Microsoft 365 pricing has grown increasingly complex. Between Business plans, Enterprise tiers, Copilot add-ons, and Teams licensing confusion, figuring out what you'll actually pay requires a spreadsheet—which is ironic for productivity software.
This guide breaks down M365 pricing for 2026, including the hidden costs Microsoft doesn't advertise prominently.
Microsoft 365 Business Plans (Up to 300 Users)
Business plans are designed for small and medium organizations under 300 users.
Microsoft 365 Business Basic
Price: $6.00/user/month (annual commitment)
What you get:
- Web and mobile versions of Office apps (Word, Excel, PowerPoint)
- Business email with 50GB mailbox
- Microsoft Teams
- 1TB OneDrive storage per user
- SharePoint
- Microsoft Bookings
What you don't get:
- Desktop Office applications
- Advanced security features
- Webinar hosting (Teams)
- Data loss prevention
Reality check: Business Basic works for organizations that only need web-based Office. Most users expect desktop apps—which means upgrading.
Microsoft 365 Business Standard
Price: $12.50/user/month (annual commitment)
What you get (beyond Basic):
- Desktop Office apps (Word, Excel, PowerPoint, Outlook)
- Publisher and Access (PC only)
- Webinar hosting in Teams
- Standard security
What you don't get:
- Advanced security and compliance
- Intune device management
- Advanced threat protection
- eDiscovery
Reality check: Business Standard is Microsoft's sweet spot for SMBs. Desktop apps justify the cost for most knowledge workers. But security features are basic.
Microsoft 365 Business Premium
Price: $22.00/user/month (annual commitment)
What you get (beyond Standard):
- Intune for device management
- Azure AD Premium P1
- Advanced threat protection
- Data loss prevention
- Information protection
- Conditional access
- Windows Autopilot
Reality check: Business Premium nearly doubles the cost of Standard for security features. Necessary for regulated industries or security-conscious organizations. Overkill for many SMBs.
Microsoft 365 Apps for Business
Price: $8.25/user/month (annual commitment)
What you get:
- Desktop Office apps only
- 1TB OneDrive storage
- No email, Teams, or SharePoint
Reality check: This plan exists for organizations using other email/collaboration tools who just want Office apps. Rare use case.
Business Plan Comparison
| Plan | Price | Desktop Apps | Teams | Security | |
|---|---|---|---|---|---|
| Basic | $6/user | No | Yes | Yes | Basic |
| Apps | $8.25/user | Yes | No | No | Basic |
| Standard | $12.50/user | Yes | Yes | Yes | Basic |
| Premium | $22/user | Yes | Yes | Yes | Advanced |
Microsoft 365 Enterprise Plans (300+ Users)
Enterprise plans remove the 300-user limit and add enterprise-grade features.
Microsoft 365 E3
Price: $36.00/user/month (annual commitment)
What you get:
- Everything in Business Premium
- Unlimited users
- eDiscovery (Standard)
- Information governance
- Core Microsoft Defender features
- Windows 11 Enterprise
Reality check: E3 is the enterprise baseline. The jump from Business Premium ($22) to E3 ($36) is 64%—significant without adding dramatic new capability for many organizations.
Microsoft 365 E5
Price: $57.00/user/month (annual commitment)
What you get (beyond E3):
- Microsoft Defender for Endpoint Plan 2
- Microsoft Defender for Office 365 Plan 2
- Microsoft Defender for Identity
- Microsoft Defender for Cloud Apps
- Azure AD Premium P2
- Advanced eDiscovery
- Advanced audit
- Power BI Pro
- Phone System (Teams PSTN)
Reality check: E5 is Microsoft's security-and-compliance flagship. The $21/user jump from E3 buys significant security tooling—but many features require dedicated security staff to operate effectively.
Office 365 E1/E3/E5 (Still Available)
Microsoft still sells Office 365 plans (without Windows licensing):
| Plan | Price | Desktop Apps | Security Level |
|---|---|---|---|
| Office 365 E1 | $10/user | No | Basic |
| Office 365 E3 | $23/user | Yes | Standard |
| Office 365 E5 | $38/user | Yes | Advanced |
These are cheaper than M365 equivalents but don't include Windows Enterprise licensing.
The Copilot Question (2026 Reality)
Microsoft's AI assistant, Copilot, adds substantial cost:
Microsoft 365 Copilot: $30/user/month
Requirements: Copilot requires Microsoft 365 E3/E5 or Business Standard/Premium as a base.
Total cost with Copilot:
- Business Standard + Copilot: $42.50/user/month
- Business Premium + Copilot: $52/user/month
- E3 + Copilot: $66/user/month
- E5 + Copilot: $87/user/month
Reality check: Copilot pricing makes Microsoft 365 expensive fast. A 50-person team on E3 + Copilot pays $39,600/year. That's significant productivity software spend.
The Copilot dilemma: Microsoft heavily promotes Copilot, but the $30/user premium prices out many organizations. Alternatives offer AI at lower cost or included in base pricing.
Hidden Costs of Microsoft 365
The sticker price isn't the full story.
