Custom License Billing and Calculated Custom Licenses
Sync 365 custom licenses let you create a billable quantity when the item you need to bill does not map cleanly to one Microsoft 365 license SKU.
Use normal Microsoft license mapping for standard Microsoft license and subscription billing. Use custom licenses when you need to bill MSP services, user-based add-ons, mailbox services, security tools, bundles, split billing, or overages.
Common MSP billing use cases
Custom licenses can be used for simple billing counts or more advanced calculated billing rules. The best option depends on how your MSP sells the service and how the client agreement says it should be billed.
Managed-user billing
Bill your managed users using one of these methods:
- Entra ID licensed users: Count licensed users in the tenant.
- Entra ID group: Count users or devices in a specific Entra ID group.
- Copying a Microsoft 365 license: Copy the quantity from one or more Microsoft 365 licenses where the managed-user service follows those license assignments.
- Calculated managed users: Count active licensed users and filter by license, department, office, location, company name, domain, user type, or extension attribute.
Mailbox backup billing
Bill Microsoft 365 mailbox backup products such as SkyKick, Backupify, Veeam Office 365 Backup, Cove Data Protection, or Dropsuite using one of these methods:
- User mailbox count: Count active user mailboxes.
- Shared mailbox count: Count shared mailboxes where shared mailboxes are billable.
- User and shared mailbox count: Count both mailbox types where the backup product protects both.
- Licensed Entra ID users: Count licensed users where backup billing follows licensed users rather than mailbox count.
- Calculated mailbox backup overage: Count mailbox backup users/mailboxes, then subtract the managed-user or included-mailbox custom license so only extra mailboxes are billed.
Email security and spam filtering
Bill your email security or spam filtering provider using one of these methods:
- User mailbox count: Count protected user mailboxes.
- User and shared mailbox count: Count shared mailboxes as well if they are protected and billable.
- Licensed Entra ID users: Count licensed users where filtering follows licensed users.
- Calculated email security overage: Count protected users or mailboxes, then subtract the managed-user custom license if filtering is already included for managed users.
Custom bundles for managed users
Bill custom bundles that are provided to managed users using one of these methods:
- Entra ID licensed users: Count all licensed users receiving the bundle.
- User mailbox count: Count mailboxes where the bundle follows mailbox users.
- Entra ID group: Count users in a group that represents who receives the bundle.
- Multiple Microsoft license SKUs: Combine users from selected Microsoft 365 licenses and remove duplicate users.
- Calculated bundle count: Combine backup users, security users, filtering users, signature users, or other service counts into one billable bundle.
Signature management billing
Bill signature management platforms such as Exclaimer using one of these methods:
- Entra ID group: Count the group that has signatures applied.
- Calculated signature overage: Count signature users, then subtract managed users if signature management is already included in the managed-user plan.
Security software and cloud add-on billing
Bill security software, cloud add-ons, archiving, security awareness, endpoint tools, or compliance add-ons using calculated custom licenses where the billing rule is more complex than one simple count.
- Included service plus overage: Count all users consuming the add-on, then subtract the managed-user custom license.
- Filtered add-on users: Count users by department, office, location, company, domain, license SKU, or extension attribute.
- One add-on across multiple license plans: Combine users from several Microsoft 365 SKUs and remove duplicate users.
Split billing inside one Microsoft tenant
Use calculated custom licenses when one tenant needs separate billing counts for different entities, sites, departments, franchises, or domains.
- Bill users where domain equals a specific customer domain.
- Bill users where department equals a specific department.
- Bill users where office or location equals a specific site.
- Bill users where company name or extension attribute matches a billing entity.
Custom license types
| Type | Best used for |
|---|
| Per mailbox - active user mailbox only | Mailbox backup, email filtering, archiving, or any service billed per user mailbox. |
| Per mailbox - shared mailbox only | Billing services that apply only to shared mailboxes. |
| Per mailbox - shared and user mailboxes | Billing a service that applies to all mailbox types. |
| Linked to an Office 365 license count | Copying or combining Microsoft 365 license quantities when the custom service follows those licenses. |
| Based on users in Microsoft 365 / Entra ID | Managed-user billing or user-based recurring services. |
| Based on an Entra ID group | Billing users or devices that your team already manages through group membership. |
| Calculated custom license | Advanced billing rules that add and subtract multiple sources, apply filters, remove duplicates, or calculate add-on overages. |
Calculated custom licenses
Calculated custom licenses give you more control by building the billing quantity from multiple dependency rows. Each row can add to or subtract from the final quantity.
