How software is sold: licence channels
The channel is where a licence originally came from. It is the single most useful thing to understand, because it determines the price, whether the licence can move to another computer, and who supports it.
A licence pre-installed by a PC maker and tied to the machine it shipped on. It is cheaper than retail because it is sold in bulk to manufacturers, and it is supported by that manufacturer rather than by Microsoft. An OEM Windows licence stays with the motherboard: replace the PC and the licence does not come with you.
A licence bought directly by an end user rather than installed by a manufacturer, whether that is a boxed copy, a download from Microsoft, or a key from a reseller. Retail Windows licences can generally be moved to a different computer once removed from the old one. Retail is the channel most home users and small businesses are buying without realising there is a distinction.
Licences bought in quantity under an agreement rather than one at a time. Volume editions install differently — usually through the Office Deployment Tool or an ISO rather than a consumer installer — and are activated with a MAK or KMS key rather than a per-copy product key. Office Professional Plus and Office Standard are volume-channel product names; you will not find them on a shop shelf.
Microsoft’s partner programme for selling subscriptions such as Microsoft 365 through resellers, who handle billing and first-line support. It replaced the old Open License programme for most small-business buying. A CSP subscription is rented, not owned, and stops when you stop paying.
Larger volume agreements with committed terms, typically three years, aimed at organisations with hundreds or thousands of seats. Both usually include Software Assurance. Neither is relevant to a sole trader, but the terms turn up in quotes and comparison articles, which is why they are here.
Software supplied as a download and a key by email rather than on a disc. It is a delivery method, not a licence type — an ESD licence can be retail or volume, and the phrase says nothing on its own about whether the licence is transferable.
Discounted licences restricted to a defined class of buyer: students and institutions, registered charities, or partners receiving Not For Resale copies. The restriction is contractual — the software is identical, but using it outside the eligible group breaches the licence terms.
A loose term for keys sold outside the channel they were intended for — region-locked keys sold internationally, NFR or academic copies sold to the general public, or keys of unclear origin sold at implausible prices. The distinguishing feature is not the price but the absence of any documented provenance, which is what determines whether a key is likely to keep working.
Two Windows 11 Pro keys can look identical on a listing and behave completely differently: one moves to your next PC, one does not; one activates cleanly, one fails on a hardware change. If a listing does not say what kind of licence it is selling, that is the question to ask before the price. Our complete guide to Windows licensing goes through the practical differences in depth.
What you are buying: licence models
A one-time purchase that grants the right to use a specific version indefinitely. Office 2024, Visio 2024 and Project 2024 are perpetual. The version never expires, but it also never becomes a newer version — and it stops receiving security updates when that version reaches end of support.
A recurring payment for the right to use software while the payment continues. Microsoft 365 is the main example. You always have the current version, and if you stop paying the applications drop to a limited or read-only state. See our comparison of buying once against subscribing.
One unit of a licence, normally one user or one device depending on how the product is counted. A “five-seat” subscription covers five people; it does not mean five installations for one person.
Two different ways of counting. A per-device licence covers one machine regardless of who uses it; a per-user licence covers one person across several machines. Perpetual Office is per-device — one PC per licence. Microsoft 365 is per-user.
An additional licence required for each user or device connecting to a server product such as Windows Server or Exchange Server. The server licence alone is not enough; CALs are bought separately and are a common source of unexpected cost.
An optional add-on to volume licences that includes rights to new versions released during the term, plus benefits such as training vouchers and deployment rights. It is bought alongside the licence, usually annually, and it lapses if not renewed.
The right, attached to some licences, to install an earlier version than the one purchased — buying Windows 11 Pro and running Windows 10 Pro, for example. Downgrade rights are a feature of OEM and volume licensing rather than consumer retail, and they follow the terms of the licence you bought.
A licence sold on the condition that a qualifying earlier version is already installed. Microsoft has largely retired upgrade SKUs for consumer products, but the term survives in older documentation and in second-hand listings, where it matters — an upgrade licence with nothing to upgrade is not a working licence.
