2024 Guide to Microsoft 365 Licenses

Whether you’re newly considering Microsoft 365 for your organisation or a long-standing user, understanding the various business licenses and what they include can be difficult. With our detailed guide, you can gain a thorough understanding of each license type, helping you to choose the best fit for your organisation. 

Microsoft Windows key on a keyboard

Microsoft 365 Business Licensing

In order to use the most notable Microsoft 365 applications across your organisation – aka Word, Outlook, Powerpoint, Excel, etc) – you will require a Microsoft 365 Business License.  

Microsoft has recently made adjustments to their licensing for Microsoft 365, Office 365, and Teams. These changes mean that new subscribers will no longer have access to Office 365 E1, Office 365 E3, Office 365 E5, Microsoft 365 E3, and Microsoft 365 E5 packages that include Teams.

How exactly does this effect Microsoft users?

  • Existing subscribers can maintain, renew, expand or upgrade their current subscriptions as before. Alternatively, they can switch to the newly introduced packages once their contract renews.
  • Microsoft 365 Business users can continue with the current Microsoft 365 Business Basic, Microsoft 365 Business Standard, and Microsoft 365 Business Premium suites that include Teams or switch to the newly introduced versions of these suites without Teams.
  • New customers looking to subscribe to Office/Microsoft 365 Enterprise packages who want to include Teams for their users will need to purchase two separate items: a Microsoft 365 or Office 365 suite without Teams, and the Microsoft Teams Enterprise separately.

Microsoft 365 Apps for Business

Microsoft 365 Apps for Business stands as the most basic license bundle which incorporates both desktop and web versions of applications. The Microsoft Office apps that are included in this license are as follows: 

  • Microsoft Word 
  • Microsoft PowerPoint 
  • Microsoft Excel 
  • Outlook 
  • OneDrive 
  • Microsoft Publisher (PC only) 
  • Microsoft Access (PC only) 

However, cloud-based collaboration tools like SharePoint and Microsoft Teams are not included. 

This bundle serves as a good fit for smaller businesses that don’t require communication and meeting functionalities, and primarily work offline with the traditional Microsoft Office application suite. 

Microsoft 365 Business Basic

Microsoft 365 Business Basic offers organisations an affordable introduction to the Microsoft 365 Suite. With this license, a Microsoft Outlook work email is created for each user, giving them access to the web and mobile versions of the following applications: 

  • Microsoft Word 
  • Microsoft Excel 
  • Microsoft PowerPoint 
  • Outlook 
  • OneDrive 
  • Microsoft Teams 
  • Microsoft Bookings 
  • Microsoft Forms 
  • Microsoft Lists 
  • Microsoft Planner 
  • Exchange 
  • SharePoint 

Immediately you can see that the key differentiator between this license and the previous one is the addition of cloud collaboration applications. Additionally, organisations utilising the Microsoft 365 Business Basic bundle does not include desktop editions of the above applications, and therefore cannot be used for offline work. It is also missing some notable features such as webinars and large meetings, and data visualisation.  

This license is an ideal choice for smaller teams that primarily work online – however, businesses that are already accustomed to the traditional desktop Microsoft applications may find that these web versions lack some functionality in comparison. 

Microsoft 365 Business Standard

Microsoft 365 Business Standard, as stated in the name, is typically the ‘standard’ choice for any business looking to get the most functionality from their Microsoft 365 license without significant spend. This license bundle includes everything that we listed above for Business Basic, with the addition of desktop versions of all the 365 applications, allowing teams to work both online and offline. On top of this, organisations can benefit from access to Microsoft Publisher and Access. 


This license also introduces the ability to host webinars and large meetings, but still lacks some of the more complex business features that other bundles can accommodate, such as remote device management, advanced security tools, and cyber threat protection. 

