Why IAM Licensing Complexity Is Growing
Identity and access management (IAM) has become the #1 cybersecurity investment priority for enterprises in 2026. The market is fragmented, with competing pricing models, module dependencies, and bundling strategies that create significant cost variability.
Most organisations face a critical decision: build a comprehensive IAM platform around Okta Workforce Identity (purpose-built, modular, vendor-neutral) or Microsoft Entra ID (Azure AD) (often bundled into Microsoft 365 Enterprise licences). This choice impacts annual costs by $100K–$5M+ depending on scale and feature depth. See our cybersecurity software licensing guide for broader context on the IAM market landscape.
Key Finding
Microsoft Entra ID is 60–75% cheaper than Okta when included in M365 E5, but Okta offers superior third-party app integration (7,000+ pre-built connectors vs Microsoft's 200+).
Okta Workforce Identity: Pricing Breakdown
Okta prices per-licensed user per month and has moved aggressively toward modular, add-on-heavy pricing. Below are 2026 indicative rates (list prices; negotiated rates are typically 20–40% lower):
- Single Sign-On (SSO): $2–3/user/month — Basic SSO for SaaS apps and on-prem systems
- Multifactor Authentication (MFA): $3–5/user/month — Advanced MFA beyond free SMS
- Lifecycle Management: $4–7/user/month — User provisioning and deprovisioning automation
- Advanced Server Access: $12–18/user/month — Privileged access for servers and infrastructure
- Identity Governance (Okta Governance): $8–14/user/month — Entitlement reviews, access certification, segregation of duties
- Okta Identity Engine bundle: $15–25/user/month — Comprehensive platform covering SSO, MFA, Lifecycle, Governance
- Volume discounts: 10–20% at 1,000 users; 20–35% at 5,000+; 30–45% at 20,000+
Example 5,000-user deployment: Okta Identity Engine at $18/user/month (post-discount) = $1.08M/year. Adding identity governance = $1.56M/year.
Microsoft Entra ID (Azure AD): Licensing Tiers
Microsoft Entra ID (the rebranded Azure Active Directory) is priced in tiers with a bundling advantage:
- Entra ID Free (included in any Azure subscription): Basic SSO for Microsoft cloud apps only; no third-party SaaS support
- Entra ID P1: ~$6/user/month standalone (often included in M365 E3 or Business Premium) — SSO, Conditional Access, SSPR, MFA, hybrid identity
- Entra ID P2: ~$9/user/month standalone (included in M365 E5 at ~$57/user/month) — adds Identity Protection, Privileged Identity Management (PIM), Access Reviews
- Entra External ID (CIAM): $0.01625/monthly active user (MAU) for first 50K, volume discounts for scale
- Entra ID Governance (new 2023): ~$7/user/month additional — entitlement management, lifecycle workflows, access reviews
Key advantage: For M365 E3 customers, Entra ID P1 is already included. For M365 E5 customers, Entra ID P2 is included, eliminating additional IAM licensing costs.
Okta vs Entra ID: Feature & Cost Comparison
| Feature |
Okta (Workforce) |
Microsoft Entra ID P1 |
Microsoft Entra ID P2 |
Winner |
| Single Sign-On (SSO) |
Yes ($2–3/user) |
Included (M365) |
Included (M365) |
Microsoft |
| Multifactor Authentication (MFA) |
Yes ($3–5/user) |
Included P1 |
Included P2 |
Microsoft |
| Conditional Access |
Advanced rules |
Yes (P1) |
Yes (P2) |
Tie |
| Passwordless Auth |
Yes |
Yes |
Yes |
Tie |
| Identity Governance/IGA |
Yes ($8–14/user) |
Limited |
Yes (P2 + Governance $7/user) |
Okta |
| PAM Integration |
Via Okta + CyberArk |
Limited |
Limited |
Okta |
| Multi-IDP Support |
Excellent |
Good |
Good |
Okta |
| Non-Microsoft App Integrations |
7,000+ pre-built |
200+ pre-built |
200+ pre-built |
Okta |
| Customer Identity (CIAM) |
Okta Customer Identity |
Entra External ID |
Entra External ID |
Tie |
| 5,000-User Annual Cost |
$75K–$125K (list) |
$30K–$50K (P1 standalone) |
$45K–$75K (P2 standalone) |
Microsoft |
Cost interpretation: Microsoft wins on per-unit cost for Microsoft-centric environments. Okta wins on breadth of third-party integrations and identity governance depth.
