Microsoft 365 License Types Explained – Which One’s Right for Your Business?

Written by

Abiya Anjum

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“I just do not know really what we are buying anymore.” 

That is what one of the business owners told us during the phone in the previous month. Fourteen employees. 21 Microsoft 365 licences. When we followed up with the question which license does what, no one was forthcoming in answering the question. 

They are not the only ones. The licensing structure that Microsoft provides can be a maze; even a five-person team can seem like a seventy-five-person practice.This is not a small IT inconvenience. It is an expense on your finances, on your staff productivity as well as your sleep. So, let us mend it.

Why Most Companies Have Wrong Licenses 

We get the same three issues again and again when we audit Microsoft 365 installations of small and mid-sized businesses: 

1. Organisations continue to pay subscriptions to the tools that they are not utilising. 

2. Part of the licenses belonging to employees who left months earlier are allocated. 

3. Teams would be deprived of the much-needed security tools that they have already paid. 

It is not the neglect. It’s complexity. The Microsoft ecology is not designed to support busy operations teams it was designed to support IT professionals who have plenty of time on their hands (which, as we all know, most of us do not). So, it is time to decode the most popular ones, and it is time to learn how to prevent those mistakes, which cost in the long term. 

 

The 3 Business Plans That You Really Want to Know 

Microsoft 365 Business Basic 

Best suited: Contractors, part time employees or employees that only require email and cloud access 

Approximated Price: 6-dollar per user/month 

What’s included: 

  • Online versions of word, excel and power point 
  • Teams and OneDrive 
  • Professional mail (Exchange) 
  • Each user will have 1TB of storage. 
  • Exclusions include: none of the desktop Office programs, lack of sophisticated security. It is minimalistic but ideal in the case of lightly used. 

 

Microsoft 365 Business Standard 

Target audience: Majority of ordinary office users  

Approximate price: Twelve and fifty per participant per month  

What it covers:  

  • Includes everything in Business Basic  
  • Word, Excel and Outlook among others in desktop  
  • Improved email and calendar options  
  • A powerful strategy toward most full time work, but yet not in terms of security measures in real time or control over the devices.  

 

Microsoft 365 Business Premium  

Target audience: The team that appreciates security, compliance, and can work remotely  

Price: Approximately twenty-two dollars per user, per month  

It includes:  

  • All things in Standard  
  • Microsoft Defender of Business (Real-time protection of threats)  
  • Migration to Intune mobile and device management  
  • User account conditional access policy   

What Should You Choose E3, And E5?  

Full-blown such as E3 and E5 are quite formidable, though in many respects they are overpowering to businesses with less than three hundred users. They are such features as legal data holds, superior data loss prevention as well as extended reporting.  

The official comparison on Microsoft may be found here: https://www.microsoft.com/en-us/microsoft-365/compare-microsoft-365-enterprise-plans 

 
Microsoft 365 Licensing Tips and Tricks  

To know whether your business needs an audit of the licensing records, you may want to consider whether any of the following applies:  

  • Other licenses that are still active by employees who were employed last year  
  • Buying security tools that you have not set up  
  • I do not know what plan each individual is using.  
  • Manual user management done incessantly  
  • There is no record of backup policies or policies on keeping records  

Such errors do not only eat up your budget but put you at a higher risk of security. 

 

What AIVIGIL Does Differently 

We assist businesses with more than helpdesk tickets at AIVIGIL. We assist the teams to tidy, re-orient, and lock down their Microsoft 365 experiences.  

This is how we can assist:  

  • Complete license audit usage  
  • Reinstatement and demotion when necessary  
  • Dynamically intelligent job based licensing mapping  
  • Compensate the gaps such as phishing filters and backups  
  • Get rid of unused or dormant accounts  

We have assisted law firms, clinics, suppliers of logistics services, and others both in the US and abroad, to gain perspective and dominance over their Microsoft 365 environment.  

 For this month, get:   

  • Get 20 percent off the first three months  
  • No cost Microsoft 365 migration and license tidy-up  
  • Life assistance in correcting the problems and remaining safe in the long-run  

  

Most of the small businesses do not require additional apps. They have to be better-informed. Do not spend your money every month in confusion and inertia. With the right license configuration, you can unlock budget, enhance security and even make the entire operation easier. Let AIVIGIL assist you to manage Microsoft 365  the clever approach.

 

1. How does Microsoft 365 Business Basic differ with Microsoft 365 Business Standard and Premium?

Microsoft Business Basic has web-only office programs and cloud solutions only. Standard includes complete desktop applications. Premium contains all the features of Standard and has additional security capabilities such as Microsoft Defender and Intune to manage devices. 

2. What should I do to find out whether I am paying too much on Microsoft 365 licenses?

You could be spending more on what you do not use or licenses that are not used anymore, assigning licenses to current or former workers or under purchasing many functions you do not use at all. The most effective solution to finding saving opportunities is to run Microsoft 365 audit. 

3. Are Microsoft 365 Enterprise plans such as E3 or E5 up to small businesses in use?

AmYes, but Enterprise packages mostly fit businesses that have more than 300 users or businesses subject to heavy regulation such as healthcare or financial services. SMBs and most of them use Business Premium, which provides more than sufficient functionality and security. 

4. Is MS 365 Business Premium a good fit to a small team?

Certainly, particularly in case your team requires strong security, remote access tool and mobile device control. It works perfectly well with companies dealing with sensitive information or those companies that operate over a number of machines and places. 

5. What occurs when I select a wrong Microsoft 365 license to an employee?

They can lack the features that are required, or even you can spend more than required. Role-based license mapping is also the key towards making sure that only what a user needs is provided to him/her, and nothing more, nothing less. 

6. What is the best way to ease licensing management through Microsoft 365 in my company?

Introduce license matrix, automation of onboarding/offboarding and regular quarterly audits. This can be facilitated by software such as Microsoft Admin Center or by collaborating with a partner such as AIVIGIL to facilitate this process and be cost effective. 

 

Abiya Anjum

Published at July 11, 2025

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