Microsoft 365 and Teams licensing changes explained

Microsoft 365 Licensing changes from 1st April 2024

Microsoft have announced updates to how Microsoft 365 and Teams will be licensed for commercial organisations, with Teams Enterprise now being split out from the Microsoft 365 Enterprise licences.

As a brief background, Microsoft Teams was ‘unbundled’ from Microsoft 365 due to some concerns that were raised through the European Commission last year. These concerns were: 1) that customers should be able to choose a business suite without Teams at a price less than those with Teams included; and (2) that we should do more to make interoperability easier between rival communication and collaboration solutions and Microsoft 365 and Office 365 suites. This is taken from Microsoft’s official post here.

As a result, on 1st October 2023 Microsoft unbundled Teams from Microsoft 365 and Office 365 suites for the European Economic Area (EEA) EEA and Switzerland. From 1st April 2024, this is being updated to apply globally for consistency – which means UK organisations are now impacted.

What has changed?

New commercial customers will no longer be able to purchase Teams included in the Microsoft 365 Enterprise licence. Instead, customers will now need to purchase two SKUs: Microsoft 365 E3 or E5 (no Teams) and Teams Enterprise. This is $3 RRP more expensive than when they were previously bundled (correct as of 1st April 2024).
New Microsoft 365 Business customers (Business Basic/Standard or Premium) and Frontline customers (F1 and F3) have the choice of purchasing Microsoft 365 with or without Teams included. All the licences without Teams included are priced lower than the suites with Teams included.

These changes only apply to commercial organisations and do not currently apply to Nonprofits, Academics of Government licences.

The full announcement with $USD pricing can be found here:


What if I already have Microsoft 365 Business Standard, Business Premium, E3 or E5? There is no impact to existing customers. You can continue to use your licensing as normal and renew as you have been. You will, however, have the option to switch to Microsoft 365 without Teams if you do not use Teams, as there is a small cost saving. The chance of companies doing this, however, is likely very small.

What if I have Microsoft 365 Business but would like to move to Enterprise? If you only have Microsoft 365 Business licences and make the change to Enterprise, then you will be impacted by the change. Any net new E3 or E5 licences (i.e. you do not have any Enterprise licences today) mean you will need the new versions with Teams split out, which is $3 more. This could impact customers that hit the 300 threshold of Business licences. For example: you may have 300 Business Premium, or you may have 150 Business Standard and 150 Business Premium. You could not have 300 Business Premium and 5 Business Standard. After 300, you must buy any additional licences as Enterprise, so this is something to consider if you are nearing the 300 mark.

What if I am a new customer looking to purchase Microsoft 365 Business Premium? You can choose to purchase with or without Teams included.

What if I am looking to purchase Microsoft 365 F1 or F3? You can choose to purchase with or without Teams included.

What if I am a new customer looking to purchase Microsoft 365 E3 or E5? You will have to purchase two SKUs: Microsoft 365 E3 or E5 (no Teams) and the Teams Enterprise licence.

Does this apply to Charity, Academic or Government licensing? The changes announced apply only to commercial SKUs (Enterprise, Business, and Frontline). Consumer, Academic, US Government, and Nonprofit-specific SKUs are not currently impacted.

Any Questions?

This change will have limited impact on existing Microsoft 365 customers but will impact those that are newly moving to Microsoft 365 Enterprise. If you have any questions around the changes or would like to check that you have the best licensing, please get in touch with us.