Microsoft 365 E3 vs E5

What E3 already gives you

Microsoft 365 E3 is the complete modern-workplace bundle for most organisations: Microsoft 365 Apps for Enterprise, Exchange Online Plan 2 with a 100 GB mailbox and a 1.5 TB archive, Teams with webinars, SharePoint Plan 2 and OneDrive Plan 2, Windows Enterprise with 36 months of support per release, Intune Plan 1 and Plan 2, Entra ID P1 with Conditional Access, Windows Autopilot, Defender for Endpoint Plan 1, Defender for Office 365 Plan 1, data loss prevention, sensitivity labels, retention policies and standard eDiscovery.

If a feature you need is in that list, you don't need E5 for it.

What E5 adds, in four bundles

Advanced security. Defender for Endpoint Plan 2 (endpoint detection and response, automated investigation, threat hunting), Defender for Office 365 Plan 2 (attack simulation training, automated investigation for email, threat explorer), Defender for Identity (on-premises Active Directory threat detection), Defender for Cloud Apps (SaaS app discovery and control), Entra ID P2 (Identity Protection with risk-based Conditional Access, Privileged Identity Management, access reviews) and Security Copilot capacity.

Advanced compliance. The premium Purview tools: eDiscovery (premium) with review sets and analytics, insider risk management, records management, advanced audit, communication compliance and Copilot data loss prevention.

Voice. Teams Phone and audio conferencing with dial-in numbers. External calling still needs a calling plan or operator connection.

Analytics. Power BI Pro, which is otherwise a separate per-user subscription.

E5 also includes the Intune Suite (Cloud PKI, Endpoint Privilege Management and Enterprise App Management), which is an add-on on E3. Everything else, from the apps to the mailbox to Windows, is the same in both plans.

The price difference

At UK list prices the gap is £18.10 per user a month, or £217.20 a year. For 100 users that is £21,720 a year; for 500 users, £108,600; for 2,000 users, £434,400. Enterprise agreements discount both plans, but the ratio holds.

The test is simple: list which of the four bundles your organisation would actually use, and for how many people. If it is all four for most people, E5 is good value because the components bought separately cost more. If it is one bundle, price the add-on. If it is one bundle for a few people, license those people on E5 and leave everyone else on E3.

E3 plus add-on suites

Microsoft packages the E5 security products as the Defender Suite and the E5 compliance products as the Purview Suite, each sold as an add-on to E3 (and in Business Premium and Frontline editions). An organisation that needs the security bundle but has no interest in Teams Phone or Power BI will usually find E3 plus the Defender Suite cheaper than E5, and the Purview Suite covers the compliance case the same way. The comparison tool shows E3, the Defender Suite and E5 side by side, so you can see exactly which rows each adds.

Mixing E3 and E5

The most common enterprise pattern is a core of E5 users and a majority on E3. The E5 core is typically IT administrators and anyone with privileged access (for Privileged Identity Management and Identity Protection), finance, legal and executives (for the compliance tools and impersonation protection), and the teams that use Teams Phone or Power BI day to day. Some Defender products protect the whole tenant once a threshold of E5 users is reached, which is worth checking before you license everyone.

What doesn't work well is buying E5 for everyone because the renewal quote was simpler that way, and then discovering two years later that Teams Phone was never deployed and Power BI has forty users. That is the pattern a licensing assessment exists to catch.

See it for yourself

Open E3 and E5 side by side in the comparison tool. With "Only differences" ticked the list is short enough to read in a minute, and each row links to Microsoft's own documentation.