Trying to understand the differences between Microsoft Entra Plan 1 (P1) and Plan 2 (P2)? You’re not alone. Many organizations are tasked with understanding how each of these identity management services fit into their overall security picture. Whether you’re building a modern zero trust model or simply upgrading from basic access controls, it’s crucial that you understand the differences between each service offering.

Brian Desmond’s article Microsoft Entra ID Premium – Where to Start, offered insights into P1 vs P2 back in 2021. Let’s revisit this topic and explore what’s changed since then.
By the end of this article, you’ll have the clarity you need to choose the right license based on your current environment, budget, and risk posture.
What is Entra ID P1?
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Microsoft Entra ID P1—formerly Azure Active Directory P1—is Microsoft’s identity management service designed to give organizations foundational security features and access control capabilities. You may already have access to P1, as it’s included in Microsoft 365 E3, F1, F3 and Microsoft 365 Business Premium plans. Alternatively, P1 can be purchased separately.
Entra ID P1 builds upon the features of Entra ID free, enabling secure user identity authentication and access management across cloud and hybrid environments.
Core Features:
- Conditional Access: Define rules for when users must meet certain requirements, such as requiring Multi factor Authentication (MFA) when outside the corporate network.
- Single Sign-On (SSO): Simplifies access to applications by allowing cloud users to securely access multiple applications and services with their Microsoft Entra credentials.
- Microsoft Entra Connect Health: Enhances hybrid identity support with additional monitoring and insights into on-premises Active Directory (AD) environments.
With these features in mind, Entra ID P1 is best suited for organizations with straightforward identity and access needs. These are often small to mid-sized businesses or larger enterprises that don’t operate in heavily regulated industries. Companies that are transitioning to cloud or operating in a hybrid environment will benefit from P1’s ability to bridge on-premises and cloud identities. It’s particularly useful for businesses that are beginning to adopt cloud technologies or for IT teams that want to enhance their security posture without needing specialized staff to manage complex configurations.
Pros and Cons of Entra ID P1
Entra ID P1 strikes a balance between affordability and functionality, but it doesn’t cover every identity governance scenario. Here’s a look at where it excels and where it may fall short.
Pros:
- Conditional Access and MFA integration helps secure user sign-ins based on user, location, device, or other non-risk-based signals.
- Single Sign-On (SSO) to cloud apps eliminates the need for multiple credentials and repeated logins.
- Cost-effective licensing makes it accessible for organizations that want to elevate security without taking on the expense of full governance features.
Cons:
- Lacks real-time risk evaluation, which means that sign-ins aren’t assessed using risk-based signals like impossible travel or unfamiliar sign-in patterns.
- No built-in automation for identity governance, which results in tasks like reviewing access or entitlements having to be done manually.
- Missing administrative safeguards such as just-in-time access for privileged roles, making it harder to control and monitor high-impact accounts.
If your main goals are to strengthen user authentication, enforce MFA, and streamline access across applications, then P1 offers a strong foundation. However, if you are looking for more in the realm of identity governance and automation, then Entra ID P2 may be a more appropriate choice.
What is Entra ID P2?
Microsoft Entra ID P2 (formerly Azure Active Directory P2) is Microsoft’s premium service in the identity management space. It’s designed for organizations that need richer identity protection, compliance support, and automation. The P2 license is included in the Microsoft 365 E5 plan and can be bought as an add-on as part of the E5 Security, F5 Security, and F5 Security + Compliance packages. P2 can also be licensed on its own.
Entra ID P2 includes all the features of P1 but goes further into security intelligence and role management with advanced features.
Core Features:
- Entra ID Protection: Automatically detect and respond to risky user behavior or unusual sign-ins, like those that resemble impossible travel patterns.
- Risk-based Conditional Access: Factor in user and sign-in risk levels from Entra ID Protection to dynamically decide whether access should be allowed, challenged, or blocked.
- Privileged Identity Management (PIM): Enforces just-in-time and approval-based admin access, eliminating the need for permanently assigned admin accounts.
- Access Reviews: Run recurring reviews of user access to applications and group memberships. Apply decisions—such as removing unnecessary access—automatically.