This is most useful when an MSP service is included for one group of users but needs to be billed as an overage for another group.
Example patterns
- Mailbox backup overage: Mailbox backup count minus managed-user included mailbox count.
- Email security overage: Protected mailbox count minus managed-user included users.
- Security add-on overage: Users with the security add-on minus users already covered by the managed-user plan.
- Managed users by office: Active licensed users filtered to a specific office or location.
- Managed users by license plan: Users with selected Microsoft licenses, with duplicate users removed.
- Split tenant billing: Active licensed users filtered by domain, department, company, or location.
If a calculated result would be negative, Sync 365 sets the final quantity to zero.
Calculated sources
| Source type | What it counts | Example use |
|---|
| Custom license | The quantity from another custom license. | Subtract managed-user included services from a larger add-on count. |
| License SKU | A Microsoft 365 license SKU count, with optional filters. | Bill a managed service to users with selected qualifying Microsoft licenses. |
| Subscription | A Microsoft subscription count, with optional filters. | Use only where the custom service depends on subscription data. Do not use this to replace normal Microsoft license billing. |
| All users | Users in the Microsoft tenant, with optional filters. | Bill managed users, active users, licensed users, or users in a department/location/domain. |
| Static | A fixed number. | Available for specific edge cases, but MSP overage examples should usually subtract an existing custom license instead. |
Filters available in calculated mode
Calculated custom licenses can use filters to include or exclude users based on Microsoft tenant data.
- Department
- Office
- City
- State
- Country
- Company name
- Account enabled status
- Domain from UPN
- Assigned license SKU ID or friendly name
- On-premises extension attributes 1 to 15
Domain filters are matched against the normalized domain from the user principal name or email address.
User count options
For user-based rows, you can control how users are counted.
- Exclude disabled users: Removes disabled accounts from the count.
- Only licensed users: Counts only users with assigned Microsoft licenses.
- Remove duplicate users: Prevents the same user being counted twice across multiple plus terms, such as when a user appears in more than one matching license SKU.
Enable duplicate removal when the billing rule is one billable user, not one billable license assignment.
Adding a custom license
- Open the company that you would like to create a custom license for.
- Click Custom Licenses.
- Click Add Custom License.
- Enter a clear name for the custom license.
- Select the custom license type.
- Configure the required source, filters, and options.
- Click Save.
Your custom license will now be displayed and can be mapped like a normal license.
Adding a calculated custom license
- Open the company that you would like to create the calculated custom license for.
- Click Custom Licenses.
- Click Add Custom License.
- Select Calculated mode.
- Add each row in the order you want it calculated.
- Choose whether each row should add to or subtract from the result.
- Select the source type, such as custom license, license SKU, subscription, all users, or static.
- Choose the count type where available, such as total, used, or available.
- Apply filters where needed.
- Enable options such as exclude disabled users, only licensed users, or remove duplicate users where they match the billing rule.
- Save the calculated custom license.
- Map the custom license to the correct PSA billing item.
Things to check before mapping to the PSA
- Should disabled users be excluded?
- Should unlicensed users be excluded?
- Are service accounts, test users, shared users, or excluded users being counted?
- Are domain, department, location, company, or extension attribute filters populated consistently in Microsoft 365?
Recommended naming
Use names that explain the custom license clearly. This makes mapping and support much easier later.
- Managed Users - Active Licensed Users
- Managed Users - Entra ID Group
- Managed Users - Business Premium + E3 + E5
- Managed Users - London Office
- Mailbox Backup - User Mailboxes
- Mailbox Backup - User and Shared Mailboxes
- Mailbox Backup - Overage Outside Managed Users
- Email Security - Protected Mailboxes
- Email Security - Overage Outside Managed Users
- Signature Management - Exclaimer Group
- Franchise A Users - domain.com