Choosing the right Microsoft 365 plan isn’t always straightforward. Microsoft offers multiple options for individuals, small businesses, and enterprises, including Business Basic, Business Standard, Business Premium, Office 365 E1, Office 365 E3, Microsoft 365 E3, and Microsoft 365 E5. While the plans may look similar at first glance, the differences in pricing, security, desktop apps, compliance features, and device management can significantly impact both cost and productivity.
In this Microsoft 365 plans comparison guide, you’ll find a complete breakdown of pricing, features, licensing options, and plan limitations. We’ll compare Microsoft 365 Business and Enterprise plans side by side, explain the differences between E3 and E5, and help you determine which plan is best for your organization based on size, budget, and security requirements.
Whether you’re evaluating Microsoft 365 for the first time or considering an upgrade, this guide will help you make an informed decision without paying for features you don’t need.
Microsoft 365 Pricing at a Glance
| Plan | Price (per user/month) | User Cap | Best For |
| Microsoft 365 Personal | $6.99 (per account) | 1 | Personal / home use |
| Microsoft 365 Family | $9.99 (per account) | 6 | Households |
| Business Basic | $7.00 | 300 | Startups, light/browser users |
| Apps for Business | $8.25 | 300 | Teams needing desktop apps, external email |
| Business Standard | $14.00 | 300 | Growing SMBs |
| Business Premium | $22.00 | 300 | SMBs with security needs |
| Office 365 E1 | $10.00 | Unlimited | Large orgs, frontline/light users |
| Office 365 E3 | $26.00 | Unlimited | Large orgs needing full apps + compliance |
| Microsoft 365 E3 | $36.00 | Unlimited | Enterprises needing device management |
| Microsoft 365 E5 | $57.00 | Unlimited | Full security + analytics stack |
Quick Reference: Which Plan for Which Situation
| Your situation | Recommended plan |
| Individual or home use | Personal or Family |
| Startup under 20 people, browser-based | Business Basic |
| SMB needing full Office apps | Business Standard |
| SMB handling sensitive data or remote devices | Business Premium |
| Team using another email provider | Apps for Business |
| Large org, light/frontline users | Office 365 E1 |
| Large org needing full apps + compliance | Office 365 E3 or M365 E3 |
| Enterprise needing advanced security | Microsoft 365 E5 |
Table of Contents
What Is Microsoft 365?
Microsoft 365 is Microsoft’s cloud productivity platform that combines Office apps, business email, cloud storage, collaboration tools, and security features under a subscription model. Depending on the plan, it can include Word, Excel, PowerPoint, Outlook, Exchange Online, Teams, OneDrive, SharePoint, Defender, and Intune.
The features you receive vary significantly between Personal, Business, and Enterprise plans, which is why comparing Microsoft 365 pricing, licensing, and included features is essential before choosing a subscription.
Microsoft 365 vs Office 365 — Is There Still a Difference?
For most organizations, Microsoft 365 is the modern version of Office 365. While Office 365 focuses on productivity tools such as Outlook, Exchange Online, Teams, and SharePoint, Microsoft 365 adds security, device management, identity protection, and, in some plans, Windows Enterprise licensing.
Some Office 365 plans, including Office 365 E1 and Office 365 E3, are still available and remain popular in enterprise environments. However, Microsoft generally recommends Microsoft 365 plans for new deployments.
| Feature | Office 365 | Microsoft 365 |
| Core Office apps | ✅ | ✅ |
| Exchange, Teams, SharePoint | ✅ | ✅ |
| Advanced security (Defender, Intune) | Limited | ✅ (Business Premium and above) |
| Device management | ❌ | ✅ (Business Premium, E3+) |
| Identity protection (Azure AD P1/P2) | ❌ | ✅ (E3/E5) |
| Windows Enterprise licensing | ❌ | ✅ (E3/E5 only) |
For most small and medium businesses, the decision is usually between Microsoft 365 Business Basic, Business Standard, and Business Premium rather than traditional Office 365 plans.
Personal and Family Plans
These plans exist for home and personal use. They are not licensed for business or commercial purposes — if you’re deploying this for employees or organizational work, you need a Business or Enterprise plan.
Microsoft 365 Personal
- Full desktop Office apps: Word, Excel, PowerPoint, Outlook, OneNote
- 1 TB OneDrive cloud storage
- Works on Windows, Mac, iOS, and Android
- Single user only, up to 5 devices simultaneously
- Microsoft Defender for personal device protection
Best for: Freelancers, students, or individuals who need the full Office suite for personal work.
