Insights

Microsoft 365 is the most popular business productivity solution, used by organisations globally – from small businesses up to the largest enterprises. As Microsoft’s leading productivity suite, Microsoft 365 gets regularly enhanced with new products and features and often staying ahead of the latest licensing options can be tricky. In this article, we explain the different Microsoft 365 licensing options, compare the three Enterprise versions (E3, E5 and E7) and their pricing.

Note: This article has been updated May 2026 following the release of Microsoft 365 E7.

Microsoft 365 licensing explained

Microsoft 365 combines Office 365, Windows and Enterprise Mobility + Security (EMS) providing different features of these into different licensing levels (or SKUs). Microsoft 365 is available in Business or Enterprise versions, which depends on the number of users. Microsoft 365 Business is aimed at organisations with fewer than 300 employees, while Enterprise is available to those with more than 300 employees, or organisations that wish to have advanced features. Within these versions it can be further broken into Academic, Government, Nonprofit and Frontline. These combinations within Microsoft 365, give organisations access to a range of powerful productivity and security solutions and at a more cost-effective price than purchasing these products separately.

Microsoft 365 – with or without Teams

In April 2024, Microsoft removed Teams from Microsoft 365 Enterprise suites due to compliance and regulatory pressure – meaning organisations had to purchase Microsoft 365 Enterprise (without Teams) and buy a Teams add-on. From 1st November 2025 this was rebundled back into Microsoft 365, so organisations can now purchase Microsoft 365 with or without Teams included As most organisations use Teams, having it back in the bundle is much simpler – but you will see Microsoft 365 options with and without for a lower cost. You can read more on this here for the history and context.

Microsoft 365 Business

Microsoft 365 Business is available in: Business Basic, Business Standard and Business Premium. In this article, we are focusing on the Enterprise editions but recommend the Microsoft Business comparison webpage to compare features, or the M365 Business Plan chooser to walk you through guided questions.

Note: It is useful to note than organisations can currently combine Business and Enterprise licences, however there is a 300 maximum limit tenant-wide across all Business SKUs (i.e. 150 Business Standard and 150 Business Premium). If you go over 300, you will then need to purchase Enterprise licensing.

Image source: Microsoft

What's included in Microsoft 365 Enterprise?

Each licence tier increases products and features as you’d expect. There can be many different features, so to avoid over-complication we’ve created a simplified feature comparison in the graphic below to show a high-level of the differences in features and apps across E3, E5 and E7. We highly recommend viewing https://m365maps.com/ to see an extensive overview that is regularly updated.

To summarise the main differences:

Microsoft 365 E3 – Overall E3 includes core productivity features of Office 365, Windows operating system and basic security features. In terms of products, it includes Office 365 E3 (Microsoft 365 apps, Outlook, SharePoint, Viva, etc), EMS E3 (Entra ID P1, Intune P1 and Information Protection features), Windows E3 (Windows Hello for Business, BitLocker, Universal Print and more), as well as Endpoint P1 and basic Copilot Chat.
Microsoft 365 E5 – E5 steps up from E3 by adding more advanced security and compliance features, Power BI Pro and Teams Phone. If you are considering E5 but do not require Power BI Pro or Telephony, there is a Defender Suite add-on and Purview add-on focusing on security or compliance features, which we outline in a little more detail below.
Microsoft 365 E7 – Newly launched in May 2026, E7 includes all the features of E5 as well as full Microsoft 365 Copilot (premium), Agent 365 (for managing and governing AI agents) and Entra Suite add-on – designed for companies fully embracing AI across the business.

