By Jason Small, Partner and Head of Technology, Fantastic IT
If your company has 300 people or fewer, Microsoft 365 Business Premium is usually the better choice. It costs $22 per user per month, against $39 for Microsoft 365 E3, and it includes the security and device management most small and mid-sized companies need. E3 makes sense when you have more than 300 users, or when you need specific enterprise tools that Business Premium doesn’t include.
Microsoft changed both plans on July 1, 2026, and many comparisons online still show the old prices and features. Here’s how the two plans compare now.
The short version
Choose Business Premium if:
- You have 300 or fewer users across all your Microsoft 365 Business plans, including people you plan to hire soon.
- You want strong device and email security without paying for enterprise extras.
- Nobody on your team needs Windows Enterprise or advanced enterprise management tools.
Choose Microsoft 365 E3 if:
- You have more than 300 users, or you’ll pass 300 soon.
- Your IT team needs Windows 11 Enterprise or the extra Intune tools Microsoft added to E3 in 2026.
- A client contract or regulator requires a specific control that only the enterprise plans include.
What each plan costs
| Plan | With Teams | Without Teams | Notes |
|---|---|---|---|
| Microsoft 365 Business Premium | $22.00 | $18.79 | $26.40 with monthly billing. $32.00 with Copilot included. |
| Microsoft 365 E3 | $39.00 | $30.45 | Annual commitment only. Teams Enterprise is $8.55 on its own. |
| Office 365 E3 | $26.00 | $17.45 | A different, smaller plan. See below. |
Microsoft U.S. list prices per user per month, annual commitment, checked September 29, 2026.
For a 50-person company, the gap between Business Premium and E3 is $17 per user per month, or $10,200 a year.
Microsoft raised Microsoft 365 E3 from $36 to $39 on July 1, 2026, and left Business Premium at $22. If you’re an existing customer, you keep your current price until your first renewal after July 1, 2026.
What both plans include
Most of what a typical office uses every day is the same in both plans:
- Office apps and email: desktop Word, Excel, PowerPoint, and Outlook, plus a 100 GB mailbox and up to 1.5 TB of email archive per user.
- Identity protection: Microsoft Entra ID P1, which includes multifactor authentication and Conditional Access. Conditional Access lets you set rules such as “only allow sign-ins from company devices.”
- Device management: Microsoft Intune Plan 1, for setting up, securing, and wiping laptops and phones.
- Email and Teams protection: Microsoft Defender for Office 365 Plan 1, which checks links and attachments before people open them.
- Data protection: Microsoft Purview Information Protection Plan 1 for sensitivity labels, and data loss prevention for email and files.
- Legal holds and records requests: eDiscovery (Standard) and Litigation Hold, which let you preserve, search, and export email and files for a legal matter, plus standard audit logs.
Until mid-2026, a bigger mailbox was a common reason to pay for E3. Microsoft has since raised the Business Premium mailbox to 100 GB, so that reason is gone. Litigation hold, which law firms often need, is in both plans too.
Where they differ
| Business Premium | Microsoft 365 E3 | |
|---|---|---|
| Maximum users | 300, counted across all Business plans in your account | No limit |
| Price | $22 | $39 with Teams |
| Windows | Windows 11 Pro upgrade | Windows 11 Enterprise E3 |
| Device security | Microsoft Defender for Business | Microsoft Defender for Endpoint Plan 1 |
| Extra Intune tools | Not included | Remote Help, Endpoint Privilege Management, Advanced Analytics, Cloud PKI, and Enterprise App Management (added in 2026) |
Device security: the cheaper plan has more
This surprises people. Business Premium includes Microsoft Defender for Business, which Microsoft built for companies of up to 300 users. It includes endpoint detection and response, which watches for suspicious behavior on each computer, and automated investigation that can contain a threat without waiting for someone to act.
E3 includes Defender for Endpoint Plan 1. It blocks malware and reduces the ways an attacker can get in, but detection and response and automated investigation start at Plan 2, which comes with E5 or as an add-on.
For a company under 300 people, Business Premium usually gives you better protection on your computers for less money.
The 300-user limit
The limit covers every Business plan in your Microsoft 365 account together. If 250 people have Business Premium, you can add only 50 more licenses across Business Basic, Standard, and Premium combined. If you’re at 250 and hiring, plan the move to an enterprise plan before you hit the cap, ideally at a renewal.
Office 365 E3 is not Microsoft 365 E3
The two E3 names are easy to confuse, and the mix-up leads to real buying mistakes.
Office 365 E3 ($26) includes the Office apps, email, file storage, Teams, and compliance tools. It does not include Intune, Entra ID P1, Windows, or Defender for Endpoint. Microsoft 365 E3 ($39) includes everything in Office 365 E3 plus those four.
That means Office 365 E3 costs more than Business Premium and includes less security. We’ve seen this come up when a software vendor says their product “needs E3.” Often the software only needs the desktop Office apps, which Business Premium already includes. Before you buy a bigger plan for one application, ask the vendor exactly which feature it depends on.
Can you mix Business Premium and E3?
Yes. Microsoft allows Business and Enterprise plans in the same account. Some companies keep most staff on Business Premium and put a few people who need enterprise features on E3.
There’s one catch with security. Microsoft’s endpoint protection doesn’t mix: if your account has Defender for Business, every user gets the Defender for Business experience, even people on a plan that includes a Defender for Endpoint license. Mixed licensing works, but plan it with whoever manages your Microsoft 365 account so your security settings stay consistent.
What about E5?
Microsoft 365 E5 costs $60 per user per month. It adds the higher security tiers (Defender for Endpoint Plan 2, Defender for Office 365 Plan 2, and Entra ID P2), premium compliance tools, Teams Phone, and Power BI Pro.
For most companies under 300 people, adding a security add-on to Business Premium costs less than moving everyone to E5. Microsoft sells add-on bundles made for Business Premium, including the Defender Suite and the Purview Suite for Business Premium. Look at the specific gap first, then price the add-on.
Five questions to settle before your renewal
- How many users will you have in a year? Count everyone across all Business plans, including planned hires.
- What do your software vendors actually require? Get it in writing, down to the specific feature.
- What does your cyber insurance application ask about? Insurers commonly ask about multifactor authentication and endpoint detection and response. Business Premium includes both.
- When is your renewal? Your current price holds until your first renewal after July 1, 2026, so that’s the natural time to switch.
- What add-ons are you already paying for? If you’re on E3, it now includes Defender for Office 365 Plan 1 and several Intune tools you may be buying separately.
How Fantastic IT helps
Most of the companies we support are under 300 people, and most of them run Business Premium. When we review a client’s licenses, the most common thing we find is people on a bigger plan than they need, or paying for add-ons the plan already includes. We check licenses at every renewal and set up Intune, Conditional Access, and Defender so the security you’re paying for is actually turned on.
If you’d like a second opinion on your Microsoft 365 plan, talk to our team about cloud and Microsoft 365 support.
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