One of the key features of Dynamics 365 is the choice of the deployment platform: go online, on-premises or partner-hosted. With Dynamics 365 Online leading the way, licensing has evolved beyond simplistic “pay-per-server-plus-cal” model of the past.

For penny savvy customers, the recommended bedside reading is Dynamics 365 On-Premises Enterprise Edition Licensing Guide. If you don’t fall asleep by page 5 then the goodness is right there. It’s so good, it’s worth quoting verbatim (highlights are mine):

Dual Use Rights

One of the advantages of Microsoft Dynamics 365 is the option to deploy either in Microsoft’s cloud or in a private on-premises or partner-hosted cloud. In some cases, customers may want to deploy both modes simultaneously, for migrating a Microsoft Dynamics 365 on-premises deployment to Microsoft Dynamics 365, running private Dev/Test deployments in Microsoft Azure.

Users or devices licensed with Dynamics 365 User Subscription Licenses (User SLs) have use rights equivalent to a CAL for the purpose of accessing on-premises functionality. With Microsoft Dynamics 365 the Dynamics 365 (On-Premises) server license is included with the SLs.

In layman terms, “buy one get one free!”

Careful though

Dual Use Rights is a one-way street

Dual Use Rights convey Microsoft Dynamics 365 (On-Premises) Server license access rights to Microsoft Dynamics 365 SLs. Microsoft Dynamics 365 (On-Premises) CALs have no reciprocal rights to access functionality provided exclusively to Microsoft Dynamics 365 SLs, nor do Dual Use Rights imply equivalent capabilities between Microsoft Dynamics CALs and Microsoft Dynamics Microsoft Dynamics 365 SLs.

Dual Use Rights only apply to Dynamics 365 so don’t forget to license other deployment components.

Licenses for all supporting servers (e.g., Windows Server and CAL(s)) must be obtained separately.

Saving best for last

If on-premises user needs both sales and customer service functionality, you need to buy 2 separate SKUs. However, Enterprise Plan 1 license (available as online-only SL) will allow you to use either one and save a bundle!