Microsoft 365 Family
- Everything in Personal
- Covers up to 6 people — each with their own 1 TB OneDrive (6 TB total)
- Each person can use up to 5 devices simultaneously
Best for: Households where multiple family members need Office access. At under $10/month for up to 6 people, it’s by far the most cost-efficient way to get personal Microsoft 365 licenses.
Microsoft 365 Business Plans
Business plans are designed for organizations with up to 300 users. There are four options. Each tier adds meaningfully more capability, so it’s worth understanding exactly what you’re getting — and what you’re not.
1. Microsoft 365 Business Basic
This is the entry-level business plan, and it’s a solid starting point for lean teams whose work primarily lives in a browser.
What you get:
- Web and mobile versions of Office apps (Word, Excel, PowerPoint, Outlook)
- Business email via Exchange — 50 GB mailbox per user
- Microsoft Teams for meetings, chat, and file collaboration
- SharePoint for internal sites and document management
- OneDrive with 1 TB storage per user
- Standard spam and malware protection
What you don’t get:
- No desktop Office applications (users work in a browser only)
- No advanced security, no device management
Best for: Startups and small teams who primarily work in browsers, or organizations that just need email, Teams, and basic cloud tools without the full Office suite.
One thing to watch: If your team regularly works with complex Excel spreadsheets, large PowerPoint decks, or needs to work offline, the browser-only apps will become a frustration point quickly. Test this with your team before committing.
2. Microsoft 365 Business Standard
This is the most popular plan for small and mid-sized businesses — and for good reason. It adds full desktop Office applications on top of everything in Basic.
What you get:
- Everything in Business Basic
- Full desktop Office apps — install on up to 5 PCs or Macs and 5 mobile devices per user
- Microsoft Teams with webinar hosting (up to 300 attendees)
- Microsoft Bookings for customer scheduling
- MileIQ for mileage tracking (available in select regions)
What you don’t get:
- No advanced security, compliance, or device management tools
Best for: Growing businesses that need the full Office suite and solid collaboration tools. If your team uses Outlook, Word, and Excel heavily, this is the plan where most small to medium businesses find their sweet spot.
3. Microsoft 365 Business Premium
Business Premium is the most capable plan in the Business tier. It adds enterprise-grade security, device management, and identity protection — capabilities that used to be exclusive to enterprise plans.
What you get:
- Everything in Business Standard
- Microsoft Defender for Business — advanced threat detection and endpoint protection
- Microsoft Intune — enroll and manage company and employee devices (MDM and MAM)
- Azure Active Directory Premium P1 — conditional access policies, multi-factor authentication enforcement, single sign-on
- Azure Information Protection — classify and encrypt sensitive documents
- Microsoft Purview — data loss prevention (DLP) policies to stop accidental data sharing
- Litigation hold and email archiving for compliance
Best for: Any business that handles sensitive client data, operates in a regulated industry (healthcare, legal, financial services), or has remote employees using a mix of personal and company devices. The $8/user/month premium over Standard often pays for itself many times over in avoided security incidents.
Security matters at every size. If your team is handling customer financial information, health records, or confidential contracts, Business Standard’s lack of advanced security is a genuine gap — not just a missing feature. Our guide on how to enable or disable MFA in Office 365 walks through exactly how to set up multi-factor authentication once you’re on Business Premium, which is one of the first things every admin should do after deployment.
4. Microsoft 365 Apps for Business
This is a specialized plan that often gets overlooked. It’s built for organizations that need fully installed desktop Office applications but already have email hosted elsewhere — through Gmail, Zoho Mail, or another provider.
What you get:
- Full desktop Office apps (Word, Excel, PowerPoint, Outlook, OneNote)
- Install on up to 5 PCs/Macs and 5 mobile devices per user
- 1 TB OneDrive per user
What you don’t get:
- No Exchange email hosting
- No Teams
- No SharePoint
Microsoft 365 Enterprise Plans
Enterprise plans lift the 300-user ceiling and add sophisticated compliance, identity, and security capabilities designed for large and highly regulated organizations. They’re typically purchased through Microsoft volume licensing or a cloud solution partner.
Office 365 E1
A legacy plan that provides cloud-based productivity and email — but no desktop Office applications.