Microsoft 365 Business Premium

Microsoft 365 Business Premium offers a more complete and robust solution for businesses. Compared to the above license bundles, Business Premium offers high levels of security with the addition of Microsoft Intune and Azure Information Protection – on top of all applications included in Business Standard, of course. Beyond this, Business Premium also includes Remote Device Management, giving admins more granular access controls.

Typically, this license bundle is recommended for large businesses and enterprises that frequently deploy work devices, have higher user counts, and host cloud applications – however, with the advancements of today’s cyber threat tactics, we would recommend Business Premium to most organisations, as the addition of security tools is worth the extra expenditure.  

Microsoft 365 Enterprise Licensing

Enterprise organisations often require more advanced security and compliance tools, which is exactly what sets Microsoft 365 Enterprise Licenses apart from the previous Business licenses. Additional features like Advanced Threat Protection and Advanced Compliance stand out as clear benefits, giving IT admins reassurance that their Microsoft environment is protected and possibly even easing their internal resource demands. 

Microsoft Teams for Enterprise

For Enterprise businesses wanting to help their team communicate and work together effectively while driving business growth, Microsoft Teams for Enterprise is the natural choice. This stand-alone license is often purchased in conjunction with a Microsoft 365 or Office 365 suite to expand on the collaboration functionalities available with these licenses, allowing teams to stay connected in dispersed or hybrid working environments.

Microsoft Teams for Enterprise offers a lot more than basic chat and call features, helping to ensure that everyone in their organisation has access to the same information by sharing files, coauthoring Microsoft 365 documents, creating shared task lists, and notifying everyone of important messages.


Microsoft 365 E3

Microsoft 365 E3 offers organisations the complete suite of 365 applications, just like the higher levels of Business licenses. What really separates this Enterprise level offering is the fact that all users are provided with a license for Windows 365 E3. This version of Windows 11 incorporates enterprise-specific features, like Azure Active Directory and Windows Autopilot, assisting with the set-up and pre-configuration of new devices and Microsoft Intune. 

To summarise, Microsoft 365 E3 goes beyond simply providing 365 applications, empowering enterprise organisations to garner the full security benefits of the Windows ecosystem as well. 

Microsoft 365 E5

Microsoft 365 E5 provides even more security and automation functionalities. On top of the listed E3 features and tools, Microsoft 365 E5 grants users access to an upgraded Azure Active Directory P2, as well as Power BI Pro. E5 also builds upon the existing security features included with Azure and Windows by providing access to Microsoft Defender capabilities, safeguarding enterprise organisations against evolving threats. 

For businesses with more stringent requirements surrounding security and compliance, E5 is easily the most appropriate choice to propel success and mitigate risks.  

Microsoft Enterprise Mobility + Security Licensing

Enterprise Mobility + Security plans are the ideal solution for organisations that have adopted a robust cloud workflow and rely heavily on Microsoft’s identity management system.

These licensing plans are very similar to Microsoft 365 Enterprise in terms of functionality, but introduce some additional Azure Directory features. 

Microsoft Enterprise Mobility + Security E3

Microsoft Enterprise Mobility + Security E3 is the most fundamental security license within this category. It introduces invaluable security tools that can be used across your organisation, including data protection, access management and threat analytics. However, this license does not include the 365 Productivity features that were incorporated into the full Microsoft 365 E3 package. 

One notable tool within this package is Azure Information Protection, which assists organisations in discovering, classifying and protecting sensitive data, as well as locating where data is stored and transferred within their business. 

Microsoft Enterprise Mobility + Security E5

Microsoft Enterprise Mobility + Security E5 includes all of the security features listed in the previous package, with the addition of higher-lever functionalities such as Azure Active Directory and Windows Defender for Identity. 

This license package is a great fit for any business seeking a more robust security solution, without the requirement for any of the Microsoft 365 productivity applications. 

Azure Active Directory Premium P1

Azure Active Directory Premium P1 offers organisations a solution for identity management, as well as remote and institution-wide access security. It introduces Multi-Factor Authentication (MFA) – an incredibly helpful security tool in today’s threat climate  

– and works seamlessly with cloud integrations. Additionally, this license option is fully Azure enabled.

