Microsoft 365 E3 vs E5 Compared

Microsoft 365 is one of the most popular - if not the most popular - productivity solutions used by organisations worldwide.

Helping organisations from SMB’s to Enterprises, charities to commercial, Microsoft 365 is available in many different licensing subscriptions and this article has been written to help you compare the different Enterprise options.

Microsoft 365 licensing explained

Microsoft 365 combines Office 365, Windows 11 and Enterprise Mobility + Security (EMS) providing selected offerings of each suite into two different groupings: Business and Enterprise. 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. 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.

The Enterprise versions correlate nicely to their relevant suite versions:

  • Microsoft 365 E3 = The E3 version of Office 365, EMS and Windows 11 Enterprise
  • Microsoft 365 E5 = The E5 version of Office 365, EMS and Windows 11 Enterprise

Microsoft 365 licensing change – removing Teams

In April 2024, Microsoft 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. 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. You can read more on this here.

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 for Business licences (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

Microsoft 365 UK pricing

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 for this luxury. Annual term commitment offers better pricing but means committing to a set number of seats for 12 months as your baseline but 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.


As of June 2024, the pricing for Microsoft 365 in £GBP ERP is:

  • Microsoft 365 E3 (legacy version with Teams included): Monthly = £39.72 / Annual = £397.20
  • Microsoft 365 E3 (no Teams): Monthly = £37.20 / Annual = £370.00
  • Microsoft 365 E5 (legacy version with Teams included): Monthly = £62.88 / Annual = £628.80
  • Microsoft 365 E5 (no Teams): Monthly = £60.36 / Annual = £603.60
  • Microsoft Teams Enterprise (add-on to include with Microsoft 365 E3 or E5): Monthly = £5.16 / Annual = £51.60
  • Add-ons Pricing

    • Microsoft 365 E5 Security = Monthly = £11.88 / Annual = £118.80
    • Microsoft 365 E5 Compliance = Monthly = £11.88 / Annual = £118.80

    Please note, pricing is subject to change from Microsoft.

Microsoft 365 Enterprise Licensing Overview

The above graphic acts as an overview of key products and features but is not extensive of all features. We highly recommend viewing to see an extensive overview that is regularly updated.

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 are aimed at companies that want to gain the advanced security and compliance tools within Microsoft 365 E5, but are not ready to make the leap in cost or do not require the Telephony and Power BI Pro licences included in E5. The two add-ons are:

  • Microsoft 365 E5 Security
    £9.00 per user per month (ERP) – This includes all the solutions in Microsoft 365 Defender – 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 365 E5 Security here.
  • Microsoft 365 E5 Compliance
    £9.00 per user per month (ERP) – 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 365 E5 Compliance here.

Build 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.

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 73 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. So if you’re already paying for Office 365 then you can upgrade to gain access to Windows 11 and a great set of security and mobility tools within EMS for a greatly reduced cost over buying them separately.
  • One integrated solution
    As most organisations use Office 365, 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.

Any Questions?

If you have any questions around Microsoft 365 or you would like a review to ensure that you are paying for the most appropriate licensing and getting the full value from the solutions and features within it, please get in touch. We offer Microsoft 365 consultancy services to help organisations get the most from Microsoft 365.