Yes |
| Premium connectors (SQL, HTTP, Dataverse) | No | Yes |
| Desktop flows (RPA) | No | Yes |
| AI Builder | No | Yes |
Power BI Licensing
Power BI licensing is more straightforward:
Power BI Pro
~$14 AUD per user/month
- Create and share reports and dashboards
- Collaborate with other Pro users
- Included with Microsoft 365 E5
Power BI Premium Per User
~$28 AUD per user/month
- Advanced AI features
- Larger dataset sizes
- Paginated reports
- Deployment pipelines
Power BI Premium (Capacity)
~$7,000+ AUD per capacity/month
- Dedicated capacity for heavy workloads
- Unlimited viewers (don't need Pro license to view)
- Only makes sense at scale (100+ users typically)
Free Viewers?
With Power BI Premium capacity, you can share reports with unlimited users who don't have Pro licenses. This can be cost-effective for broad report distribution.
The Dynamics 365 Use Rights Question
This is where most confusion arises. Dynamics 365 licenses include certain Power Platform rights, but the rules are nuanced:
What Dynamics 365 Licenses Include
- Power Apps: Rights to run apps that extend Dynamics 365
- Power Automate: Rights to create flows triggered by or acting on Dynamics 365
- Power BI: Some embedded analytics within Dynamics 365
What Requires Separate Licensing
- Power Apps accessing non-Dynamics data sources
- Power Automate flows not related to Dynamics 365
- Power BI reports outside Dynamics 365 context
- Users who need Power Platform but don't have Dynamics 365
Audit Risk
Microsoft licensing audits are increasingly common. If you're using Power Platform capabilities beyond your Dynamics 365 use rights, you may be out of compliance. When in doubt, get a licensing review.
Common Scenarios
Scenario 1: Extending Dynamics 365 for Internal Users
Need: Build a custom app for sales reps to capture field data and sync to Dynamics 365.
Licensing: Covered by Dynamics 365 Sales license—no additional Power Apps license needed.
Scenario 2: Customer-Facing Portal
Need: Build a portal for customers to submit service requests.
Licensing: Power Pages licensing (per authenticated user or pay-as-you-go).
Scenario 3: Automating Finance Processes
Need: Automated workflow connecting SharePoint, SQL Server, and email.
Licensing: Power Automate Premium for users who build/manage the flows. Premium connectors (SQL) require premium licensing.
Scenario 4: Company-Wide Dashboards
Need: 200 users need to view (not create) Power BI dashboards.
Licensing: Either Power BI Pro for all 200 users (~$2,800/month) or Power BI Premium capacity (~$7,000/month) with free viewers. At 200 users, Premium capacity is more expensive—break-even is around 350-500 users.
Cost Optimisation Tips
- Audit current usage: Understand who's actually using what before buying more licenses
- Leverage bundled rights: Check what's already included with M365 and Dynamics 365
- Right-size licenses: Not everyone needs Premium—use Per App for occasional users
- Consider nonprofit pricing: Substantial discounts for eligible organisations
- Plan for growth: Per-user licensing scales linearly; capacity licensing has better economics at scale
- Consolidate environments: Fewer environments mean less capacity consumption
Get a Licensing Review
We regularly help organisations optimise their Microsoft licensing. A proper review often finds savings that more than cover the cost of the review.
The Bottom Line
Power Platform licensing is complex, but the key principles are:
- Standard connectors are broadly included with M365
- Premium connectors (SQL, Dataverse, HTTP, custom) require premium licensing
- Dynamics 365 licenses include Power Platform rights for extending Dynamics
- Per-user licensing works for most scenarios; capacity licensing makes sense at scale
- When in doubt, get expert advice—the savings usually justify the cost
Microsoft updates licensing models regularly, so always verify current pricing and terms before making decisions.