Microsoft 365 Licences: Business Standard vs Business Premium vs E3 vs E5 (Plus E1)

By Taliah | 5th March 2026 10:07 am | Microsoft 365

Choosing a Microsoft 365 licence is about finding the right mix for your organisation so that people have what they need, without paying for what they don’t. Most businesses don’t need every employee on the same licence. A blended approach (for example, lighter licences for occasional users, Business Premium for knowledge workers, and selective upgrades for higher-risk teams) is often the most cost-effective way to stay productive, secure, and compliant.

Below is a practical, side-by-side comparison of the most common licences IT decision makers weigh up: Microsoft 365 Business Standard, Microsoft 365 Business Premium, Microsoft 365 E3, and Microsoft 365 E5, with Office 365 E1 included as a useful baseline (and because many “web-only” users still start there).

Office 365 vs Microsoft 365: why “E3” can mean two different things

Microsoft still sells some Office 365 enterprise licences. The key point is that E3 and E5 exist in both families:

• Office 365 E3 / E5: primarily productivity (apps + services) and related security/compliance features.
• Microsoft 365 E3 / E5: bundles Office 365 plus extra layers such as Windows Enterprise and a broader set of security, identity, and management capabilities.

So if your organisation says “we’re on E3”, it’s worth clarifying whether that’s Office 365 E3 or Microsoft 365 E3 before comparing features or building a roadmap.

At-a-glance comparison

*Teams Phone System and some very specific compliance features are not included in the bundle vs E5.
**Microsoft positions Business plans for organisations with up to 300 users and notes a tenant limit approach across Business plans.

What you actually get in Business Standard and Business Premium

Business Standard: productivity first

Business Standard is the “full Office apps for everyone” option for smaller organisations: desktop, web, and mobile versions of the Office apps, plus business email, Teams, and cloud storage. It’s ideal when your primary goal is getting people productive quickly, without needing deep device management.

Business Premium: productivity plus day-to-day management

Business Premium includes everything in Business Standard and adds the building blocks many SMEs need once they start tightening security and control:

• Microsoft Intune for device management (Windows, macOS, iOS/iPadOS, Android)
• Microsoft Defender for Business for endpoint protection
• Microsoft Entra ID P1 for stronger identity/access controls

If you’re comparing Business Premium vs E3, this is where the conversation often lands: Business Premium can deliver a very strong security and management baseline for SMEs, without moving fully into enterprise licensing structures.

The big SME lever: Business Premium + Defender Suite + Purview Suite

This is the area many organisations want more clarity on, because it’s where you can close a lot of the “E5 gap” without paying full E5 pricing across the board.

Microsoft offers two add-on bundles designed specifically for organisations on Microsoft 365 Business Premium:

• Microsoft Defender Suite for Business Premium (adds additional, integrated security capabilities on top of the baseline Defender for Business experience)
• Microsoft Purview Suite for Business Premium (adds broader compliance, information protection, and governance capability)

In plain terms, these suites expand what SMEs can do with security and compliance – and for many common requirements, they can bring you close to the kind of outcomes people associate with Microsoft 365 E5.

What these suites help SMEs do (in practical terms)

Defender Suite add-on typically matters when you want stronger, joined-up protection across identities, endpoints, email and collaboration alongside better visibility and investigation workflows.

Purview Suite add-on comes into its own when you need to control and evidence how sensitive information is handled: labelling and protection, data loss prevention, retention, auditability, and support for compliance-led processes.

(Exactly how far this gets you depends on your environment and what you already use – but as a general direction, it’s a strong option for SMEs that want to mature security and compliance without jumping straight to enterprise E5 for everyone.)

Cost comparison (UK list pricing, paid yearly)

Using Microsoft’s published UK list pricing as a guide:

• Microsoft 365 Business Premium: £16.90 per user/month
• Defender Suite for Business Premium: £7.70 per user/month
• Purview Suite for Business Premium: £7.70 per user/month

That totals £32.30 per user/month for Business Premium plus both suites, compared with Microsoft 365 E5 at £49.00 per user/month (paid yearly). In other words, it’s around £17 cheaper per user per month at list price.

(Prices exclude VAT. Microsoft also offers “no Teams” variants and can change pricing over time, so treat this as a guide and validate at point of purchase.)

Where frontline worker licences fit (and where they don’t)

Frontline licences (such as Microsoft 365 F3) can be relevant when you have colleagues who share devices, spend limited time at a desk, or mainly need lightweight communication and task tooling.

That said, they’re not usually where you build your management and compliance posture. Most organisations use frontline licences selectively, then base their wider security and device strategy around Business Premium (or enterprise equivalents) where the management capability is stronger.

Pricing and minimum user requirements

Microsoft pricing changes, promotions, and “with/without Teams” variants can make headline costs confusing, so always validate pricing at the point of purchase. As a reference point (UK list pricing, annual commitment shown on Microsoft’s site):

• Microsoft 365 Business Standard: £9.60 per user/month (paid yearly)
• Microsoft 365 Business Premium: £16.90 per user/month (paid yearly)
• Microsoft 365 E3: £31.00 per user/month (paid yearly)
• Microsoft 365 E5: £49.00 per user/month (paid yearly)

On user limits: Microsoft positions the Business family for organisations up to 300 users (with specific guidance on how that limit is treated across Business plans).

Typical use cases by business size

Smaller businesses (up to 300 users)

• Business Standard works well when the main requirement is “proper Office apps + email + collaboration” and security needs are relatively straightforward.
• Business Premium tends to be the better long-term fit when you need to manage devices properly, reduce risk from lost/stolen endpoints, and apply stronger identity controls without stitching together multiple add-ons.

Mid-market and enterprise

• E3 becomes attractive when you need enterprise-grade standardisation (identity, endpoint, governance) and you’re operating beyond the SMB constraints.
• E5 is usually reserved for organisations (or departments) with advanced security, compliance, and voice requirements.

When upgrades or downgrades make sense

Good reasons to upgrade

• You’re on Business Standard, but you now need consistent device policies, stronger endpoint protection, or conditional access controls – Business Premium is often the cleanest step up.
• You’ve outgrown SMB licensing constraints, or you need enterprise governance and standardisation at scale – consider E3.
• You’re facing higher threat levels, regulatory pressure, or complex investigations – selective E5 for the users who genuinely need it can be more cost-effective than blanket upgrades.

Good reasons to downgrade (or mix licences)

• Not everyone needs desktop apps, advanced security tooling, or voice features. Splitting licences by role (frontline vs knowledge worker vs high-risk user) is often where the biggest savings live.
• If only a small group needs advanced compliance or security capabilities, keep most users on Business Premium or E3 and allocate E5 to the teams that will actually use (and justify) the extra capability.

Picking the right mix (and avoiding expensive mistakes)

Start with what people need day-to-day (apps, email, collaboration), then decide how much risk you need to reduce (identity, device controls, endpoint protection, compliance).

Avoid assuming you can mix licences freely. Some services have licensing conditions that apply across everyone who benefits from them – identity and access is a common example (including Entra ID P1/P2 in certain scenarios).

A safer approach is role-based: Microsoft 365 E3 as the baseline, Microsoft 365 E5 for higher-risk or regulated groups, and frontline colleagues on Microsoft 365 F3 with the F5 Security + Compliance add-on where needed.

If you’d like help mapping roles to licences, rationalising what you already have, or planning a clean upgrade path, see Syntax’s Microsoft 365 consulting services and contact our team for a consultation – we’ll help you to build a licence strategy that fits how your business actually works.