What you get:
- Web and mobile Office apps
- Exchange Online (50 GB mailbox), Teams, SharePoint, OneDrive
- Basic compliance tools — eDiscovery, audit logs, legal hold
- Standard security
No desktop apps is the defining limitation here. For many frontline workers, kiosk users, or light users who mainly need email and Teams, that’s perfectly fine and makes E1 a cost-effective per-seat option.
Office 365 E3
Adds full desktop applications and stronger compliance tools on top of E1.
What you get:
- Everything in E1
- Full desktop Office apps
- Advanced eDiscovery and content search
- Litigation hold and archiving (unlimited archiving)
- Information Rights Management
- Data loss prevention (DLP) for email and documents
Microsoft 365 E3
This is where “Microsoft 365” branding really differentiates from Office 365. E3 adds enterprise device management and identity tools on top of Office 365 E3.
What you get:
- Everything in Office 365 E3
- Microsoft Intune — full enterprise MDM and mobile app management
- Azure Active Directory Premium P1 — conditional access, automated user provisioning, SSPR
- Windows 10/11 Enterprise licensing
- Enhanced threat protection and compliance tools
Microsoft 365 E5
The most comprehensive Microsoft 365 plan available. E5 adds the full security and analytics stack — including advanced threat intelligence, identity protection, and built-in analytics tools.
What you get:
- Everything in Microsoft 365 E3
- Microsoft Defender for Endpoint (Plan 2) — enterprise EDR and threat hunting
- Microsoft Defender for Identity — detect and investigate identity-based attacks
- Azure Active Directory Premium P2 — Privileged Identity Management, Identity Protection with risk-based conditional access
- Microsoft Purview (advanced) — insider risk management, advanced compliance manager
- Advanced eDiscovery — for complex legal and regulatory investigations
- Power BI Pro — business intelligence dashboards for every user
- Microsoft Teams Phone System — cloud-based calling without a separate telephony license
Prices are standard rates billed annually in USD. Pricing varies by region and purchasing channel. Always verify on the official Microsoft pricing page before purchasing.
Full Feature Comparison
| Feature | Basic | Standard | Premium | Apps | E1 | E3 (O365) | E3 (M365) | E5 |
| Web & mobile Office apps | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ |
| Desktop Office apps | ❌ | ✅ | ✅ | ✅ | ❌ | ✅ | ✅ | ✅ |
| Exchange email (50 GB) | ✅ | ✅ | ✅ | ❌ | ✅ | ✅ | ✅ | ✅ |
| Microsoft Teams | ✅ | ✅ | ✅ | ❌ | ✅ | ✅ | ✅ | ✅ |
| OneDrive (1 TB+/user) | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ |
| SharePoint | ✅ | ✅ | ✅ | ❌ | ✅ | ✅ | ✅ | ✅ |
| Teams webinars | ❌ | ✅ | ✅ | ❌ | ❌ | ✅ | ✅ | ✅ |
| Defender for Business / Endpoint | ❌ | ❌ | ✅ | ❌ | ❌ | ❌ | Partial | ✅ |
| Intune device management | ❌ | ❌ | ✅ | ❌ | ❌ | ❌ | ✅ | ✅ |
| Azure AD Premium P1 | ❌ | ❌ | ✅ | ❌ | ❌ | ❌ | ✅ | ✅ |
| Azure AD Premium P2 | ❌ | ❌ | ❌ | ❌ | ❌ | ❌ | ❌ | ✅ |
| DLP policies | ❌ | ❌ | ✅ | ❌ | ❌ | ✅ | ✅ | ✅ |
| Advanced eDiscovery & archiving | ❌ | ❌ | ✅ | ❌ | Basic | ✅ | ✅ | ✅ |
| Unlimited email archive | ❌ | ❌ | ❌ | ❌ | ❌ | ✅ | ✅ | ✅ |
| Windows Enterprise licensing | ❌ | ❌ | ❌ | ❌ | ❌ | ❌ | ✅ | ✅ |
| Power BI Pro | ❌ | ❌ | ❌ | ❌ | ❌ | ❌ | ❌ | ✅ |
| Teams Phone System | ❌ | ❌ | ❌ | ❌ | ❌ | ❌ | ❌ | ✅ |
| Microsoft Copilot AI | Add-on | Add-on | Add-on | Add-on | Add-on | Add-on | Add-on | Add-on |
How to Choose the Right Plan
The honest answer is that no one-size-fits-all recommendation exists — it really does depend on what your organization does, who it’s responsible to, and how your IT environment is set up. That said, here’s a practical framework.