Microsoft 365 Education Licensing

Microsoft 365 A1

Microsoft 365 A1 serves as the starting point for education licenses and is targeted towards small and mid-sized schools. This license option is specifically designed for schools that are buying new Windows devices and do not currently have a Microsoft Volume Licensing agreement. It is licensed by device rather than by user, meaning that any associated device can be used by multiple users.  

Microsoft 365 A1 includes Office 365 A1, which provides free online access to Office 365 applications such as Word, Excel and PowerPoint, along with additional classroom tools.  

Microsoft 365 A3

Microsoft 365 A3 includes all of the free online applications introduced with Microsoft 365 A1, as well as desktop versions in many instances. The complete offering of applications is as follows: 

  • Outlook (online only) 
  • Microsoft Word (online only) 
  • Microsoft Excel (online only) 
  • Microsoft PowerPoint (online only) 
  • Microsoft OneNote 
  • Exchange 


  • OneDrive 
  • SharePoint 
  • Skype for Business 
  • Microsoft Teams 
  • Microsoft Sway 
  • Microsoft Forms 
  • Microsoft Stream 
  • Flow 
  • PowerApps 
  • School Data Sync 
  • Microsoft Publisher 
  • Microsoft Access 
  • Bookings 

With the A3 variation, each license is assigned to a specific student or faculty member, rather than a device, giving them personalised access wherever they log on. 

Microsoft 365 A5

Microsoft 365 A5 offers all of the tools and functionalities included in Microsoft 365 A3, with the addition of some more advanced security management and analytics tools. 


These additional features include Power BI Pro, identity protection, advanced threat protection, compliance, and data loss prevention, helping educational institutions to improve their security posture and mitigate cyber related risks. 

Microsoft Defender

Microsoft Defender Security plans assist organisations in safeguarding themselves by identifying and preventing sophisticated threats. It is designed for this exact purpose, serving as an anti-virus software and threat detection system. 

These license plans are typically favoured by small to medium enterprises looking to improve the security posture of their organisation, especially those focusing on device management. This is because Microsoft Defender includes monitoring of endpoint devices, utilising sensors within Windows 11 to analyse behavioural signals and detect potential threats. 

Microsoft Defender licenses offer flexibility, allowing businesses to incorporate them into a mixed-licensing approach alongside other Microsoft 365 plans like E3 and E5. This means organisations have the freedom to choose whether to include or exclude these additional security functionalities depending on their unique requirements. 

Microsoft Defender for Business

Microsoft Defender for Business provides valuable protection against cyber-attacks and other security threats that could potentially pose risk to your organisation. 

Tailored towards small and medium sized businesses, Microsoft Defender for Business incorporates the following features: 

  • Antispam protection 
  • Antimalware protection 
  • Next-generation protection 
  • Attack surface reduction 
  • Endpoint detection and response 
  • Automated investigation and response 
  • Vulnerability management 
  • Centralised reporting 
  • APIs (for integration with custom apps or reporting solutions) 
  • Integration with Microsoft 365 Lighthouse 

Microsoft Defender for Endpoint Plan 1

Microsoft Defender for Endpoint Plan 1 offers even more protection than Microsoft Defender for Business, with more advanced tools available for organisations to fortify their environment and mitigate risk. 