Other IAM Platforms: Ping, ForgeRock, SailPoint
The IAM market includes several other credible platforms, each with distinct positioning:
- Ping Identity (now Ping Identity by Thales): Per-user SaaS, $3–8/user/month. Strong hybrid and on-premises support. Merged with ForgeRock in 2024; pricing consolidated around Ping platform.
- SailPoint IdentityIQ: IGA-focused, $8–20/user/month depending on tier. Strongest pure-play identity governance vendor. Government-grade Clearance module available.
- CyberArk: Privileged Access Management (PAM) leader, not a general IAM platform. $50–150/user/year for Privileged Access module. Often bundled with Okta or Microsoft Entra for comprehensive identity + PAM coverage.
Reference our related SIEM platform cost comparison for how IAM integrates with security information and event management.
Customer Identity (CIAM) Licensing
Customer-facing identity (CIAM) is separate from workforce IAM and has fundamentally different pricing:
- Okta Customer Identity: Per-monthly active user (MAU) pricing; $0.01–$0.05 per MAU depending on volume
- Microsoft Entra External ID: $0.01625 per MAU for first 50K, declining tiers for larger volumes
- Auth0 (owned by Okta): $0.02–$0.05 per MAU; free tier up to 7,500 MAU
CIAM is usage-based and scales with customer growth. For a 1M MAU consumer app, annual CIAM cost ranges $120K–$600K depending on platform and volume negotiation.
PAM Licensing: BeyondTrust, CyberArk
Privileged Access Management (PAM) is often sold separately or bundled into enterprise IAM:
- CyberArk (market leader): $50–150/user/year; per-managed resource pricing available
- BeyondTrust Privilege Management: $60–120/user/year; competitive with CyberArk on price
- Okta Advanced Server Access (ASA): Included in IAM bundles or $12–18/user/month standalone
Most large enterprises negotiate PAM as a bundled add-on to core IAM (10–15% additional cost for integrated Okta+PAM or Entra+CyberArk). See endpoint protection licensing comparison for how PAM fits into broader identity and security architecture.
8 IAM Negotiation Tactics
Tactic 1
Use M365 E5 Bundling as Primary Lever
If your organisation has or is considering M365 E5, Entra ID P2 is included. Show Okta the effective Entra cost as zero for covered features. Okta will respond with differentiation around non-Microsoft apps — evaluate whether those justify the delta. This creates immediate pricing pressure.
Tactic 2
Challenge Okta's Add-On Module Pricing
Okta has aggressively moved to modular pricing where 'complete' IAM requires 5–8 purchased modules. Request an 'Identity Engine bundle' quote and negotiate the effective per-user rate as a whole, not module-by-module. Bundle discounts typically reduce effective cost by 15–25%.
Tactic 3
Introduce Ping/ForgeRock as Competitive Alternative
Ping Identity post-Thales acquisition is positioned competitively at 20–30% below Okta for large deployments. Even a preliminary Ping evaluation formally documented (RFP, discovery call) will move Okta on price by 15–25%.
Tactic 4
Separate Workforce from CIAM
Customer Identity and Workforce IAM are often sold together but have completely different ROI profiles and usage patterns. Negotiate them separately — CIAM on per-MAU basis can often be structured as consumption pricing with better scalability and cost controls.