Hidden Cost #1: Annual Commitment Trap
All prices shown require annual billing. Monthly billing adds 20%:
| Plan | Annual | Monthly | Premium |
|---|---|---|---|
| Business Standard | $12.50 | $15.00 | +20% |
| Business Premium | $22.00 | $26.40 | +20% |
| E3 | $36.00 | $43.20 | +20% |
Annual billing means 12-month lock-in. No refunds if you outgrow or want to switch.
Hidden Cost #2: Storage Add-Ons
Default storage limits:
- OneDrive: 1TB per user
- SharePoint: 1TB + 10GB per user
- Exchange: 50GB (Business), 100GB (Enterprise)
Exceeding limits requires purchasing additional storage—billed separately.
Hidden Cost #3: Teams Phone System
Want to make/receive actual phone calls through Teams? You need:
- Phone System (included in E5, add-on for others): ~$8/user/month
- Calling Plan: $12-24/user/month depending on domestic/international
- Or Direct Routing with your own PSTN carrier (complex setup)
Teams as a phone system adds $20-30/user/month beyond base M365 cost.
Hidden Cost #4: Advanced Security (If Not E5)
Many security features Microsoft advertises require E5 or add-ons:
| Feature | Included In | Add-On Cost |
|---|---|---|
| Defender for Endpoint P2 | E5 only | ~$5-7/user |
| Defender for Office 365 P2 | E5 only | ~$5/user |
| Azure AD P2 | E5 only | ~$9/user |
| Advanced eDiscovery | E5 only | ~$5/user |
Organizations on E3 who need these features either upgrade to E5 or buy à la carte—often ending up paying E5 prices without the bundle.
Hidden Cost #5: Training and Adoption
Microsoft 365 is complex. Real costs include:
- Admin training for IT staff
- End-user training for features
- Ongoing support for questions
- Time lost to SharePoint confusion
Organizations underestimate the human cost of Microsoft's complexity.
Hidden Cost #6: Third-Party Add-Ons
Microsoft 365 gaps require additional tools:
- Project management (Asana, Monday, etc.)
- CRM (Salesforce, HubSpot)
- Advanced forms/automation
- Document management beyond SharePoint
- OKRs and goal tracking
The "all-in-one" Microsoft suite often still requires other subscriptions.
Microsoft 365 Pricing at Scale
Let's calculate real costs for different organization sizes:
25-Person Team
| Scenario | Monthly | Annual |
|---|---|---|
| Business Standard | $312.50 | $3,750 |
| Business Premium | $550 | $6,600 |
| Standard + Copilot | $1,062.50 | $12,750 |
100-Person Organization
| Scenario | Monthly | Annual |
|---|---|---|
| Business Premium | $2,200 | $26,400 |
| E3 | $3,600 | $43,200 |
| E5 | $5,700 | $68,400 |
| E3 + Copilot | $6,600 | $79,200 |
500-Person Enterprise
| Scenario | Monthly | Annual |
|---|---|---|
| E3 | $18,000 | $216,000 |
| E5 | $28,500 | $342,000 |
| E3 + Copilot | $33,000 | $396,000 |
| E5 + Copilot | $43,500 | $522,000 |
Is Microsoft 365 Worth It in 2026?
Microsoft 365 Works Well For:
- Windows-centric organizations: Deep OS integration
- Enterprise compliance needs: eDiscovery, retention, legal hold
- Teams-heavy collaboration: Video, chat, channels already entrenched
- Existing Microsoft investment: Switching costs are real
Microsoft 365 Struggles For:
- Cost-conscious organizations: Per-seat pricing adds up
- Teams wanting simplicity: SharePoint complexity is legendary
- AI-forward teams: Copilot pricing is steep
- Organizations reducing tool sprawl: Still need CRM, project management, etc.
The Alternative Calculation
Microsoft 365 E3 for 50 users: $21,600/year
That buys:
- Email and calendar
- Office apps (Word, Excel, PowerPoint)
- Teams collaboration
- SharePoint document management
- Basic security
Still need separately:
- Project management
- CRM
- OKRs/goals
- Advanced forms/automation
- Potentially better AI
Organizations spending $21,600+ on M365 often spend another $10,000-30,000 on complementary tools.
Making the Decision
Stay with Microsoft 365 if:
- Your workflows are deeply built around Microsoft
- Compliance requirements mandate Microsoft tools
- Migration cost exceeds potential savings
- Your team knows and prefers the Microsoft experience
Evaluate alternatives if:
- Per-seat costs are becoming significant
- You're managing multiple tools alongside M365
- SharePoint complexity is causing problems
- Copilot pricing is prohibitive
- You want unified productivity without the integration tax
Considering alternatives? See our Microsoft 365 hidden costs breakdown or explore the best Microsoft 365 alternatives for small business.
Related reading: Compare Google Workspace vs Microsoft 365, understand hidden costs in your bill, or learn how to consolidate your tech stack.
About the Author
Stuart Leo
Stuart Leo founded Waymaker to solve a problem he kept seeing: businesses losing critical knowledge as they grow. He wrote Resolute to help leaders navigate change, lead with purpose, and build indestructible organizations. When he's not building software, he's enjoying the sand, surf, and open spaces of Australia.