I have a jira server license for 500 users, Now i want to purchase jira portfolio license for 50 users. Can i do so or do i have to purchase it for all 500 users?
You need to purchase the plugin license for 500 users as well (altough only 50 users use the plugin).
Can it work in this way if i buy license for 50 users and created a group for them.
As Srini already said, you need to licence it for 500, as it needs to match the (largest) JIRA licence you have.
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