Keys and activation
These four words get used interchangeably and mean different things, which is why activation problems are so hard to describe over the phone.
| Term | What it actually is |
|---|---|
| Licence | The legal right to use the software, defined by the terms you agreed to |
| Product key | The 25-character code that proves you hold that right |
| Activation | The process of checking that key against Microsoft’s servers |
| Digital licence | Activation stored against your hardware or Microsoft account, so no key is needed |
Windows activation recorded against your PC’s hardware ID, and optionally linked to your Microsoft account. Once a machine holds a digital licence, a clean reinstall of the same edition reactivates automatically with no key entered. This is why many people cannot find a product key for a PC that is perfectly well licensed.
A volume-licensing key with a fixed number of activations, used on machines that will not regularly reach a company network. Each install consumes one activation from the pool.
A volume activation method where machines activate against a server on the organisation’s own network and renew every 180 days. It is designed for managed estates with a minimum number of devices, and a KMS-activated machine that permanently leaves the network eventually falls out of activation.
Volume activation handled through the directory rather than a dedicated KMS host, so domain-joined machines activate automatically when they join. Same purpose as KMS, less infrastructure.
A publicly published key that installs a particular edition without activating it. It is used to select the right edition during setup or to switch a machine from Home to Pro before entering a real key. It is not a licence and it will not activate anything.
Microsoft’s command-line tool for installing volume and LTSC editions of Office, driven by an XML configuration file. It is the standard route for installing Office Professional Plus, which does not install from the consumer setup page.
Re-running activation after a significant hardware change, most often a new motherboard, which Windows treats as a different computer. Retail and account-linked licences can normally be reactivated through the troubleshooter; OEM licences generally cannot follow the hardware.
Versions and support
A specific saleable variant of a product — edition, channel, language and device count combined. “Office Professional Plus 2024, volume, 1 PC” is a SKU; “Office” is not.
The feature tier within a product line: Windows 11 Home and Pro; Office Home & Business, Professional and Professional Plus; Visio Standard and Professional. Editions differ in what is included, not in how long they are supported.
A release designed to stay unchanged for its whole supported life, receiving security fixes but no new features. Office LTSC 2024 and Visio LTSC 2024 are the perpetual, volume-channel versions of those products. For Windows, the equivalent is the Enterprise or IoT Enterprise LTSC editions, which carry much longer support windows and are licensed only through volume channels.
The subscription-delivered desktop Office applications, updated continuously rather than released as a numbered version. Formerly Office 365 ProPlus. Distinct from the perpetual Office 2024 family, which never gains features after release.
The two phases of Microsoft’s Fixed Lifecycle Policy. Mainstream support includes feature updates and design changes as well as fixes; extended support narrows to security updates and paid support. Older products such as Office 2019 and Visio 2019 followed this model.
The newer model, which gives a product a single support window and a stated retirement date rather than two phases. Office 2021, Visio 2021 and the 2024 releases sit here. In practice the distinction rarely changes what you do — but it explains why some Microsoft lifecycle pages show two dates and others show one.
The date after which Microsoft stops issuing security updates, bug fixes and technical support for a version. The software is not disabled and your licence is not revoked — it simply stops being maintained, and any vulnerability found after that date stays open.
Dates that matter right now: Windows 10, Office 2016, Office 2019, Visio 2019 and Project 2019 all reached end of support on 14 October 2025. Office 2021, Visio 2021 and Project 2021 reach it in October 2026. The 2024 releases are supported until October 2029.
A paid or conditional programme that supplies critical and important security updates for a product past its end-of-support date. It buys time; it does not restore support, and it never includes new features or bug fixes.
For Windows 10, Microsoft’s consumer ESU programme now runs to 12 October 2027, with enrolment free if you sync your PC settings, or available for 1,000 Microsoft Rewards points or a one-off payment. Business ESU is bought per device per year and rises in price each year. Our guide to Windows 10 ESU covers the UK detail.
How often a product receives updates: Current Channel for continuous updates, Monthly Enterprise Channel for a predictable monthly cycle, Semi-Annual Enterprise Channel for twice-yearly feature updates. Applies to Microsoft 365 Apps and to Windows feature updates, not to perpetual releases.