Tactic 5
Negotiate Growth Caps
IAM vendors typically price per-user, meaning headcount growth creates automatic cost escalation. Negotiate price freeze on current users and cap rate for additions (max 5% year-on-year per-user price increase, not per-headcount growth). This protects against surprise cost growth.
Tactic 6
Verify User Count Methodology
Okta typically counts all 'active' users by default including service accounts, shared mailboxes, and contractors. Clean up the user base before pricing discussions — 10–20% reduction in licensable users is common. This directly reduces annual spend by $50K–$300K+.
Tactic 7
Leverage the Okta-CyberArk Bundle
If evaluating PAM alongside IAM, an Okta+CyberArk bundle can offer 15–25% discount versus standalone. Alternatively, use bundle discussion with Okta to extract standalone discounts by threatening to go Microsoft Entra + CyberArk independently.
Tactic 8
Negotiate SLA Improvements Beyond Standard
Okta's standard SLA is 99.99% uptime with $500 monthly credit cap. For critical IAM infrastructure, negotiate enhanced SLA with financial credits exceeding the standard cap — target 10–20% monthly fee as credit for outage events. This protects business continuity.
Bundling IAM into M365 Enterprise Agreements
For Microsoft-aligned organisations, bundling decisions drive significant cost savings:
- M365 E3: Includes Entra ID P1 (~$6/user/month value) + 100 GB mailbox + Teams + Office + security basics
- M365 E5: Includes Entra ID P2 (~$9/user/month value) + full security suite (Defender XDR, Advanced Audit, Information Protection, DLP)
- Negotiation lever: When renewing M365 EA, bundle Entra ID P2 as 'free' in E5 to offset any per-user price increases, or negotiate Entra ID Governance at 30–40% discount when bundled into E5 EA.
See Microsoft Enterprise Agreement negotiation and Microsoft Security E5 analysis for comprehensive M365 bundling strategy.
Need a formal cost analysis or vendor comparison?
Get matched with a vendor-neutral IAM negotiation advisor
Get Matched Now
Frequently Asked Questions
Is Microsoft Entra ID (Azure AD) always cheaper than Okta?
For Microsoft-centric environments with M365 E3 or E5, Microsoft Entra ID is almost always cheaper because P1 (E3) or P2 (E5) is included in the bundle. For hybrid environments with heavy non-Microsoft SaaS applications (Salesforce, Workday, Slack, etc.), Okta's 7,000+ pre-built integrations and superior third-party app support often justify the premium. The true cost comparison must include the M365 licence bundle cost as baseline. A typical 5,000-user Okta deployment ($75K–$125K/year) might cost only $30K–$50K as part of M365 E3, creating a 40–60% cost advantage for Microsoft. However, if your application stack is 30%+ non-Microsoft, Okta's integration breadth may offset the cost delta.
What is identity governance (IGA) and do we need it?
Identity Governance and Administration (IGA) covers user lifecycle management, entitlement reviews, access certification, and segregation of duties (SoD). IGA is required for SOX compliance (quarterly access certification), FedRAMP (continuous monitoring of privileged access), and ISO 27001 (access reviews). SailPoint leads the pure-play IGA market; both Okta and Microsoft have expanded governance capabilities. Budget $8–15/user/year for IGA on top of core IAM. If you have SOX, FedRAMP, or HIPAA requirements, IGA is non-negotiable; otherwise, it can be phased in as a secondary priority.
How can we reduce our Okta bill without switching?
Three primary levers: (1) Clean up unused accounts — service accounts, inactive users, and contractors on inactive projects frequently represent 15–25% of the licensed user base. (2) Downgrade modules — audit actual feature usage; most organisations use fewer than 60% of licensed Okta modules. Request a downgrade to the Identity Engine bundle and remove unused modules (e.g., Advanced Server Access if you're not using privileged access). (3) Negotiate bundle pricing — request an Okta Identity Engine bundle quote rather than module-by-module pricing, which typically reduces total effective cost by 15–25%.