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Introduction
AVD license management is the process of assigning, tracking, and optimizing user licenses for your Azure Virtual Desktop environment and its applications.
Effective management is critical for controlling cloud costs, ensuring legal compliance with Microsoft's terms, and preventing service disruption for your end-users, as unmanaged licenses can lead to significant and unnecessary operational spending.
What licenses are required for an Azure Virtual Desktop environment?
Before you can optimize your licenses, you need a clear understanding of exactly what entitlements are required to operate your AVD environment. Getting this foundation right is the first step toward effective management and cost control.
What are the primary AVD access rights and entitlements?
To access an Azure Virtual Desktop environment, each user must have an eligible license that grants them the right to use the Windows operating system running on the session host virtual machines. You do not pay for the OS license itself, but rather, the user's entitlement covers its use within AVD. This entitlement is crucial because it covers the use of the Windows client OS in a multi-session remote desktop environment, a right not typically included in standard device-based Windows licenses.
Eligible licenses that grant Azure Virtual Desktop access rights include:
| License Category | Eligible SKUs |
|---|---|
| Microsoft 365 | E3, E5, A3, A5, F3, Business Premium, Student Use Benefit |
| Windows Enterprise | E3, E5 |
| Windows Education | A3, A5 |
| Windows VDA | VDA per user |
For IT professionals evaluating both platforms, it's a key benefit that the same underlying Microsoft 365 licenses often cover both AVD access and Windows 365 Cloud PC provisioning, simplifying entitlement management across the enterprise. This flexibility also extends to cost, where AVD's pay-as-you-go infrastructure and multi-session pooling features can offer significant savings over the fixed-price model of Windows 365 for intermittent or shared-use scenarios.
Which licenses are needed for Microsoft 365 Apps in AVD?
A common point of confusion is that Azure Virtual Desktop access rights do not include the license for Microsoft Office applications. To run applications like Word, Excel, or Outlook within an AVD session, your users need a separate license for Microsoft 365 Apps. For multi-user environments, this license must also support Shared Computer Activation (SCA), which allows multiple users to share the same installation of Office on a single virtual machine.
Licenses that include Microsoft 365 Apps with SCA are:
- Microsoft 365 Apps for enterprise
- Microsoft 365 Apps for business (if included in a Business Premium plan)
- Microsoft 365 E3, E5, A3, A5
Are there separate licenses needed for FSLogix?
No, you do not need to purchase a separate license for FSLogix. The right to use FSLogix technology for profile management is included with all of the primary AVD access licenses listed above. This powerful tool for managing user profiles in non-persistent environments is a core benefit of your existing entitlement.
Know the TCO
This step-by-step wizard tool gives you the total cost of ownership for AVD in your organization.
What are the standard methods for assigning licenses for Azure Virtual Desktop?
Microsoft provides several powerful methods for assigning the necessary licenses to your users. Understanding the difference between group-based and direct assignment is key to building a scalable and manageable licensing model.
How does group-based licensing work in Microsoft Entra ID?
Group-based licensing in Microsoft Entra ID (formerly Azure Active Directory) is the recommended best practice for any enterprise environment. Leveraging Microsoft Entra ID for group-based licensing streamlines management because the same system that handles user authentication also enforces license assignment, creating a single, cohesive process. This method allows you to assign one or more product licenses to a group, and Microsoft Entra ID ensures that the licenses are assigned to all members of that group.
The process is straightforward:
- Create a Security Group: In the Microsoft Entra admin center, create a new security group for a specific user cohort (e.g., "AVD - Marketing Users").
- Assign Licenses to the Group: Navigate to the "Licenses" blade of the group and assign the required product licenses (e.g., Microsoft 365 E3).
- Add Users: Add users to this group. They will automatically inherit the assigned licenses, typically within a few minutes. If a user is removed, the license is automatically reclaimed.
This approach simplifies administration, reduces manual error, and makes it easy to manage entitlements for hundreds or thousands of users.
When should you use direct license assignment?
Direct license assignment involves applying a license directly to an individual user account. While this method works, it is not ideal for managing licenses at scale. You should reserve direct assignment for one-off exceptions or testing purposes, as it creates significant administrative overhead and makes it difficult to track and reclaim licenses systematically.
How can you use PowerShell for license assignment and reporting?
For administrators who prefer automation and scripting, the Microsoft Graph PowerShell SDK is an essential tool. It allows you to programmatically manage every aspect of licensing.
You can use PowerShell for critical tasks such as:
- Auditing SKUs: Use Get-MgSubscribedSku to see all available license plans in your tenant.
- Assigning Licenses: Use Set-MgUserLicense to add or remove specific licenses from a user account.
- Reporting: Create scripts to identify users with specific license assignments or find users who have no licenses assigned at all.
What are the best practices for minimizing AVD license waste?
