A switch to Office 365 offers many perks, but it takes substantial effort to find the right balance of cost and features for your organization.

As more companies move to Microsoft 365 services, such as Exchange Online, SharePoint Online and Microsoft Teams, it's important to get a handle on licensing. Nearly all services within Microsoft 365 require a license. Licensing within many Microsoft services and applications is often hard to understand and, sometimes, costs more than it should. Though documentation exists for licenses, it takes work to know what you have access to with the current licenses and what services you might want to add.

Over the past few years, Microsoft 365 licensing has evolved with specific plans for government, education, frontline workers, small businesses and enterprises. The licenses include various features and services depending on the level purchased. Most organizations buy the Office 365 E3 licenses as a starting point for all employees with some opting for Office 365 E5 licenses to add extra capabilities. Microsoft modified the licensing even more to include Office 365 and Microsoft 365 licensing, the latter of which includes the Office 365 equivalent licenses and Windows 10/11 licensing.

Typical features within Office 365 Business and Enterprise licenses
Microsoft 365 Business and Enterprise licenses are similar but do not contain the same features. The business licenses target small businesses, whereas the enterprise licenses are for larger organizations. Most organizations choose these licenses because they include vital components, such as Exchange Online, SharePoint Online, OneDrive for Business and basic security capabilities. However, any organization can purchase any license type as needed.

Microsoft 365 Business licensing comes in four tiers: Microsoft 365 Business Basic, Microsoft 365 Apps for business, Microsoft 365 Business Standard and Microsoft 365 Business Premium. As can be expected, the more expensive the license, the more services and features are included. The maximum number of users supported on these licenses is 300.