Because Office 2021, Visio 2021 and Project 2021 are still widely sold second-hand, they look like a cheap escape from the 2016 and 2019 versions that went out of support last October. They reach their own end of support in October 2026. Anything bought now on the 2021 line is a licence with weeks left on it, which is rarely what the buyer thinks they are getting.
Terms that cause the most confusion
Office is the perpetual product bought once — currently the 2024 family. Microsoft 365 is the subscription. Microsoft’s own naming has moved back and forth over the years, and a great many listings and articles use “Office 365” for something that has not been called that since 2020.
Different editions from different channels. Home & Business is the retail edition with Word, Excel, PowerPoint and Outlook. Professional Plus is the volume edition, adding Access and Publisher, and installs through the Office Deployment Tool rather than the consumer installer. The apps themselves are the same software.
Microsoft’s cloud identity service, renamed from Azure AD in 2023. It is what signs you in to Microsoft 365, and it is the directory that data-linked diagrams and org charts often pull from. Older documentation still says Azure AD; it is the same thing.
Where volume licences, agreements and downloads now live. Microsoft retired the Volume Licensing Service Center in April 2024 and migrated existing customers across. If a guide tells you to sign in to the VLSC, it predates that move.
Activation happens once, when a key is checked and bound to a machine. Validation is the ongoing check that an installation is still genuine. A copy can be activated and later fail validation — which is what produces the “not genuine” messages people see long after installing.
Whether a licence can move to another person or machine depends entirely on the channel it came from and the terms attached to it. OEM licences are tied to their original hardware; retail licences are generally transferable between machines belonging to the same owner.
Separately, the resale of used software licences within the UK and EU is the subject of a body of case law on the exhaustion of rights, the best known being the Court of Justice ruling in UsedSoft v Oracle (2012). It is a technical area where the specifics of each transaction matter, and it is worth reading a specialist legal source rather than a summary.
A licence that activates against Microsoft’s servers, holds validation over time, and came from a documented source. The first two are checkable in Settings; the third is the one that decides whether the first two keep being true in a year’s time.
Most people need one of about four things. If you can tell us what you are trying to do, we can tell you which licence covers it — and when the honest answer is that you already have what you need, we will say so.
Frequently asked questions
An OEM licence is pre-installed by a PC manufacturer and stays with that machine permanently, supported by the manufacturer. A retail licence is bought separately by the end user and can generally be moved to a different computer once it has been removed from the old one.
A perpetual licence is a one-time purchase giving you the right to use that version of the software indefinitely, with no recurring fee. It never expires, but it also never becomes a newer version, and it stops receiving security updates at that version’s end of support.
The licence is the legal right to use the software; the product key is the 25-character code that proves you hold it. Some Windows installations have a licence with no key at all, because activation is stored as a digital licence against the hardware.
Long-Term Servicing Channel: a release that stays feature-frozen for its whole supported life and receives only security and stability fixes. Office LTSC 2024 and Visio LTSC 2024 are the perpetual volume versions of those products.
ESU supplies critical security updates for a product past its end-of-support date, without restoring full support or adding fixes and features. Microsoft’s consumer ESU programme for Windows 10 currently runs to 12 October 2027.
Both are volume activation methods. MAK keys hold a fixed number of activations and are used one machine at a time. KMS activates machines against a server on the organisation’s own network, with each device renewing every 180 days.
The shared applications are identical. Professional Plus is the volume-channel edition and adds Access and Publisher, and it installs using the Office Deployment Tool rather than the consumer setup page.
No. End of support means Microsoft stops issuing security updates, bug fixes and technical support for that version. The software continues to run and your licence remains valid — it is simply no longer maintained.
Gary Walsh is the Head of Tech Support at Software Supplies, with more than 20 years in the IT industry. Fully Microsoft-certified and experienced across the full business software stack — from Windows and Office to cloud infrastructure and device management — Gary delivers practical, no-nonsense advice that helps users and businesses get the most from their technology.
