Microsoft Volume Licensing: When Should You Use It?

Software license management is a common challenge for IT professionals in businesses. Microsoft offers several licensing models (OEM, Retail, Volume, and cloud subscriptions), and choosing the right one can significantly impact costs, flexibility, and administration. In this technical blog, we’ll explore in detail when to use Microsoft Volume Licensing, comparing it to OEM, Retail, and cloud-based subscriptions such as Microsoft 365 or Google Workspace. We’ll outline its benefits, limitations, and use cases, with real-world examples to guide both SMEs and large enterprises in their licensing decisions.

What Is Microsoft Volume Licensing?

A Microsoft Volume License is a type of software license designed for organizations that need to use the same product on multiple devices or for multiple users. Instead of purchasing many individual licenses (one per device or user), the company acquires a license package under a single volume licensing agreement. This provides a master product key or centralized activation method that enables efficient installation and activation across many machines without needing to enter a different key for each setup.

Volume licenses usually offer special rights that are not available with OEM or Retail licenses. For example, they often include downgrade rights, allowing companies to use older software versions if needed for compatibility, and simplify deployment using standard images across dozens or hundreds of devices. Microsoft has offered various volume licensing programs (Open License, Open Value, Enterprise Agreements, etc.), each tailored to different organization sizes, but all share the concept of centralized purchasing and management of multiple licenses.

However, using volume licenses requires meeting certain criteria, such as a minimum license quantity (typically around 5, depending on the program). In return, the organization benefits from lower unit costs, greater flexibility, and centralized license management tools.

Types of software licenses: OEM, Retail, Volume and Cloud Subscriptions

Before focusing on volume licensing, let’s review how it differs from other software licensing models.

OEM Licenses (Original Equipment Manufacturer)

OEM (Original Equipment Manufacturer) licenses come pre-installed by the manufacturer on new hardware (e.g., a brand-name PC with Windows included). These licenses are permanently tied to the original hardware and cannot be transferred to another machine. Their advantage is the lower cost, since they’re cheaper than Retail when purchased with the hardware. However, they have limitations: if the hardware undergoes a major change (like replacing the motherboard), the OEM license may become invalid; support is provided by the hardware manufacturer, and they don’t allow upgrades from previous software versions (a clean install is required when changing versions).

Retail Licenses (FPP)

Retail (FPP, Full Packaged Product) licenses are purchased separately from hardware, aimed at end users and small businesses. Unlike OEM, they are not tied to a specific PC: you can install them on one machine and later transfer them to another (one installation at a time). They offer more flexibility and usually include direct support from Microsoft. However, they’re more expensive per unit compared to OEM or Volume licenses, and managing many Retail licenses in an organization is more complex, since each has its own key and independent activation (there’s no centralized console to administer them).

Volume Licenses

Microsoft Volume Licenses are designed for companies and organizations that need multiple copies of a software. With this model, the organization purchases a block of licenses for a product (or suite of products) under a single agreement. It receives one volume license key that covers all authorized installations, instead of managing dozens of separate keys.

The main benefit is simplified mass deployment (one key for dozens of installations) and access to enterprise features not available with Retail licenses, such as using the software on terminal servers (remote desktop) or having downgrade rights to install older versions for compatibility.

Of course, volume licensing usually requires a minimum purchase. It also demands a bit more administration: registering the agreement with Microsoft and ensuring you don’t exceed the number of licenses acquired. Still, beyond a certain scale, the efficiency and savings far outweigh the initial effort.

Cloud Subscriptions (Microsoft 365, Google Workspace, etc.)

In recent years, the cloud subscription model has gained traction over perpetual licenses. Instead of paying once for a fixed software version, organizations pay a monthly or annual fee per user and always have the latest version plus associated online services.

Microsoft 365 (formerly Office 365) is a clear example: for a per-user fee you get the always-up-to-date Office apps plus cloud business services (Exchange email, OneDrive, Teams, etc.), all managed from a web portal. Similarly, Google Workspace offers Gmail with a corporate domain, Drive storage, and Google’s collaborative apps (Docs, Sheets, etc.) by subscription for business users.

Subscriptions offer advantages like continuous access to the latest versions, flexible per-user scalability, and integrated online services, but in return involve recurring costs and dependence on payments and internet access to maintain software availability.

Advantages of Volume Licensing

Below is a summary of the main benefits of choosing volume licensing for a business:

Savings on large purchases: the cost per license decreases when purchasing volume license packages, resulting in a lower unit price compared to buying individual licenses.
Centralized management: there is a single portal to monitor how many licenses are in use and how many are available, making audits and compliance easier.
Efficient deployment: enables automated installation of software across multiple devices (standard images, unified activation), streamlining migrations and onboarding of new devices.
Flexibility: it is easy to reassign licenses to new devices when old ones are replaced or users change, and it includes downgrade rights to use previous versions if needed.
Enterprise editions: access to more advanced software versions (e.g., Windows Enterprise, Office Pro Plus) not available in Retail, with the option to add Software Assurance to obtain future updates and specialized technical support.

