MS-900 Practice Question: Describe Microsoft 365 pricing, licensing, and support
Wide World Importers has 300 users and is currently using Microsoft 365 Business Premium. The company is expanding and expects to hire 50 more employees next quarter. The CFO is concerned that Business Premium has a 300-user limit and wants to ensure a smooth transition without service interruption. The company needs to keep all current services (Exchange, SharePoint, Teams, OneDrive, Microsoft Defender for Business). They also want to add Microsoft Copilot for Microsoft 365 for all users. Which licensing strategy should they implement to accommodate the growth and add Copilot?
⚠ Common exam trap
Many candidates assume Business Premium can be scaled by purchasing extra licenses, but Microsoft enforces a hard 300-user limit, requiring a migration to an enterprise plan (E3 or E5) for larger organizations.
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
✓
Switch to Microsoft 365 E3 and add Copilot licenses
Microsoft 365 Business Premium has a strict 300-user limit, and Wide World Importers will exceed that with 350 users. Switching to Microsoft 365 E3 provides unlimited user licensing and includes all required services (Exchange, SharePoint, Teams, OneDrive, and Defender for Business). Microsoft Copilot for Microsoft 365 is available as an add-on for E3, allowing the company to add it for all users without service interruption.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Keep Business Premium and purchase extra licenses for the new hires
Why it's wrong here
Microsoft 365 Business Premium is contractually capped at 300 users per tenant, so you cannot 'purchase extra licenses' to accommodate more than 300 seats. The hard limit is a licensing constraint, not a cost or availability issue, meaning any attempt to add a 301st license will fail at the admin portal or require a plan transition. To support the new hires, you must move to an enterprise plan that has no such user ceiling, making this option technically impossible rather than merely suboptimal.
- ✗
Upgrade all users to Microsoft 365 E5
Why it's wrong here
Upgrading all 300 existing users to Microsoft 365 E5 would grant every user the full suite of advanced security, compliance, and analytics tools (e.g., Microsoft Defender, Purview, Power BI Pro) that are not required for this organization's stated needs. E5 is significantly more expensive per user than E3, and because Microsoft 365 Copilot is available as an add-on to E3, you can achieve the desired AI capabilities for a fraction of the cost. This approach overprovisions the entire tenant with unused premium features, creating unnecessary licensing spend without any additional functional benefit for the scenario.
- ✓
Switch to Microsoft 365 E3 and add Copilot licenses
Why this is correct
Microsoft 365 E3 removes the 300-seat limit inherent to Business Premium, allowing seamless scaling beyond the current 300 users. E3 includes the essential services needed—desktop Office apps, Exchange Online, SharePoint, Teams, and security/compliance baselines—and supports the Microsoft 365 Copilot add-on for AI-powered assistance. By switching to E3 and appending Copilot licenses only for the users who need them, you align license cost with the required functionality and future growth, avoiding the excess expense of E5 while meeting the organization's exact requirements.
- ✗
Switch to Microsoft 365 F3 and add Copilot
Why it's wrong here
Microsoft 365 F3 is designed for frontline workers and provides only web-based and mobile Office apps, not the full desktop Office suite that users in this organization likely rely on. Additionally, F3 is positioned for task-oriented, shift-based workers and lacks many of the collaboration and security features found in E3, so it cannot serve as a direct replacement for Business Premium. Even if Copilot were added, F3's underlying service limitations (no desktop apps, reduced email storage, simplified compliance controls) make it an unsuitable foundation, meaning this option fails to deliver the required user experience.
Go deeper
Related to this question
Learn chapter
Microsoft 365 Licensing Plans
Key term
Microsoft Defender
Microsoft Defender is a suite of security products that protects devices, data, and identities from cyber threats like malware, phishing, and unauthorized access.
Key term
User
A user is any person, system, or device that interacts with an IT service, resource, or identity system, typically authenticated through credentials and authorized to perform specific actions.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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