Security & Compliance add-ons

As well as being able to purchase different Microsoft 365 versions, there are security and compliance add-ons available to enhance your base licensing functionality. These can only be added onto Microsoft 365 E3 (and Business Premium) and are aimed at companies that want to gain the advanced security and compliance tools within Microsoft 365 E5 or E7, but are not ready to make the leap in cost or do not require the other functionality available in E5 or E7. The two add-ons are:

• Microsoft Defender Suite
  Previously known as ‘Microsoft 365 E5 Security’, this includes all the solutions in Microsoft Defender XDR – Microsoft Defender for Endpoint, Cloud Apps, Identity & Office 365, and Entra ID P2. By adding these solutions to Microsoft 365 you can benefit from advanced security and identity & protection tools to support a Zero Trust security model and enable rapid threat detection and response to reduce your risk. You can read more on Microsoft Defender Suite here.
• Microsoft Purview Suite
  Previously known as ‘Microsoft 365 E5 Compliance’, this provides information protection, classification and governance capabilities to help organisations adhere to data protection and compliance regulations – including solutions such as Microsoft Purview Information Protection and Microsoft Defender for Cloud Apps. You can read more on Microsoft Purview Suite here.

How much does Microsoft 365 cost in the UK?

New Commerce Experience explained

Microsoft 365 pricing has been a little more complex with the introduction of the New Commerce Experience (NCE). The NCE model means that organisations need to choose the term commitment, which affects pricing – choosing either annual or monthly commitments.

Monthly commitments give you the flexibility to increase and decrease seats as and when you need, but it comes with a 20% price premium. Annual term commitment offers better pricing but means committing to a set number of seats for 12 months as your baseline. If you need to decrease the number of seats, you will have to still pay the set baseline. You can mix and match annual and monthly terms – i.e. choosing 100 annual seats but then getting 30 monthly seats for seasonal workers and fluctuations.

Microsoft 365 Enterprise pricing

As of May 2026, the pricing for Microsoft 365 (including Teams) is:

• Microsoft 365 E3: Monthly = £37.20 per user per month / Annual, paid annual = £370.20 per user per annum / Annual, paid monthly = £32.55 per user per month
• Microsoft 365 E5: Monthly = £58.80 per user per month / Annual, paid annual = £588.00 per user per annum / Annual, paid monthly = £51.45 per user per month
• Microsoft 365 E7: Monthly = £97.92 per user per month / Annual, paid annual = £979.20 per user per annum / Annual, paid monthly = £85.68 per user per month

Add-ons pricing

• Microsoft Defender Suite: Monthly = £11.04 per user per month / Annual, paid annual = £110.40 per user per annum / Annual, paid monthly = £9.66 per user per month
• Microsoft Purview Suite: Monthly = £11.04 per user per month / Annual, paid annual = £110.40 per user per annum / Annual, paid monthly = £9.66 per user per month

Prices correct as of May 2026 and doesn’t include any promotions. Pricing is subject to change and will be regularly evaluated against fluctuating exchange rates. Typically, Microsoft evaluate this twice a year, but it could change any time.

Note: Microsoft 365 E5 pricing will increase from July 2026, read this article for more information.

Why Microsoft 365?

Today, many organisations are using Microsoft 365. Our main reasons why we recommend Microsoft 365 include:

• Unparalleled security scale
  The main reason why Microsoft 365 has some of the best security products on the market is their sheer scale of telemetry that feeds into their security tools – and their investment in their continual development. Microsoft analyse over 100 trillion signals daily – so if a new threat is picked up any email, file etc within Microsoft’s ecosystem, then Microsoft’s products can learn to detect it as a threat and block it in real-time. No other security provider can match this scale.
• Value
  By buying Microsoft 365 instead of the the individual products you will save in licensing costs rather than buying the solutions separately.
• One integrated solution
  As most organisations use Office apps, Outlook and Teams, it makes sense to keep your security tools and operating system within the Microsoft stack. Historically some organisations might use different vendors to spread risk but this adds complexity, reduces integration and therefore also limits insights and speed. By using Microsoft 365 all your solutions perfectly integrate and feed data into one another, making one very simple, integrated toolset that is extremely efficient, quick to react and produces a holistic overview.

How to roll out your Microsoft 365 roadmap?

If you’re starting your Microsoft 365 journey or looking to ensure you’ve rolled out all the features available, you may be interested in our Microsoft 365 implementation roadmap on-demand webinar showing our recommended implementation approach and best practices.