Courseiva

MS-900 Practice Question: Describe Microsoft 365 pricing, licensing, and support

Your company has a mix of on-premises and cloud users. You plan to move to Microsoft 365 and need to support hybrid identity with password hash synchronization. Which licensing is minimally required?

⚠ Common exam trap

The trap is to assume PHS requires a premium license. In reality, PHS is available in the Free edition. Premium editions like P1 add features like conditional access, MFA, or password write-back, but not PHS itself.

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

✓

Microsoft Entra ID Free

Password hash synchronization (PHS) is a feature of Microsoft Entra ID available in all editions, including the free tier. It is part of the directory synchronization capabilities provided by Microsoft Entra Connect. Therefore, Microsoft Entra ID Free is the minimum licensing required to support hybrid identity with PHS. Microsoft 365 E3 also works but is not minimal.

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

  • ✗

    Microsoft Entra ID P1

    Why it's wrong here

    While Microsoft Entra ID P1 does support password hash synchronization, it is an identity-only license and does not include Exchange Online, SharePoint Online, Teams, or other Microsoft 365 productivity workloads. Thus, a standalone P1 license cannot satisfy the organization's need for Microsoft 365 services for its mixed on-premises and cloud users.

  • ✗

    Microsoft 365 E3

    Why it's wrong here

    Microsoft 365 E3 bundles Microsoft Entra ID P1 together with the full Microsoft 365 enterprise workload licenses. This gives you password hash synchronization for hybrid identities while also providing access to Exchange Online, SharePoint Online, Teams, and the Office desktop apps, making it the only option that meets both the identity sync and productivity requirements.

  • ✗

    Microsoft Entra ID P2

    Why it's wrong here

    Microsoft Entra ID P2 includes everything in P1, such as password hash synchronization, but it adds Identity Protection and Privileged Identity Management features. These extra security capabilities are not required for the scenario, and like P1, P2 is still an identity-only license that lacks Microsoft 365 workloads, making it both overkill and insufficient.

  • ✓

    Microsoft Entra ID Free

    Why this is correct

    The Microsoft Entra ID Free tier only supports cloud-only identities and does not support password hash synchronization from on-premises Active Directory. It also provides no Microsoft 365 workloads, so it cannot handle the hybrid directory requirements or deliver the needed productivity services to the organization's users.

Go deeper

Related to this question

About these practice questions

Courseiva writes every MS-900 question from scratch — 794 in total, each with an explanation and a wrong-answer breakdown. None are copied from real exams or dumps. Learn why practice questions differ from exam dumps →

How Courseiva writes practice questions · Editorial policy

JA

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.