Entra ID P2 is designed for organizations with advanced security and compliance demands. This includes enterprises operating in regulated industries like finance or healthcare, where there’s a heightened need for user risk assessments, access reviews, and tight control over administrative privileges. It’s also ideal for companies who are pursuing a Zero Trust model or those that manage larger, distributed teams with elevated access requirements. Organizations implementing verified ID solutions will also benefit from P2’s comprehensive identity verification capabilities.
Pros and Cons of Entra ID P2
Entra ID P2 boasts increased capabilities, but with that added power comes additional cost and complexity. Let’s break down the key benefits and drawbacks so you can assess whether P2 is the right investment for your organization.
Pros:
- Risk based Conditional Access evaluates sign-ins against real-time risk signals from Entra ID Protection, automatically enforcing stricter policies when threats or anomalies are detected.
- Automated governance features like Access Reviews and Entitlement Management help ensure users have the right access at the right time, simplifying compliance audits and reducing excess privileges.
- PIM enforces least privilege access by requiring users to activate elevated permissions only when needed, reducing the need for persistent admin rights.
Cons:
- Requires a more mature identity strategy, as deploying tools like Access Reviews and PIM demands clear roles, policies, and workflows.
- Potential for alert fatigue or misconfiguration, especially if risk-based policies and access reviews are rolled out too quickly without proper tuning or training.
- High licensing costs may be difficult to justify for organizations, especially when only a subset of features is needed.
If your IT team needs to protect against identity-based attacks more proactively, automate governance, and audit user activity regularly, then Entra ID P2 delivers the tools and insights necessary to meet those goals.
Pros and Cons of Entra ID P2
Entra ID P1 and P2 both enhance identity security, but they serve different maturity levels. P1 delivers solid baseline protections like Conditional Access paired with MFA, while P2 builds on that with more advanced capabilities. P2 introduces automation for governance, detailed reporting for audits, dynamic risk-based access decisions, and features that scale with complex environments. The comparison below breaks down where these two plans align and where they diverge.
Key Differences Breakdown:
Capability | Entra P1 | Entra P2 |
---|---|---|
Hybrid Active Directory (AD) Integration | ||
Single Sign-On (SSO) | ||
Multi-Factor Authentication (MFA) | ||
Conditional Access | ||
Identity Protection | ||
Access Reviews | ||
Privileged Identity Management (PIM) | ||
Risk-based Conditional Access |
If the feature breakdown doesn’t shed enough light on which plan is right for you, consider the decision from a strategic perspective. CISOs and IT leaders should ask themselves:
- What is your risk profile? If you’re dealing with sensitive data, remote work, or global operations, then P2’s risk intelligence may be necessary.
- Are you under a compliance framework like HIPAA, PCI, GDPR, or ISO 27001 that calls for strict access controls? If so, you may benefit from P2’s increased capabilities like Access Reviews and PIM.
- Do you have IT or Security staff who can manage all the P2 features? P2 can be powerful, but only if it’s configured and monitored properly.
- Do you plan to scale or undergo audits? Planning for future compliance now can save time and rework down the road.
- Are you aiming for Zero Trust or identity-centric security architecture? If so, P2 aligns well with that as a long-term strategy.
These questions can help cut through the noise and focus on what truly matters. With a clear understanding of your environment and priorities, choosing the right Entra license becomes a strategic move, and not just a licensing decision.
Conclusion
Choosing between Entra ID P1 and P2 isn’t only about cost – it’s about aligning identity management with your organization’s security goals and operational needs.
P1 gives you the core tools to strengthen access controls and support hybrid environments. P2, on the other hand, offers automation, real-time risk evaluation, and governance for organizations that need tighter control, especially in high-risk or regulated industries.
Whether you’re a CISO planning your Zero Trust roadmap or an IT lead managing hybrid access, make your choice based on needs, not just features.
Need help deciding on or deploying the right Entra ID license for your organization? At Ravenswood Technology Group, we’ve helped countless organizations align Entra capabilities with real-world needs – strengthening identity, security, and compliance every step of the way. Our team specializes in identity, security, and compliance. Reach out to us to learn how we can tailor a solution to meet your needs.