Licensing guide

Business Premium vs E3 vs E5, explained without the fog.

Microsoft licensing is genuinely confusing — and confusion is expensive. Here's the honest map for 15–250 user organizations.

The short version

Which license fits which business.

Prices shift; the structure doesn't. Here's how the main plans compare on what actually matters.

CapabilityBusiness PremiumE3
Office desktop apps✓Included✓Included
Intune device management✓Included✓Included
Entra ID P1 (Conditional Access)✓Included✓Included
Defender for Business / Endpoint✓Included✗Add-on required
Defender for Office 365 P1✓Included✗Add-on required
User cap300 usersUnlimited
Advanced compliance (Purview)Core features✓Extended
Typical fitMost 15–250 user orgs300+ users or specific compliance needs

The counterintuitive truth: Business Premium includes security features that E3 doesn't. Organizations "upgrade" to E3 and unknowingly lose Defender for Business. If your MSP moved you to E3 without discussing endpoint protection, that's worth a conversation.

Plan by plan

The honest one-paragraph review of each.

Business Basic

Web apps only

Email, Teams, and web Office. No desktop apps, no security stack. Fine for seasonal or kiosk accounts inside a larger tenant; not a foundation for a business.

Business Standard

No security layer

Adds desktop Office. Still no Intune, no Conditional Access, no Defender. If you have compliance requirements or more than a handful of employees, the missing security layer costs more than the license savings.

Business Premium

Our default recommendation

Everything Standard has, plus the full SMB security stack: Intune, Entra ID P1, Defender for Business, Defender for Office 365. The best value in Microsoft's lineup for organizations under 300 users, and the license our Standard baseline is built on.

E3 / E5

Enterprise tier

E3 removes the user cap and extends compliance tooling — but drops Defender unless you add it back. E5 adds the full security suite, Entra ID P2, and Teams Phone at a price that only makes sense when you'll use those specific components. We model it honestly, per organization.

Licensing questions

What people actually ask.

License optimization is included in every managed services plan — most new clients find 10–25% waste in their first review.

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Business Premium (max 300 users) includes Office apps, Intune, Entra ID P1, and Defender for Business — the best value for most SMBs. E3 removes the 300-user cap and adds enterprise compliance features, but notably does NOT include Defender for Endpoint (that's an add-on or E5). Many organizations paying for E3 would be better served — and better protected — by Business Premium.
Usually not at 15–250 users. E5 makes sense when you need its specific components: Defender for Endpoint P2, Entra ID P2 (risk-based Conditional Access, PIM), Purview advanced compliance, or Teams Phone. Often the smarter play is Business Premium or E3 plus targeted add-ons — we model both paths with real numbers.
The entire security and management layer: no Intune, no Entra ID P1 (so no Conditional Access), no Defender for Business. Business Standard is fine for a five-person shop with no compliance requirements. For anyone we'd work with, Premium's roughly $10/user/month delta is the cheapest security investment available.
Yes, and you usually should. Front-line staff who only need email and Teams don't need the same license as knowledge workers. A typical optimized tenant mixes Business Premium for most users with F3 or Exchange-only plans for limited-use accounts. This is standard practice in our license reviews.
We bill licenses at cost. Our revenue is the management fee — which means our license recommendations are driven by what you need, not by margin. When we cut a client's license spend 20% in a review, nothing bad happens to our economics.
Microsoft offers significant nonprofit discounts — including a number of free Business Premium seats for eligible organizations. If you're a 501(c)(3) paying full commercial rates, that's the first thing we'd fix.

Related

Paying for licenses you don't use?

Send us your current license mix. We'll show you what you're overpaying for, what you're missing, and what the right-sized configuration looks like.

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