MS-900 Practice Question: Describe Microsoft 365 pricing, licensing, and support
Fabrikam Inc. has 5,000 users and is currently using Microsoft 365 E3. They want to enable Microsoft Copilot for Microsoft 365 for all users. The finance team is concerned about the additional cost and wants to explore if any existing licenses include Copilot or if they can use a lower-cost option. The IT team has determined that Copilot requires a qualifying license such as E3 or E5. Fabrikam also needs to maintain their current level of service for Exchange, SharePoint, Teams, and OneDrive. They do not need any additional security or compliance features beyond what E3 provides. Which licensing strategy should they implement to enable Copilot for all users while minimizing total cost?
⚠ Common exam trap
A common mix-up: candidates assume Copilot requires an E5 license or that a Business Premium license can support 5,000 users, but Microsoft explicitly limits Business Premium to 300 users and requires a qualifying base license for Copilot, making the add-on on E3 the only cost-effective and technically valid option.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Keep Microsoft 365 E3 and purchase Copilot add-on licenses for all users
Microsoft 365 E3 is a qualifying base license for Copilot for Microsoft 365, and the Copilot add-on can be purchased per user without changing the existing plan. This allows Fabrikam to retain their current E3 service levels for Exchange, SharePoint, Teams, and OneDrive while adding Copilot functionality at the lowest incremental cost, as they do not need the extra security or compliance features of E5.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Switch to Microsoft 365 Business Premium and add Copilot
Why it's wrong here
Microsoft 365 Business Premium is designed for small and mid-sized businesses and is capped at 300 users, so it cannot accommodate Fabrikam's 5,000 users. Even though Copilot for Microsoft 365 can be added to Business Premium, the user limit makes this option unfeasible. For an enterprise of this scale, Microsoft 365 E3 is the appropriate base plan, and Copilot should be added as a per-user add-on.
- ✗
Upgrade all users to Microsoft 365 E5
Why it's wrong here
Upgrading all users to Microsoft 365 E5 would indeed provide a qualifying base license for Copilot, but it bundles many advanced security, compliance, and analytics features that Fabrikam may not need. Since Fabrikam already has Microsoft 365 E3, which also qualifies for the Copilot add-on, the E5 upgrade is more expensive and adds unnecessary features. The most cost-effective approach is to keep E3 and purchase the Copilot add-on licenses separately.
- ✓
Keep Microsoft 365 E3 and purchase Copilot add-on licenses for all users
Why this is correct
Microsoft 365 E3 is a qualifying base license for Microsoft 365 Copilot, and the Copilot add-on can be licensed per user to provide the AI-powered assistance Fabrikam needs. Since the company already uses E3, they can simply purchase the Copilot add-on for all 5,000 users without changing the underlying plan. This avoids the cost of upgrading to E5 or switching to a plan with a user limit, meeting the requirement at minimal additional expense.
- ✗
Purchase standalone Copilot licenses without changing the base plan
Why it's wrong here
Microsoft 365 Copilot is not available as a standalone product; it must be attached to a qualifying base license such as Microsoft 365 E3, E5, or Business Standard/Premium. Without a valid base license, the standalone Copilot license cannot be activated or used. Because Fabrikam already has E3, purchasing Copilot as an add-on to that existing plan is the correct way to deploy it, not as a standalone purchase.
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Related to this question
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Microsoft Copilot for Microsoft 365
Key term
Copilot for Microsoft 365
Copilot for Microsoft 365 is an AI assistant integrated into Microsoft 365 apps that helps users create documents, analyze data, summarize communications, and automate tasks using natural language prompts.
Key term
Microsoft 365
Microsoft 365 is a subscription-based cloud service from Microsoft that combines productivity tools like Office apps with security, device management, and online storage.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This MS-900 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MS-900 exam.