Which Office 365 Licenses Should I Buy?

The ubiquitous Office 365 e-mail/productivity platform is a great tool for small businesses but with a major problem: the license structure can be completely obtuse and confounding to anyone not already familiar with how it works. It’s like Cap’n Jack Sparrow said about the Isla de Muerta in the first Pirates of the Caribbean movie: “It’s an island that can only be found by those who already know where it is.” 

Luckily, I’m prepared to help you figure this out – my blog is, and always will be, readable free of charge for the good of all mankind. Let’s begin by focusing on what I consider to be the basic license types most often found in use:

  1. Office 365 Business
  2. Office 365 Business Premium
  3. Office 365 E3
  4. Azure Premium P1 (purchased in conjunction with the above)
  5. Microsoft 365 Business (this may not be in wide use yet, but I predict it will continue to grow in popularity)

Office 365 Business

Price (all prices as of 2/2020): $8.25 per user/month.

The most important thing to immediately note is that Office 365 Business does not include e-mail – only applications. You are buying Microsoft Office desktop/browser software, some OneDrive cloud drive storage, and that’s it. For e-mail, you still need to have it hosted somewhere else – on a server, web host, etc. You can use that e-mail within Outlook no problem – just don’t confuse it for being Office 365 cloud-hosted e-mail.

So if you have e-mail already hosted elsewhere and just need an inexpensive option to get your users Mirosoft Office software, Office 365 Business will get the job done.

Office 365 Business Premium

Price: $12.50 per user/month.

In contrast to the above, Business Premium DOES include cloud-hosted e-mail. So if, for instance, you’re opening a new small business venture and need an inexpensive platform on which to run your e-mail along with the full Microsoft Office software suite – then Office 365 Business Premium may be a good choice.

In addition, Business Premium includes Sharepoint and Teams – both fantastic tools for collaboration and communication. On that basis alone, I would usually recommend leveraging Business Premium over choosing to host your own e-mail server. Unless there are specific business reasons why you should be hosting your own e-mail server, don’t try to pinch pennies – just spring the extra few bucks for Business Premium.

HOWEVER – compared to the next license we’re about to discuss, Business Premium has far less in terms of storage and overall functionality. So if your business needs for 365 are relatively casual in nature with your true enterprise processes focused elsewhere – then Business Premium will likely suffice. Otherwise, read on.

Office 365 E3

Price: $20.00 per user/month

Office 365 E3 – the “E” standing for “Enterprise” – is a suped-up version of Office 365 Business Premium. The first question to ask is this: Will you need more than 300 users in your 365 directory? If so, then that already tells us you’ll need Office 365 E3 at the least – as Office 365 Business Premium has a single-organization limit of 300 users.

But there’s more to consider: Business Premium only allows for active inboxes of 50GB in size with a single additional archive of 50GB – meaning 100GB of stored e-mail overall. Once you hit that limit, you’ll have to start deleting e-mail. E3, on the other hand, gives you a 100GB active inbox with unlimited archiving after that – no pesky limits. So if you have years and years of important communication to hold on to, or simply an enormous volume of mail per day, then you’ll need E3.

There are a few different ways in which E3 has enhanced general functionality, but probably the most important to consider are in the areas of Security and Compliance. For example: E3 allows the configuration and deployment of Data Loss Prevention (DLP) policies which can specify and block the sharing of privileged or sensitive information from leaving the company e-mail system, and also allows for “Legal Hold” – a function allowing for the identitification and retention of data under specific circumstances most useful in cases where the data is being held for legal reasons.

So I’ll put it this way: If compliance requirements play a significant role in your line of work and storage/retention needs are high due to message volume or importance, then you should go with E3. Anyone in a legal, financial, or generally rigorous corporate setting should go with E3 over Business Premium by default.

Azure Premium P1

Price: $6 per user/month

Azure licensing, which I’ve discussed before, is not necessary but provides some very important functionality that I think most organizations should strongly consider. Without getting overly technical: if your organization leverages a lot of web platforms – Salesforce, Bluebeam, Asana, etc – then I recommend P1 for the litany of user identiy and access management options that are made available.

With a bit of infrastructure work, you can set up Single Sign-On (SSO) with group-controlled membership to company platforms and have complete visibility/control to who can access what, and how, at any time. This may not sound important to some – but if you handle any genuinely sensitive information or platforms, then robust access management is key to maintaining control.

Microsoft 365 Business

Price: $20 per user/month

In the past, I’ve generally recommended a combination of Office 365 E3 / Azure P1 – sometimes Business Premium / Azure P1. With the introduction and gradual improvement of the standalone Microsoft 365 Business license, I’m beginning to consider it as my main go-to for many situations. Microsoft 365 Business can be somewhat accurately described as “the value of Business Premium, with many of the useful functions of E3 AND the expanded security and control of Azure P1.”

Here is my high-level reasoning: At $20 per user/month, Microsoft 365 Business is only $2.50 more than leveraging a combination of Office 365 Business Premium and Azure P1 at $18.50 per month – but you’re upgraded to unlimited e-mail archiving with full use of retention policies, Microsoft Intune MDM, and most functionality of Azure groups with conditional access. In my opinion, the sweet spot of price balanced against usage and firepower. I strongly recommend considering it for any dynamic small-to-mid business running a number of web platforms with a need to maintain some control and visibility over how users are engaging in the 365 environment.

I tried to put my explanations into simple terms, but engineers are notorious for speaking in dialects of jargon even less understable than that of people lost in the jungle as infants and raised by a conspiracy of lemurs. Questions? Ideas? Anything I missed? Point it out in the comments below. 

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