Introduction

Microsoft Power Platform is a suite of tools that enables businesses to build custom applications, automate workflows, and analyze data using a low-code/no-code approach. It includes Power Apps, Power Automate, Power BI, and Power Virtual Agents.

A key decision for organizations using Power Platform is selecting the right licensing model: Pay-as-you-go (PAYG) or Volume Licensing. This article will help you determine which option best fits your organization’s needs.

Understanding the Payment Models

Microsoft clients can choose between two primary licensing models for Power Platform:

Pay-as-you-go (PAYG)

PAYG is a flexible licensing model that allows organizations to pay based on actual usage rather than committing to fixed subscriptions. This model is beneficial for businesses that have fluctuating demand or are in the early stages of app adoption.

• Billing Structure: Charges are applied per active user per app per month. An active user is someone who opens an app at least once in a given month.
• Azure Subscription Requirement: Organizations must have an Azure subscription to enable billing.
• No Upfront Commitment: PAYG allows businesses to avoid long-term contracts, making it ideal for companies with uncertain or dynamic application needs.
• Additional Storage Costs: Dataverse storage beyond the allocated capacity incurs additional charges, including database, log, and file storage fees.
• Best for: Organizations with variable usage, project-based development, or businesses piloting Power Platform before full-scale deployment.

Volume Licensing (Enterprise Agreement & Cloud Solution Provider)

Volume Licensing offers a more structured pricing model suited for enterprises with steady and predictable usage patterns. By committing to a licensing agreement, organizations can achieve cost savings through discounted rates.

• Predictable Pricing: Organizations benefit from stable, predictable costs based on the number of users or applications.
• Commitment Terms: Requires an upfront commitment with annual or multi-year contract adjustments, making it ideal for businesses with long-term Power Platform integration plans.
• Per-App or Per-User Subscriptions: Businesses can choose between per-app or per-user licensing models, depending on how Power Apps are deployed within the organization.
• No Azure Subscription Required: Unlike PAYG, this model does not require an Azure subscription for billing, making it more accessible for enterprises already engaged in EA or CSP agreements.
• Best for: Large enterprises with steady Power Platform adoption, organizations with multiple Power Apps in use, and businesses looking to control long-term costs.

Pros and Cons of Each Model

Pay-as-you-go (PAYG)

• Pros:
  • Ideal for businesses with fluctuating app usage.
  • No long-term commitment.
  • Suitable for projects or testing before scaling.
• Cons:
  • Can become expensive for high-volume usage.
  • Requires Azure subscription for billing.
  • Storage overages can significantly increase costs.

Volume Licensing (EA & CSP)

• Pros:
  • Predictable, lower cost for businesses with steady usage.
  • No dependency on Azure for billing.
  • Discounts available for larger purchases.
• Cons:
  • Requires upfront commitment.
  • Less flexibility for organizations with irregular usage.

How to Choose the Right Model

Consider these factors when deciding between PAYG or Volume Licensing:

1 Company Size & Usage Patterns

• Small Businesses & Startups: If your company is in its early stages or only uses Power Apps occasionally, PAYG might be the better option. It allows you to scale without committing to a large number of licenses upfront. Startups running pilot projects or testing new applications can benefit from the flexibility of PAYG before fully adopting Power Platform.
• Large Enterprises: Organizations with a stable and high number of users will likely find Volume Licensing more cost-effective. Companies running multiple business-critical apps across departments should opt for Volume Licensing to ensure predictable expenses and easier management of user licenses.

2 Budget Flexibility

• PAYG: This model provides flexibility by charging only for actual usage. However, the monthly costs can fluctuate, making it harder to forecast expenses. For businesses with limited budgets or seasonal demand, PAYG ensures that you’re only paying for what you need.
• Volume Licensing: This model locks in fixed pricing, making budgeting more predictable. Large organizations that need stability in IT costs should consider Volume Licensing to avoid unexpected expenses.

3. Storage Costs

• Dataverse Consumption: PAYG environments have additional costs for exceeding storage limits, with high prices for database, log, and file storage. If your applications require extensive data storage, these overages can add up quickly.
• Volume Licensing: Enterprise Agreement or Cloud Solution Provider agreements include predefined storage capacities, often at lower costs per GB. If your organization expects significant data growth, Volume Licensing may provide a more cost-effective solution.

4. Existing Licensing Agreements

• If You Already Have an EA or CSP Agreement: Adding Power Platform under the same agreement can streamline license management and may qualify for discounts. Organizations that already have Microsoft 365, Dynamics 365, or other Microsoft products under an enterprise contract should check whether adding Power Apps licenses via Volume Licensing offers better pricing.
• Standalone Deployments: If your organization does not have existing Microsoft agreements, PAYG may be a more accessible entry point without requiring additional licensing commitments.

For more details, visit Microsoft’s official documentation.