MS-900 Practice Question: Describe Microsoft 365 pricing, licensing, and support
This MS-900 practice question tests your understanding of describe microsoft 365 pricing, licensing, and support. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A global organization with 20,000 users is running Microsoft 365 E5 licenses. Due to budget cuts, the CIO wants to reduce licensing costs by 20% while ensuring that all users still have access to Exchange Online, SharePoint, Teams, and OneDrive. The organization also needs to maintain compliance with industry regulations that require eDiscovery and retention policies. The security team is willing to give up advanced threat protection features like Microsoft Defender for Office 365 P2 and Microsoft Purview Data Loss Prevention. Which licensing strategy should the organization adopt?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Downgrade all users to Microsoft 365 E3
Microsoft 365 E3 includes Exchange Online, SharePoint, Teams, and OneDrive, and provides eDiscovery and retention policies via Microsoft Purview compliance features. Downgrading from E5 to E3 reduces licensing costs by approximately 20-30% per user while retaining the required core productivity and compliance capabilities, and removes advanced threat protection (Defender for Office 365 P2, DLP) that the security team is willing to give up.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✓
Downgrade all users to Microsoft 365 E3
Why this is correct
E3 includes Exchange, SharePoint, Teams, OneDrive, eDiscovery, and retention, at a lower cost than E5.
Related concept
Read the scenario before looking for a memorised answer.
✗
Switch to Microsoft 365 F3 for all users
Why it's wrong here
F3 lacks eDiscovery and retention features required for compliance.
✗
Keep E5 but remove all add-on licenses
Why it's wrong here
E5 is a bundled plan; removing add-ons may not reduce cost significantly.
✗
Switch to Microsoft 365 Business Premium for all users
Why it's wrong here
Business Premium is limited to 300 users, not suitable for 20,000.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates may assume E5 is required for compliance features, but Microsoft 365 E3 includes the necessary eDiscovery and retention policies, and the question explicitly states the security team is willing to give up advanced threat protection, making E3 the correct cost-saving choice.
Detailed technical explanation
How to think about this question
Microsoft 365 E3 includes the same core workloads (Exchange Online Plan 2, SharePoint Online Plan 2, Teams, OneDrive for Business Plan 2) as E5, but omits advanced security features like Microsoft Defender for Office 365 P2, Microsoft Purview Data Loss Prevention, and Microsoft 365 Copilot. The compliance features required (eDiscovery and retention policies) are available in E3 through Microsoft Purview compliance portal, specifically via the Microsoft 365 E5 Compliance add-on if needed, but E3 natively includes core eDiscovery and retention capabilities sufficient for most regulatory requirements.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this MS-900 question in full detail.
Describe Microsoft 365 pricing, licensing, and support — This question tests Describe Microsoft 365 pricing, licensing, and support — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Downgrade all users to Microsoft 365 E3 — Microsoft 365 E3 includes Exchange Online, SharePoint, Teams, and OneDrive, and provides eDiscovery and retention policies via Microsoft Purview compliance features. Downgrading from E5 to E3 reduces licensing costs by approximately 20-30% per user while retaining the required core productivity and compliance capabilities, and removes advanced threat protection (Defender for Office 365 P2, DLP) that the security team is willing to give up.
What should I do if I get this MS-900 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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Question Discussion
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