Limitations of Volume Licensing

Of course, there are also some drawbacks or considerations when using volume licensing:

Minimum quantity: usually requires purchasing at least about 5 licenses, making it unsuitable for very small businesses or those with minimal needs.
Initial complexity: requires setting up portals and understanding activation methods (KMS, MAK), which adds workload to the IT department.
Upfront payment: a significant investment must be made upfront when buying in volume, unlike spreading the cost over monthly payments (subscriptions).
Updates not included: unless you purchase Software Assurance, volume licensing only covers the version purchased. If a new version is released that you need, you will have to buy it separately (unlike subscriptions, which are always kept up to date).
Risk of overuse: when sharing an activation key, it is the company's responsibility not to install more copies than it owns to avoid non-compliance.

When to Use Volume Licensing

Consider volume licensing for your business under these circumstances:

More than 5 PCs or mass deployment: if you need to equip many devices (for example, upgrading the entire office to a new version of Windows or Office), volume licensing is much more cost-effective and allows for coordinated deployment (single installer, centralized activation) across all PCs.
You need to standardize and control versions: in managed environments, it is important that everyone uses the same software version for compatibility and support. Volume licensing ensures you can deploy a consistent version across all devices. With individual licenses or users installing from the cloud, discrepancies may arise if not monitored.
You require exclusive advanced features: if your organization needs Enterprise software editions or special use scenarios (e.g., Office on a Terminal Server for remote access, or Windows Enterprise for its security features), it must be done via volume licensing or equivalent subscriptions, as Retail/OEM editions do not cover these cases.
Your environment cannot rely on the cloud: for companies with restrictive connectivity policies (e.g., government, financial, or industrial sectors) where devices must operate in isolation, traditional software volume licenses (Windows, Office, etc.) ensure offline functionality without the need for constant internet validation, unlike subscriptions which periodically require connectivity to verify the license.

Practical Licensing Examples

Let’s look at some simplified cases that illustrate license selection in real-world situations:

Graphic design studio (25 employees): This creative firm initially used individual licenses for Adobe and Office. Each designer managed their own Adobe Creative Cloud subscription, and the company purchased Microsoft Office Retail licenses as needed. With 25 employees, this became unsustainable in terms of cost and administration. They decided to switch to Adobe Creative Cloud for Teams and Office via volume licensing. They migrated all Adobe accounts to a centralized business plan: they now manage Adobe Creative Cloud licenses through the Adobe Admin Console, making it easy to assign and reassign Adobe licenses. In addition, they acquired 25 Microsoft Office Standard 2021 volume licenses, obtaining a master key to install them on all PCs and access to the Volume Licensing portal for tracking. Thanks to this change, they simplified management: when a designer leaves the company, they free up their Adobe license and assign it to the new hire at no extra cost, and with Office, all employees stay on the same version without individual purchases or scattered keys.
Large industrial company (500+ users): A manufacturing corporation with hundreds of employees decided to standardize its software under a volume licensing agreement. They signed an Enterprise Agreement with Microsoft covering Windows 11 Enterprise and Office 365 (subscription) licenses for all users, ensuring discounted pricing and access to the latest technology. For certain machines that remain isolated from the network, they kept volume licenses with an extended support version of Windows, keeping them stable for years without major updates. This case illustrates that in large organizations, it is common to combine perpetual volume licenses with cloud subscriptions, leveraging the strengths of each model depending on the type of user and device.

(Visual suggestion: include a screenshot of the Microsoft 365 admin center or the old VLSC showing the list of licenses and keys to familiarize the reader with the platform.)

Managing Volume Licenses

Once volume licenses are acquired, they are managed through Microsoft’s dedicated portals. Initially, the Volume Licensing Service Center (VLSC) is used to register the agreement and obtain product keys and downloads. Many of these functions are now migrating to the Microsoft 365 admin center, where you can view your volume licenses alongside your cloud subscriptions.

It is important to understand that Microsoft volume licenses are not assigned to individual users one-to-one (as is the case with cloud subscriptions); instead, the company decides which devices the licensed software is installed on. Therefore, companies must implement internal processes (software inventory, installation control via IT policies) to ensure they do not exceed the number of purchased licenses and comply with usage terms.

Activation of these licenses can be performed via an internal KMS server (automatic activation on the corporate network) or using MAK keys provided by Microsoft for individual Internet-based activations, depending on what suits the organization best.

