Microsoft Power BI & Microsoft Fabric Licensing in 2025: A Strategic Guide for Decision-Makers

Part 1: Per-User Licensing

It is important to remember that you will still need licenses for your Microsoft Power BI users even if you have a Microsoft Fabric Capacity license for the business.

• Power BI report designers: Power BI Pro or Premium Per User (PPU) license required always.
• Power BI report viewers: For businesses using Microsoft Fabric F32 or below, a Power BI Pro license will be needed to view objects published to a Pro or Fabric Workspace and a Premium Per User license will be needed to view objects published to a Premium Per User Workspace.
• Non-BI Fabric users: E.g., data engineers only need Fabric Free if working in a paid capacity (Fabric) workspace.

Microsoft offers three Power BI user licenses

Purchasing Microsoft Fabric Reservation

Purchasing a Microsoft Fabric Reservation is done through the Azure portal and involves two key components:

• Reservation: This is the annual commitment to a specific number of capacity units (CUs) for your organisation. It secures discounted pricing for consistent usage over a 12-month period.
• Capacity: This refers to the specific SKU (e.g., F4, F64) you choose to run your Fabric workloads. To fully utilise your reservation, the capacity SKU you deploy should be equal to or greater than the size of your reservation.

This setup ensures you’re maximising the value of your reserved capacity and avoiding underutilisation.

Excess Usage

If usage exceeds the reserved capacity, the Fabric service will be throttled. In this situation, there are three options:

• Wait it out: Accept the throttled performance until capacity becomes available again. No additional charges apply.
• Pause and resume: Restarting the capacity triggers Pay-as-you-go billing, resulting in extra charges for the additional usage.
• Temporarily scale up: Increase the SKU temporarily and pay for the excess usage beyond the reserved capacity at Pay-as-you-go rates.

Even with a reservation in place, exceeding capacity will result in a total cost that includes both the reservation fee and any additional Pay-as-you-go charges.

CU Smoothing

Each F-SKU allows for a specified amount of CU usage, but this can be used in a variable fashion. Meaning during busy times, CU usage can exceed (or burst) above the allocated capacity and be offset against times of lower CU demand. This supports variable workloads. However, if overall limits are reached, usage may be throttled.

CU Smoothing example

A F2 capacity allows for 2 CUs or 2 CU per second. This translates into 172,800 CU per day. If a process runs for 10 minutes at 20 CUs, this will consume 24,000 of the allocated 172,800 CU. Provided the organisation uses no more than 148,800 CU for the next 24 hours, the CU smoothing will ensure they experience no throttling.

Note: Background processes run on a 24-hour CU smoothing window, whereas interactive processes run on a 10-minute smoothing window. More details are available here.

Microsoft Fabric doesn’t include storage costs

While Microsoft Fabric offers a unified platform for analytics and data services, it’s important to note that storage is not included in the cost of Fabric capacity licenses. Instead, storage is billed separately through OneLake, currently priced per GB per month. This separation allows for more flexible scaling of compute and storage resources, but it also means that organisations must carefully monitor and manage their data volumes to avoid unexpected costs.

Microsoft Power BI semantic models are not included in storage costs but instead are tied to user licenses. Power BI Pro allows up to 10GB/user, whereas PPU allows for 100TB/tenant and 100GB/model.

Part 3: Strategic Licensing Scenarios

Small Teams (<25 users)

Recommendation: Use Power BI Pro for all users. Cost-effective and collaborative.

• PPU is viable for advanced needs but creates a silo.
• Fabric Capacity is useful if data ingestion, transformation, and storage tools are required.

Mid-Sized Enterprise (e.g., 50 designers, 500 viewers)

Options:

• Pro for All (Per Month)
• F64 + 50 Pro Licenses for designers (1-Year Reservation)

Recommendation: F64 with reservation is more cost-effective and scalable.

Large Enterprises

Recommendation: Use a hybrid model.

• F128+ Capacity for shared compute.
• Pro Licenses for most designers.
• PPU Licenses for advanced teams.
• Fabric Free for viewers.

Governance is critical to manage shared resources and prevent overuse.

Embedding Analytics

Recommendation: Purchase a suitable F-SKU. All F-SKUs now include Power BI Embedded, eliminating the need for separate A-SKUs.

Note: On-premises rights (on-premises Power BI Service) are now limited to F64 or higher with 1-Year Reservation or SQL Server EE with Software Assurance.

Conclusion: Strategic Takeaways

1. Unified Platform Strategy

Microsoft Fabric consolidates Microsoft Power BI, Data Factory, Synapse, and SQL DW into a single SaaS/PaaS platform, simplifying licensing and aligning with a cloud-first approach.

2. Licensing Structure

• User Licensing: Power BI Pro, Premium Per User (PPU), and Free licenses are still required depending on user roles and workspace types.
• Capacity Licensing: Power BI Premium (P-SKUs) is being phased out in favour of Fabric Capacity (F-SKUs), which are more flexible and scalable.

3. F64+ benefits

• Included Power BI Pro licenses: For F64 and higher capacities, Power BI Pro viewer licenses are included. Developers will still need Pro or PPU licenses.
• Upgrading makes sense: Depending on user mix, upgrading to a higher capacity SKU might result in a lower overall bill.

4. Cost Optimisation

• 1-Year Reservations offer ~41% savings over Pay-as-you-go, making them ideal for predictable workloads.
• Pay-as-you-go is better suited for variable or seasonal workloads due to its flexibility and ability to pause/resume services.

5. Capacity Planning

• Businesses can mix and match F-SKUs across regions or departments.
• CU (Capacity Unit) smoothing allows for short-term bursts in usage without immediate throttling, supporting dynamic workloads.

6. Handling Overages

If usage exceeds reserved capacity, businesses can:

• Wait for capacity to free up (no extra cost),
• Pause and resume (triggers Pay-as-you-go billing),
• Temporarily scale up (incurs additional charges).

7. On-Premises Rights

Only available with F64+ (1-Year Reservation) or SQL Server EE with Software Assurance.