Microsoft 365 Licensing: What You Actually Need to Know
If you’ve ever stared at Microsoft’s licensing page and felt lost, you’re not alone. Let’s cut through it.
Office 365 vs. Microsoft 365 — Not the Same Thing
People use these names interchangeably, but they’re different products. Office 365 is the productivity suite — Outlook, Word, Excel, Teams, SharePoint. Microsoft 365 bundles that with Windows Enterprise and security management tools. At the Enterprise level, you’re getting three suites in one. At the Business level, the difference shows up in how much security you get depending on your tier.
Business Plans (Up to 300 Users)
These are designed for small and mid-sized businesses. There are three tiers:
| Plan | Price* | What You Get |
|---|---|---|
| Business Basic | $6/user/mo | Web/mobile Office apps only, email, Teams, 1 TB OneDrive |
| Business Standard | $12.50/user/mo | Everything in Basic + full desktop Office installs |
| Business Premium | $22/user/mo | Everything in Standard + endpoint security, device management, advanced email protection |
Prices increasing July 1, 2026: Basic → $7, Standard → $14. Premium stays at $22.
For most small businesses, Business Premium is the right answer. The security tools it includes — Microsoft Defender for Business and Intune — would cost more if you bought them separately. Cyber insurers are increasingly requiring endpoint protection and device management anyway. The math works.
Enterprise Plans (300+ Users, No Seat Cap)
Enterprise plans add Windows Enterprise upgrade rights, deeper compliance tools, and no user limit.
| Plan | Price* | Best For |
|---|---|---|
| Office 365 E1 | $10/user/mo | Cloud-only, no desktop apps — good for task/frontline workers |
| Office 365 E3 | $23/user/mo | Full desktop apps + foundational compliance |
| M365 E3 | $36/user/mo | E3 + Windows Enterprise + Intune + security baseline |
| M365 E5 | $57/user/mo | Everything in E3 + advanced security, eDiscovery, Insider Risk, Power BI Pro |
| M365 E7 | $99/user/mo | E5 + Copilot + Entra Suite + Agent 365 (new May 2026) |
July 2026 increases: O365 E3 → $26, M365 E3 → $39, M365 E5 → $60.
E3 covers most enterprise organizations well. E5 is worth it when you’re in a regulated industry (healthcare, legal, finance) or replacing multiple third-party security tools — the consolidation often makes the price difference disappear.
The Big Things to Know Right Now
Teams is no longer included automatically. Since April 2024, Teams is a separate add-on for new Enterprise customers ($5.25/user/mo). Business plans still include it.
Prices are going up July 1, 2026. If your renewal falls after that date, you can lock in current pricing by renewing early.
Copilot AI is now an add-on across Business and Enterprise plans. A lighter version (Copilot Chat) is included free with eligible subscriptions.
Not sure which plan fits your business? That’s exactly what we do at Mile Zero IT — a quick licensing review can save you money and close security gaps you didn’t know you had.
Pricing accurate as of May 2026. Verify current rates with Microsoft or your licensing partner.
