Microsoft 365 licensing explained: which licence does your team actually need?

Microsoft 365 licensing trips up almost every business at some point. Pick the wrong licence and you either pay for features nobody uses, or leave gaps in your security. The right approach is to match each person to what they actually do — here’s how the main options compare.

The main licences, simply put

• Exchange Online — business-class email and calendars, nothing more. Ideal for a shared or rarely-used mailbox.
• Business Basic — email plus the web and mobile versions of Office, Teams and 1 TB of OneDrive. Great for lighter or frontline users.
• Business Premium — everything in Basic, plus the full desktop Office apps and, crucially, advanced security and device management (Intune, Defender). This is the right default for most office staff.
• Premium + Copilot — Business Premium with Microsoft 365 Copilot built in, for teams ready to use AI day to day.
• Copilot for Business — adds Copilot AI on top of an existing qualifying licence.

It’s priced per user, not per device

Unlike device-based IT support, Microsoft licensing follows the person. Someone with a laptop, a desktop and a phone still needs one licence — but every additional person with a mailbox needs their own. That’s an important distinction when you’re budgeting.

Monthly or annual?

Microsoft offers a discount for an annual commitment versus paying month-to-month. Annual is cheaper if your headcount is stable; monthly gives you flexibility if you’re scaling quickly or seasonal. We’ll model both so you can see the difference before you commit.

Let someone else handle the admin

Licences change as people join, leave and change roles. We manage the whole lifecycle — assigning, reclaiming and right-sizing licences — so you only ever pay for what your team genuinely needs.