Microsoft 365 Licensing Explained

Every Microsoft 365 business plan is built on the same familiar foundation — the desktop Office apps (Word, Excel, PowerPoint, Outlook), business email, Microsoft Teams, SharePoint and 1 TB of OneDrive per user. What changes as you move up the range is security, device management, compliance and scale, not the everyday apps your team uses.

Corporate licensing splits into two families. The Business plans — Basic, Standard and Premium — are designed for small and mid-sized organisations and are capped at 300 users per tenant. The Enterprise E-series — E3 and E5 — removes that cap and layers on enterprise-grade identity, compliance and security for larger or more regulated organisations.

Compare the corporate plans

Indicative UK list prices on an annual commitment, ex VAT; Microsoft is adjusting packaging and pricing through 2026, so we confirm exact current figures as your CSP. “Add-on” means the capability is available but licensed separately.

Where the real differences lie

Standard → Premium is the most important jump for most businesses, and it’s all about security. The apps are identical; Premium adds Microsoft Defender for Business, Intune device management and Entra ID P1 conditional access. The deciding question is simple: do you want Microsoft 365 to handle your security and device management, or are you sourcing those separately?

Premium → E3 is about scale. Once you pass 300 users — or need enterprise identity, Windows Enterprise and fuller compliance tooling — E3 is the natural home. E3 → E5 then adds the advanced layer: Defender for Office 365 P2 (attack simulation and automated response), Entra ID P2 (Privileged Identity Management and Identity Protection), advanced Microsoft Purview compliance, Power BI Pro and Microsoft Teams Phone. Notably, Microsoft has narrowed the gaps in recent years — Business Premium now includes security that used to require enterprise licensing.

What is becoming the standard for UK organisations

The market is clearly shifting up the range as security, compliance and AI become baseline expectations rather than extras:

For SMEs, Business Premium is fast becoming the default. It bundles the security and device-management stack needed for Cyber Essentials, secure remote working and today’s threat levels — at a price that’s hard to beat once you’d otherwise buy those tools separately. Business Standard increasingly looks under-protected for any organisation handling customer, financial or regulated data.

For larger and regulated organisations, Microsoft 365 E5 is the benchmark — the advanced security, compliance and analytics stack in one licence, and the plan whose Entra ID P2 and Purview capabilities align best with a secure Microsoft 365 Copilot rollout. Where E5 is more than needed, E3 with targeted security add-ons is a common middle path.

How Foresight helps

As a Microsoft Cloud Solution Provider, we right-size your licensing so you neither under-protect the business nor pay for E5 features that sit idle. We licence, deploy and support the whole estate on one predictable monthly fee — and we’ll tell you honestly which plan fits. Explore the rest of our Microsoft offering: Microsoft licensing & CSP · Microsoft 365 Copilot · Microsoft Security Copilot.