Step 1: Do you need desktop Office apps?
This is the first and most important question. If your team does serious work in Word, Excel, or PowerPoint — complex spreadsheets, detailed documents, offline editing — you need a plan that includes desktop apps. That means Business Standard, Business Premium, Apps for Business, or any Enterprise E3/E5 plan.
If your team’s work is lightweight and browser-based, Business Basic or Office 365 E1 can genuinely work well and save meaningful money at scale.
Step 2: Do you have security or compliance responsibilities?
This one catches a lot of businesses off guard. If you handle customer financial data, health information, legal records, or personal data covered by regulations like GDPR or HIPAA, you need more than Basic or Standard.
Business Premium is the minimum for most regulated or data-sensitive businesses. It gives you Defender for Business, Intune, conditional access, and DLP — the building blocks of a defensible security posture.
For enterprises with dedicated security teams and stricter compliance requirements, evaluate Microsoft 365 E3 or E5 based on your threat detection and audit needs.
Step 3: How many users, and do you expect to grow?
If you’re at or approaching 300 users, don’t wait until you hit the limit to evaluate Enterprise plans. Migrating plans under time pressure is stressful and increases the risk of configuration errors. Start evaluating E3 early.
Microsoft 365 Business Basic vs Business Standard
Business Basic and Business Standard are the two most popular Microsoft 365 plans for small businesses. Both include professional email, Microsoft Teams, OneDrive, and SharePoint, but the biggest difference is access to desktop Office applications.
| Feature | Business Basic | Business Standard |
|---|---|---|
| Web & Mobile Office Apps | ✅ | ✅ |
| Desktop Office Apps | ❌ | ✅ |
| Exchange Email | ✅ | ✅ |
| Microsoft Teams | ✅ | ✅ |
| OneDrive Storage | 1 TB | 1 TB |
| SharePoint | ✅ | ✅ |
| Price (per user/month) | Lower | Higher |
Choose Business Basic if: your team primarily works in a browser and doesn’t require desktop versions of Word, Excel, Outlook, or PowerPoint.
Choose Business Standard if: employees regularly use desktop Office applications and need a complete productivity suite. For most small and medium-sized businesses, Business Standard offers the best balance of features and value.
Microsoft 365 Business Standard vs Business Premium
Business Premium includes everything in Business Standard but adds advanced security and device management capabilities.
| Feature | Business Standard | Business Premium |
|---|---|---|
| Desktop Office Apps | ✅ | ✅ |
| Exchange Email | ✅ | ✅ |
| Teams & SharePoint | ✅ | ✅ |
| Microsoft Intune | ❌ | ✅ |
| Microsoft Defender for Business | ❌ | ✅ |
| Device Management | ❌ | ✅ |
| Conditional Access | ❌ | ✅ |
| Data Loss Prevention (DLP) | Limited | Enhanced |
Choose Business Standard if: your primary goal is productivity and collaboration at the lowest practical cost.
Choose Business Premium if: you manage company devices, support remote employees, or need stronger protection against cyber threats. For organizations handling customer, financial, or regulated data, the additional security features often justify the higher subscription cost.
Microsoft 365 E3 vs Microsoft 365 E5
Microsoft 365 E3 and E5 are enterprise-focused plans designed for organizations that require advanced compliance, security, and administration capabilities.
| Feature | Microsoft 365 E3 | Microsoft 365 E5 |
|---|---|---|
| Desktop Office Apps | ✅ | ✅ |
| Windows Enterprise | ✅ | ✅ |
| Microsoft Intune | ✅ | ✅ |
| Advanced Compliance | ✅ | ✅ |
| Microsoft Defender Suite | Basic | Advanced |
| Microsoft Entra ID Premium | P1 | P2 |
| Power BI Pro | ❌ | ✅ |
| Teams Phone | Add-on | Included in many deployments |
| Advanced Threat Protection | Limited | Advanced |
Choose Microsoft 365 E3 if: your organization needs enterprise-grade productivity, device management, and compliance features without the cost of Microsoft’s most advanced security stack.
Choose Microsoft 365 E5 if: security, threat detection, identity protection, and compliance are top priorities. E5 is often the preferred choice for highly regulated industries and organizations with dedicated security teams.
Quick Verdict
- Business Basic: Best for startups and browser-based users.
- Business Standard: Best overall value for most small and medium-sized businesses.
- Business Premium: Best for SMBs that need advanced security and device management.
- Microsoft 365 E3: Best starting point for enterprise deployments.