(Visual suggestion: include a screenshot of the Adobe Admin Console showing license assignments to users.)

Volume Licensing for Third-Party Software

The concept of volume licensing is not exclusive to Microsoft. Other vendors also offer licensing programs for businesses. Adobe offers Creative Cloud for Teams (and an Enterprise edition for large organizations), a subscription program that allows companies to manage multiple licenses for their applications through a central console (Adobe Admin Console). In this Adobe Creative Cloud enterprise console, licenses can be flexibly assigned or revoked for employees, with the ability to reassign them when someone leaves without needing to purchase new licenses (Adobe applies volume discounts when certain user thresholds are exceeded). Managing Adobe licenses for teams thus becomes much simpler thanks to this unified console. Similarly, many other software vendors offer team or business licensing options with centralized management and volume-based pricing. In all cases, the idea is the same: to centralize license management and gain financial advantages when purchasing multiple licenses at once.

Frequently Asked Questions (FAQ)

What exactly is a volume license, and how does it differ from an OEM or Retail license?

Answer: A volume license is a type of software license that allows an organization to use a product on multiple devices or by multiple users under a single key or contract. In contrast to an OEM license (tied to a specific PC’s hardware, usually pre-installed and non-transferable) or a Retail license (purchased individually, transferable between devices but used on only one device at a time), a volume license is designed for corporate environments with many computers. For example, with a Microsoft Office volume license, a company receives a key that allows Office to be installed on dozens of PCs and managed collectively, rather than having to activate each copy with separate keys. This simplifies management and reduces costs when many licenses are needed.

When should my company use volume licenses instead of Retail or OEM?

Answer: Generally, when you need to license multiple users or devices with the same software. If you only have 2 or 3 PCs, individual licenses (OEM or Retail) or a basic subscription may be sufficient. But if you have 5, 10, or more devices, volume licensing becomes more efficient and cost-effective. You should also consider it if you need better administrative control over your licenses (for example, knowing which ones are actively in use) or if you need specific software editions that are only available through volume licensing. In short, for growing SMBs and large enterprises, volume licensing is usually the better option; for home users or very small businesses, the added complexity typically isn’t worthwhile.

How are Microsoft volume licenses managed after purchase?

Answer: They are managed through Microsoft’s web portals. First, you register your agreement in the Volume Licensing Service Center (VLSC), where you can view licenses, download software, and obtain product keys. Many of these functions are now also available in the Microsoft 365 admin center, alongside cloud subscriptions. The company must also maintain an internal record of which devices have the software installed to ensure it does not exceed the purchased license count. In short, volume licenses are managed through a centralized portal and by following good internal practices to track installations. In essence, managing users with Microsoft volume licenses combines using Microsoft’s platform with strong internal controls over software deployment.

How do you set up the Microsoft Volume Licensing Service Center (VLSC)?

Answer: The Microsoft Volume Licensing Service Center setup is done as follows:

Go to the Microsoft Volume Licensing Service Center website and sign in with a Microsoft account associated with your organization (this can be your corporate email if enabled, or a personal Microsoft account registered with your work email).
Register your organization in the VLSC by providing your agreement details (if the licenses were purchased through a reseller, you should have received a licensing ID in an email from Microsoft).
Accept the terms of the volume licensing agreement (for example, the terms of Open License or another applicable program).
In the portal, go to "Downloads and Keys" to download the software and obtain the necessary product keys. You can then install the software on your devices using those keys.

How do cloud subscriptions (Microsoft 365, Google Workspace) differ from traditional volume licenses?

Answer: They operate under a pay-as-you-go model with user-based assignment. A traditional volume license is a one-time payment to use a particular version of the software indefinitely within the organization (usually tied to devices), while a cloud subscription is a recurring payment that provides access to the software and online services as long as you continue to pay (and is typically assigned to a specific user who can use it on multiple devices). Additionally, subscriptions include automatic updates and integrated services (such as cloud storage, email, and real-time collaboration), which perpetual licenses do not. With volume licenses, updates must be managed manually (or purchased separately when new versions are released), and they do not inherently provide these extra services.

Does Adobe or other vendors offer similar options to volume licensing?

Answer: Yes, many do. In the case of Adobe, there is the Creative Cloud for Teams/Enterprise program, which allows you to purchase application licenses and manage them centrally via the Adobe Admin Console (with volume discounts). This is equivalent to volume licensing, though it follows a subscription model. Other professional software vendors (design, CAD, security, etc.) typically offer multi-user licenses or volume license packages with management tools for businesses. It is always worth exploring enterprise options when purchasing software, as they often simplify management and lower the per-unit cost compared to buying individual licenses.