by Scott Jack
Content Contributor, E-N Computers
More than a decade of experience in technical support including end user support, mobile device management, application deployment, and documentation.
Are you lost in the maze of Microsoft 365 licensing options? You’re not alone. Navigating licensing can be overwhelming for small and medium-sized businesses. You need to figure out which plan best meets your needs without breaking the bank. There’s no need to overspend, but you don’t want to miss out on critical features that protect against phishing, ransomware, and other malware.
As an MSP that has been supporting small and medium-sized organizations since 1997, we’ve honed in on the productivity and administration features that matter most to small businesses. Our clients do work across government, education, healthcare, manufacturing, and law, and we know what it takes to meet their security and compliance needs.
Here are our current recommendations for the best Microsoft 365 licensing options. All of the pricing listed below is current as of March 2025 and is for annual billing.
QUICK ANSWER:
What is the best Microsoft 365 licensing for small and medium businesses?
We recommend Business Premium with the E5 Security add-on for most small and medium businesses, especially those that are more security conscious like healthcare clinics, law firms, and financial services firms. If you need all the enterprise features Microsoft offers, including advanced security and compliance tools, then Microsoft 365 E5 is the way to go. To get your money’s worth, make sure to work with a company like E-N Computers that will properly configure and administer your Microsoft 365.
How E-N Computers does licensing
At E-N Computers, we don’t just sell or procure licenses for you — we actively manage them. Every year, we make a point to review your licenses, make sure you have what you need, and confirm you’re not paying more than you should. Unlike other IT providers, we take a holistic approach to licensing:
- License management is included in your monthly IT plan
- Your annual license review includes a meeting with your IT liaison and our account manager. We review your current usage plus anticipated changes in the business and staffing and make cost-conscious recommendations.
- We look for opportunities to streamline licensing and avoid paying twice for redundant features. For example, the recommendations in this article eliminate the need for third-party security and device management solutions.
- We configure and administer Microsoft 365 to make the best use of your licenses’ features. Out of the box, many of these features are configured poorly or not at all. We make sure you get your money’s worth.
The sweet spot: Microsoft 365 Business Premium
Price: $22/user/month, or $3/user/month for nonprofits
For most small and medium businesses, Microsoft 365 Business Premium provides the optimal balance of productivity tools, security features, and management capabilities. It’s the most full-featured license without going full-tilt into enterprise licensing.
This plan includes:
- Desktop and mobile Office apps (Word, Excel, PowerPoint, Outlook)
- Custom email addresses (e.g., you@yourbusiness.com)
- Collaboration tools like SharePoint and Teams
- Defender for Office 365 Plan 1 (email and collaboration security)
- Defender for Endpoint Plan 1 (device security)
- Intune device management
- Entra ID (identity and access control)
Defender P1 — the basic version of Defender for Office 365 and Defender for Endpoint that is included with Business Premium — detects threats but requires manual intervention to resolve them. For example, if Defender P1 detects a suspicious file on a user’s computer, it will flag it. However, it won’t automatically remove or quarantine the file. An IT administrator would need to manually investigate the alert, determine if the file is malicious, and then take action to delete or isolate it. Similarly, if a user’s account is flagged for unusual login activity, an administrator would need to manually reset the password and investigate the incident.
To get around-the-clock automatic investigation and response, you need the E5 Security add-on.
For enhanced security: E5 Security add-on
Price: $10/user/month, or $5/user/month for nonprofits
For businesses with heightened security concerns, we recommend taking advantage of the E5 Security add-on. We consider this add-on essential for financial services firms, small healthcare providers, legal firms, tech companies, and anyone with significant hybrid or remote workers.
The E5 Security add-on gives you Entra ID Plan 2, Defender for Identity, Defender for Endpoint Plan 2, Defender for Office 365 Plan 2, and Defender for Cloud Apps. Benefits include:
- Enhanced identity and access controls that block identity attacks in real time and enable automated workflows for a better onboarding experience.
- Extended detection and response with automated investigation and incident response, enhanced device security, enhanced security for email and collaboration tools, cyberattack simulation training, and detailed reporting.
- Cloud app security that makes it possible to identify and manage shadow IT — unauthorized apps and services that employees use but which create security risks (such as personal Dropbox, Google Drive, and OneDrive). It protects against sophisticated attacks, identifies misconfigurations, and provides suggested remediation actions.
For compliance-driven organizations: Microsoft 365 E5
Price: $60/user/month, or $23/user/month for nonprofits
Microsoft 365 E5 is the gotta-have-it-all option. Smaller companies with complex IT needs, including high security and compliance requirements, will appreciate the advanced identity access and security features, as well as all the available automations. You’ll want Microsoft 365 E5 if you:
- Are in a highly regulated industry requiring advanced security measures and comprehensive compliance tools
- Face significant cyber threats or handle sensitive data
- Need sophisticated analytics and advanced voice services
- Need email storage beyond 50GB per user
- Need advanced data loss prevention
- Have more than 300 users
E5 licensing helps organizations meet various compliance standards including FedRAMP, HIPAA, and PCI-DSS. If you need GCC High, we would recommend an E5 plan.
Here are a few of the things that you get with a full E5 license that you do not get with Business Premium plus E5 Security:
- Advanced compliance tools: Advanced auditing, eDiscovery, insider risk, and governance features.
- Voice capabilities: Integrated Teams Phone system, audio conferencing, and PSTN calling options.
- Advanced analytics: Power BI Pro and related business intelligence tools.
- More integrated security features: Some identity and endpoint protection features that are more tightly integrated in the full E5 offering.
Quick comparison chart
| Business Premium | Business Premium with E5 Security add-on | E5 | |
|---|---|---|---|
| Security | Threat detection only; manual investigation and response required | 24/7 automatic investigation and response | 24/7 automatic investigation and response |
| Compliance | Basic auditing and compliance tools | Basic auditing and compliance tools | Advanced auditing, eDiscovery, and risk & governance tools for highly regulated industries |
| Device management | Yes | Yes | Yes |
| Number of users | Up to 300 | Up to 300 | Unlimited |
| Best for | Cost-conscious small and medium businesses | Most businesses, especially more security conscious ones like small clincs, law firms, and financial services companies | Companies that need to meet strict compliance standards, or that have more than 300 users. |
| Budget | $22/user/month $3/user/month for nonprofits | $32/user/month $8/user/month for nonprofits | $60/user/month $23/user/month for nonprofits |
Next steps: Develop your IT strategy with Microsoft 365
- READ: Can Microsoft Defender replace your EDR solution?
- READ: What is business-IT strategy alignment?
- READ: How can we keep our IT roadmap current?
Microsoft 365 licensing can be complex and overwhelming. E-N Computers simplifies the process, giving you expert guidance to select the right plan, set up your tenant, and maximize your Microsoft 365 investment. In addition, we provide full service IT support, including help desk, onsite support, patching, and strategic planning.
When you have the right people working together, you can implement systems and processes that actively help you reach your business goals. We sometimes call this IT maturity. But for many organizations, something is off when it comes to their partnerships, strategy, systems, and settings. How can you know what’s working well and where you have room for improvement? Start by taking our free IT Maturity Self-Assessment. You’ll walk away with some pointers and, if you want, a free appointment to discuss your results.
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