- Microsoft 365 E5: Best for organizations requiring Microsoft’s most advanced security, compliance, and analytics capabilities.
Frequently Asked Questions
Which Microsoft 365 plan is best for a small business?
For most small businesses, Microsoft 365 Business Standard offers the best balance of productivity, collaboration, and cost. Businesses handling sensitive data or managing remote devices should consider Business Premium for its additional security and device management features.
What’s the difference between Business Premium and Microsoft 365 E3?
Business Premium is designed for organizations with up to 300 users and includes advanced security and device management. Microsoft 365 E3 is intended for larger organizations and adds Windows Enterprise licensing, enhanced compliance capabilities, and unlimited scalability.
Can I mix Microsoft 365 plans in the same organization?
Yes. Microsoft allows organizations to assign different licenses to different users within the same tenant. This helps businesses optimize costs while providing advanced features only where needed.
Can I upgrade Microsoft 365 plans later?
Yes. Most Microsoft 365 plans can be upgraded at any time. Review feature and licensing requirements before making changes to avoid unexpected disruptions.
Does Microsoft 365 include Microsoft Copilot?
No. Microsoft Copilot requires a separate add-on license and is not included with standard Microsoft 365 subscriptions.
What’s the difference between Microsoft 365 E3 and E5?
Microsoft 365 E5 includes everything in E3 plus advanced security, threat protection, identity management, Power BI Pro, and Teams Phone. E3 is often sufficient for organizations that do not require Microsoft’s most advanced security capabilities.
What happens if I cancel Microsoft 365?
Microsoft typically retains customer data for a limited period after cancellation. Before cancelling, export important mailbox, OneDrive, and SharePoint data and ensure you have a reliable backup.
How do I manage groups and permissions in Microsoft 365?
Microsoft 365 supports both Groups and Distribution Lists for collaboration and email communication. Understanding the differences can help you choose the right option for your organization.
How do I secure Microsoft 365 accounts?
Enable multi-factor authentication (MFA), enforce strong password policies, and use conditional access policies where available. MFA is one of the most effective ways to prevent account compromise.
What is the cheapest Microsoft 365 business plan?
Microsoft 365 Business Basic is the lowest-cost business plan. It includes business email, Teams, OneDrive, SharePoint, and web versions of Office apps.
Which Microsoft 365 plan includes desktop Office apps?
Business Standard, Business Premium, Apps for Business, Office 365 E3, Microsoft 365 E3, and Microsoft 365 E5 all include desktop versions of Word, Excel, PowerPoint, Outlook, and other Office applications.
Related Microsoft 365 Resources
Looking for more Microsoft 365 guidance? These resources may help:
- Microsoft 365 Mailbox Size Limitations – Understand mailbox storage limits, archive mailboxes, and what happens when users exceed their quotas.
- Shared Mailbox vs User Mailbox in Microsoft 365 – Learn the differences, licensing requirements, and when to use each mailbox type.
- Microsoft 365 Groups vs Distribution Lists – Compare collaboration features, permissions, and email distribution options.
- How to Enable or Disable MFA in Microsoft 365 – Improve account security with multi-factor authentication.
- Microsoft 365 Migration Guide – Best practices for migrating emails, calendars, contacts, and files to Microsoft 365.
- Google Workspace to Microsoft 365 Migration – Step-by-step migration options and considerations for businesses moving from Google Workspace.
- Microsoft 365 Backup Guide – Learn why Microsoft recommends a shared responsibility model and how to protect Exchange, OneDrive, and SharePoint data.
Final Thoughts
Choosing the right Microsoft 365 plan comes down to your organization’s size, security requirements, and how your team works day to day.
For most small and medium-sized businesses, Microsoft 365 Business Standard provides the best balance of productivity, collaboration, and cost. Organizations handling sensitive data, managing remote devices, or requiring stronger security controls should consider Business Premium. Larger organizations with advanced compliance and security requirements will typically find Microsoft 365 E3 or Microsoft 365 E5 more suitable.
Before making a decision, compare the features you actually need rather than paying for capabilities your organization is unlikely to use. Microsoft’s pricing and included features can change over time, so always verify the latest details on the official pricing page before purchasing.
If you’re planning a migration from Google Workspace, Amazon WorkMail, Exchange Server, or another platform, proper planning can help avoid downtime and data loss. And regardless of which plan you choose, implementing a dedicated Microsoft 365 backup solution is an important step in protecting business-critical data.