Once your licenses are assigned, the work shifts to continuous optimization to ensure you are not paying for unused resources. Implementing these best practices can lead to significant and immediate savings on your cloud spending. In the same way that features like autoscale are used to control virtual machine compute costs, proactive license management is the key to controlling the user entitlement side of your AVD spending. This holistic approach to cost management also includes analyzing performance data to automate the right-sizing of AVD session host images, ensuring you don't overpay for underutilized compute resources.
This diagram shows the step-by-step workflow for auditing user activity and reclaiming Azure Virtual Desktop licenses from inactive accounts to optimize your cloud spend.
How do you conduct regular license audits?
A license that is assigned but not used is pure waste. You should implement a scheduled, recurring process (e.g., quarterly) to review license utilization.
A simple yet effective audit process includes these steps:
- Generate a User List: Export a list of all users assigned an AVD-eligible license from Microsoft Entra ID.
- Analyze Sign-in Data: Cross-reference this list with user sign-in logs. Identify accounts that have not signed in for an extended period (e.g., 90 days).
- Reclaim Licenses: For confirmed inactive users, remove them from the corresponding licensed security group to return their license to the pool.
How can you reclaim licenses during user offboarding?
One of the most common sources of license waste is failing to remove licenses from former employees. Make license reclamation a mandatory step in your official IT offboarding process. When an employee leaves the company, their Azure Virtual Desktop and Microsoft 365 licenses should be removed on their last day, ensuring they are immediately available for new hires.
How do you match license types to user roles?
Not every user needs the most expensive and feature-rich license. By mapping licenses to specific user personas, you can prevent over-provisioning and significantly cut costs.
Consider these examples:
- Knowledge Workers: These users often require the full suite of applications and services found in a Microsoft 365 E3 or E5 license.
- Frontline or Task Workers: Users who only need access to a limited set of applications can often be served by the more cost-effective Microsoft 365 F3 license.
- External Contractors: A temporary user might only need a specific license for the duration of their project, which should be reclaimed immediately upon completion.
What are common pitfalls to avoid in AVD license management?
Many organizations inadvertently waste money on AVD licensing by falling into a few common traps. Being aware of these pitfalls is the first step toward avoiding them and securing your environment. Misconfigured or expired license assignments frequently manifest as user login failures, forcing IT teams into time-consuming troubleshooting to diagnose what appears to be a connectivity issue but is actually an entitlement problem.
- Using Overly Broad Assignment Groups: Assigning licenses to a general group like "All Employees" is a recipe for waste. Create granular, purpose-built groups for license assignments.
- Forgetting About Inactive Users: The "set it and forget it" approach is costly. Without regular audits, you will inevitably pay for licenses for users who have changed roles, left the company, or no longer need AVD access.
- Failing to configure budget alerts: Not having effective AVD cost alerting is a common oversight, leaving an organization vulnerable to unexpected cost spikes from issues like runaway autoscaling or oversized VMs.
- Ignoring License Compliance: Improperly licensing your users, especially regarding Shared Computer Activation for Microsoft 365 Apps, can lead to negative findings during a software audit and potential true-up costs.
- One-Size-Fits-All Licensing: Giving every user a Microsoft 365 E5 license "just in case" is a significant and often unnecessary expense. Always match the license to the actual user requirements.
How can automation platforms simplify AVD license management?
While native tools offer robust control, managing licensing at enterprise scale can become complex and time-consuming. This is where dedicated AVD automation platforms can provide significant value by simplifying and automating key optimization tasks.
What role do third-party management tools play?
Third-party tools are designed to sit on top of the AVD control plane and automate complex or repetitive operational tasks that would otherwise require extensive manual effort or custom scripting. These platforms operationalize the best practices for AVD by applying intelligent automation and auto-scaling to dynamically manage both performance and cost. Instead of relying on manual audits and PowerShell scripts to manage licenses, these platforms provide a unified interface with built-in workflows for cost and license optimization.
How does a platform like Nerdio Manager for Enterprise help optimize licensing?
An advanced automation platform like Nerdio Manager for Enterprise directly addresses the challenges of manual license management by integrating it into its broader AVD administration capabilities. It provides several factual benefits for organizations looking to control costs.
For example, a platform like Nerdio Manager can help by:
- Automating License Reclamation: It can be configured to automatically detect and de-allocate licenses from inactive or offboarded users based on set policies, eliminating the need for manual quarterly audits.
- Providing Unified Visibility: It presents AVD infrastructure costs and license assignments in a single, consolidated dashboard, giving you a holistic view of your spending without needing to switch between the Azure portal and Microsoft Entra admin center.
- Streamlining User Workflows: It can integrate license assignment and reclamation directly into its automated workflows for user onboarding and offboarding, ensuring no step is missed and waste is prevented from day one.
See this demo to learn how you can optimize processes, improve security, increase reliability, and save up to 70% on Microsoft Azure costs.
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