Microsoft's Power Platform licensing is deliberately confusing. We've seen SMEs with 15 staff paying for premium licences they don't need, whilst growing businesses hit walls because they're on the wrong plan entirely.
Here's the thing - Microsoft doesn't make it easy to understand what you actually need. Their licensing documentation runs to hundreds of pages, and their sales team has quotas to hit. The result? Most UK small businesses either overpay dramatically or find themselves locked out of features they assumed were included.
After helping 40+ SMEs navigate Power Platform licensing over the past two years, we've spotted the patterns. Let's cut through the marketing speak and work out what your business actually needs.
The Four Power Platform Products (And What They Actually Cost)
But here's where it gets tricky. These prices are just the starting point.
Power BI: The Dashboard Trap
Most businesses start with Power BI because they want better reporting. The Pro licence at £8 per user per month seems reasonable. But you'll hit the 1GB workspace limit faster than you think.
We worked with a Manchester logistics firm last year. They started with five Pro licences (£40/month) but needed Premium capacity within three months because their data refreshes kept failing. That jumped their costs to £4,000 per month for Premium capacity - a 10,000% increase.
Power BI Pro's 1GB limit includes all your data models, not just raw data. A typical SME dashboard with 12 months of sales data often uses 500MB-800MB per dataset.
Power Automate: The Flow Allowance Reality
Power Automate pricing looks straightforward until you hit the flow run limits. The per-user licence includes 5,000 flows per month. Sounds like plenty, right?
Wrong. We built an invoice processing system for a 12-person accountancy practice. Single automation. Simple workflow. It processed 300 invoices per month, but each invoice triggered 15 individual flow runs (extract data, validate, create record, send notification, etc.). That's 4,500 runs from one process.
Calculate your actual flow runs
Don't just count automations. Count every trigger, condition check, and action as a separate run.
Factor in growth
Your flow usage typically doubles every six months as you find new processes to automate.
Consider premium connectors
SAP, Oracle, or even some advanced Excel operations require premium licences at £12/user/month.
The Microsoft 365 Bundle Trick
Here's something Microsoft's sales team won't emphasise: if you're already on Microsoft 365 Business Premium (£18.40/user/month), you get basic Power Platform capabilities included.
What's included:
- Power BI with limited sharing
- Power Automate with 2,000 runs per user per month
- Power Apps with basic connectors
- 250MB per user of Dataverse storage
What's not included:
- Premium connectors
- AI Builder credits
- Advanced data gateways
- Proper sharing and collaboration
Most SMEs can run their first automation projects entirely within these limits. We've built customer enquiry systems, expense approval workflows, and basic reporting dashboards using only the included licences.
Real-World Licensing Scenarios
Scenario 1: The 8-Person Marketing Agency
What they wanted: Automated social media reporting and client billing workflows.
What they bought initially: 8x Power BI Pro licences (£64/month) + 3x Power Automate licences (£36/month) = £100/month.
What they actually needed: Microsoft 365 Business Premium upgrade (£50/month extra) + 1x Power Automate premium licence for the finance manager (£12/month) = £62/month.
Annual saving: £456
Scenario 2: The 25-Person Manufacturing Company
What they wanted: Production dashboard, inventory automation, and quality reporting.
What the Microsoft partner quoted: Power BI Premium Per User for everyone (£400/month) + Power Automate premium for 10 users (£120/month) = £520/month.
What they actually needed: Power BI Premium capacity (£3,800/month initially, then scaled down to £950/month) + Power Automate for 3 key users (£36/month) = £986/month for full capability.
The capacity approach cost more upfront but gave them unlimited users and better performance.
"We nearly cancelled the whole project when we saw Microsoft's initial quote. Afer Studio's licensing review saved us £3,000 per year and gave us a better solution." - Operations Director, Midlands manufacturer
The Hidden Costs Nobody Mentions
Data Gateway Licensing
If your data lives on-premises (and most SME data does), you'll need data gateways. These aren't separately licensed, but they require specific licence types to function properly. Power BI Pro can use shared gateways; Power BI free cannot.
AI Builder Credits
Want to extract data from invoices automatically? That's AI Builder. It's not included in basic licences, and credits run out faster than you'd expect. Document processing typically costs 1 credit per page. A busy SME processing 200 invoices per month (average 2 pages each) needs 400 credits monthly.
AI Builder credit costs:
- 1,000 credits: £380 per month
- 5,000 credits: £1,520 per month
Dataverse Storage Overages
Every Power Apps application needs somewhere to store data. That's Dataverse. You get 250MB per user included, but overages cost £30 per GB per month.
We built a customer management system for a property maintenance company. Started with 2GB of included storage (8 users × 250MB). Within six months, they were using 12GB. That's 10GB of overages at £300 per month.
Our SME Licensing Strategy
After working with dozens of small businesses, here's our standard approach:
Phase 1: Start with Microsoft 365 Business Premium
Use the included Power Platform capabilities for 90 days. Build small automations, create basic dashboards. Understand your actual usage patterns.
Phase 2: Identify the Power Users
Usually 2-3 people in any SME become the 'dashboard builders' or 'automation creators'. These people need premium licences. Everyone else can stay on basic.
Phase 3: Scale Based on Data, Not Users
Once you're processing serious volumes, Power BI Premium capacity often works out cheaper than per-user licensing. The break-even point is usually around 25 active users.
We always recommend starting with a 3-month trial period using included licences before committing to premium features. Most SMEs discover they need different capabilities than they originally thought.
The Annual Review Trap
Microsoft licenses are annual commitments, but your business changes fast. That automation project that seemed essential in January might be redundant by September.
We helped a recruitment agency that was paying for 15 Power BI Premium licences. By December, only 4 people were actually using the dashboards. But they were locked in until renewal.
Always negotiate monthly licensing for the first year, even if the annual rate is cheaper. The flexibility is worth the 10-15% premium.
Making the Right Choice for Your Business
The honest answer? Most UK SMEs should start with Microsoft 365 Business Premium and add individual premium licences only when they hit specific limits.
Don't let Microsoft partners sell you enterprise licensing for a 15-person business. Don't buy Power BI Premium capacity until you've actually hit the Pro limits. And definitely don't commit to annual contracts until you've run real workflows for at least six months.
If you're struggling to work out what your business actually needs, our Power Platform assessment takes about 30 minutes and gives you a clear licensing roadmap. We've helped SMEs save thousands by getting their licensing right from the start.
The key is matching the licence to your actual usage, not your aspirational usage. Start small, measure everything, and scale based on real demand.