The additional features, or tools with more advanced functionalities compared to their counterparts above, included are as follows: 

  • Next-generation protection (includes antimalware and antivirus) 
  • Attack surface reduction 
  • Manual response actions 
  • Centralised management 
  • Security reports 
  • APIs 

Microsoft Defender for Endpoint Plan 2

Microsoft Defender for Endpoint Plan 2 advances even further beyond the capabilities of Plan 1, including everything in the prior package as well as the following: 

  • Device discovery 
  • Device inventory 
  • Core defender vulnerability management capabilities 
  • Threat analysis 
  • Automated investigation and response 
  • Advanced hunting 
  • Endpoint detection and response 
  • Endpoint attack notifications 

Microsoft Defender Vulnerability Management

Microsoft Defender Vulnerability Management functions as an add-on service for Microsoft Defender for Endpoint Plan 2. This licensing add-on delivers even more vulnerability assessment tools for businesses to leverage, including the following: 

  • Security baseline assessments 
  • Block vulnerable applications 
  • Browser extensions 
  • Digital certificate assessments 
  • Network share analysis 
  • Hardware and firmware assessments 
  • Authenticated scan for Windows 

Choosing the Right License for Your Business

Several factors should be taken into account when selecting the most suitable Microsoft license for your organisation… 

  • Business Essentials vs Business Premium: Microsoft provides various license types tailored to meet unique business needs. The initial decision organisations will need to make is whether the more basic features of Business Essentials will suffice, or if your business could benefit from the enhances capabilities of Business Premium. 
  • User Count: Consider the number of users within your organisation who will require access to Microsoft products. For a small team, a single-user subscription might be adequate. However, larger teams or multi-departmental businesses may find volume licensing options to be more cost-effective.  
  • Features and Applications: Assess which specific features and applications are indispensable for your business operations. For instance, licenses incorporating Microsoft Teams and SharePoint may be essential for collaboration and communication. 
  • Budget Constraints: Understand your financial limitations and determine which license type aligns with your budget. While some licenses offer comprehensive features, they may come at a higher rice than simpler options. 
  • Growth Plans: Consider your organisation’s growth trajectory and ascertain whether the chosen license can accommodate expansion without frequent upgrades or additional costs. 

Efficiently Managing Multiple Licenses

Once you have selected the appropriate license(s) for your organisation, efficient management becomes crucial in order to maximise the benefits while minimising administrative burdens.  
Here are some strategies for effective license management: 

  • Centralised Administration: Utilise Microsoft’s centralised administration tools such as the Admin Centre or PowerShell commands to streamline management tasks for all licenses in one location. 
  • License Management Tools: Explore third-party license management tools to simplify tracking and managing licenses, ensuring compliance, and optimising usage. 
  • Regular Audits: Conduct periodic audits to ensure license compliance within your organisation. This involves verifying that the number of licenses matches the number purchased and that they are utilised by authorised users only. 
  • User Access Control: Implement proper user access controls to prevent unauthorised individuals from using licensed software, safeguarding investments and ensuring compliance with licensing agreements. 
  • Training and Support: Provide adequate training and support for employees to maximise their utilisation of licensed software, including training sessions, online resources, or access to Microsoft’s support services.

Adjusting License Options According to Business Needs

As your organisation evolves, you may need to upgrade or downgrade your Microsoft license options based on changing requirements. Here’s how to manage these transitions effectively: 

  • Assess Changing Needs: Regularly evaluate your enterprise’s needs and compare them against the features provided by your current license(s). Identify gaps or areas where an upgrade could offer additional value, or a downgrade could reduce costs without sacrificing functionality. 
  • Consultation with Experts: Seek guidance from Microsoft experts or IT professionals specialising in licensing to make informed decisions regarding upgrades or downgrades, analysing your situation and recommending appropriate actions. 
  • Review Licensing Agreements: Carefully review the terms and conditions outlined in licensing agreements before making any changes, ensuring an understanding of potential implications such as additional costs, limitations, or restrictions associated with upgrades or downgrades. 
  • Transition Planning: Develop a detailed transition plan between license types, including timelines, communication strategies, employee training requirements, data migration considerations (if applicable), and necessary adjustments to workflows or processes. 
  • Usage Monitoring & Feedback: Continuously monitor usage and gather feedback from your team during and after the transition to identify challenges or areas requiring additional support, enabling prompt resolution. 

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