Microsoft 365 is the market leader in cloud productivity suites for business, providing businesses with Microsoft Office applications, cloud storage, email, instant messaging, video conferencing, and more, all in one monthly subscription.
Office 365 is available in three plans: E1, E3, and E5. E1 is the most basic plan, offering essential business services like email, file sharing, and storage. E3 provides the full suite of enterprise functionality with Office applications (Word, Excel, PowerPoint, etc.) and additional security functionality. E5 is the most advanced package, with all the features of E3, alongside advanced email security functionality, analytics, and phone systems.
Commonly asked questions are: which plan offers the best value for money? Is it better value to use E3 and implement third-party email security? Do I need the additional security and analytics functionality offered in E5?
In this article, we’ll attempt to answer these questions and recommend which service is the best fit for your organization. We’ll start with a breakdown of each plan and what it has to offer. All pricing shown is the current information found on Microsoft’s pricing grid.
Before we get started, there’s one thing to be aware of: in this article, we’re just looking at Office 365’s pricing options. Microsoft recently renamed it’s enterprise productivity suite as a whole from Office 365 to Microsoft 365, but still advertizes Office 365 plans for SMBs. Microsoft 365 (a suite for large enterprise organizations of over 300 users) also offers E3 and E5 solutions, but these are more expensive and offer even more advanced security technologies, including identity and access management, and Microsoft’s Defender antivirus.
For the purposes of this article, we’re looking at the Office 365 packages on this page. These are aimed at small to mid-sized organizations and cover all Office 365 functionality outside of endpoint management and the Windows operating system.
Office 365 E1 Vs E3 Vs E5: Key Takeaways
E1: The best option if you’re looking for basic email and file sharing capabilities, and you absolutely do not need to use the Office 365 application suite. Best for a very small team of users.
E3: The best all-round option if you don’t need audio-conferencing or advanced compliance features. Includes the full Microsoft Office 365 suite and better storage for email and file sharing. We recommend using it alongside third-party email security, which is often more cost-effective than E5.
E5: The best option for businesses with more enterprise needs looking for telephone conferencing and additional compliance features. Additional security features are an important consideration, but third-party email security can be more powerful and cost-effective.
Let’s take a look at each of these plans in more detail.
Office 365 E1
Price: $10.00 Per User Per Month
The E1 package is the most basic of the three packages we’ll consider on this list and, as you would expect, the cheapest. It provides the “core” cloud business functionality, including email with Microsoft Outlook, file storage and sharing with OneDrive, and some security controls like multi-factor authentication.
Features
- Office: You can only access Microsoft’s Office Suite (Word, PowerPoint, and Excel) on the web and on mobile devices. You cannot use the desktop versions of these applications.
- Email: Email is available with Outlook, with a 50GB mailbox size. You have access to the calendar and contacts functionality, as well as email archiving. Be aware you cannot install the desktop client for Outlook, and will only be able to access email in the web-based portal.
- Meetings: Microsoft’s instant messaging and meeting app Teams is included, as well as live events. Audio functionality and phone systems are not included.
- File Sharing: SharePoint and Yammer are included, allowing users to share and collaborate on files (again, this is only possible on mobile or in the web version of cloud office applications). Up to 1TB storage is included for each user.
- Productivity: Power Automate, Planner, and To Do are all included.
- Analytics: Some basic analytics are included, such as Productive Score and compliance management.
Security
- Email: Emails are protected by Exchange Online Protection, Office 365’s basic layer of email security. This will block basic spam, but will not be effective against more sophisticated email attacks.
- Identity and Access Management: Supports single sign-on and multi-factor authentication.
Recommendation
We would recommend E1 only for businesses who do not wish to use Office cloud applications, but require basic email and file sharing functionality. The service is more cost-effective when considering this use case than E3.
However, when it comes to security—particularly email security—this solution is lacking. If you’re investing in E1, we recommend that you implement third-party email security solutions to protect your business against sophisticated phishing and ransomware attacks.
Office 365 E3
Price: $23.00 Per User A Month
Microsoft Office 365 E3 is the middle option for Office 365 users, including all the features of E1, with the full desktop suite of Office 365 applications and greater storage for email and SharePoint. Office 365 E3 can broadly be considered the “Goldilocks” plan: it’s not too basic and not too advanced.
The main missing features here are the enhanced email security functionality provided by Defender for Office 365, and audio-conferencing. There are numerous third-party email security solutions that provide more powerful email security than Defender (for a more cost-effective price), so the decision between E3 and E5 may come down to whether you need those audio-conferencing features.
Features
- Office: The full suite of Microsoft cloud applications is included.
- Email: Email is included with mailbox sizes up to 100GB, with the full range of features.
- Meetings: Microsoft Teams is included, but not the phone system or audio-conferencing.
- File Sharing: SharePoint is included with unlimited personal OneDrive storage for each user.
- Productivity: Power Automate, Planner, and To Do are all included. Power BI Pro is not included.
- Analytics: There are analytics included, such as Productive Score and compliance management. Admins can also manage group policies that are not available in E1.
- eDisovery and Auditing: Content search, eDiscovery and basic auditing features are included. Advanced auditing and records management are not included.
Security
- Email: Emails are protected by Exchange Online Protection. Data Loss Prevention (DLP) is also included for emails and files. Basic email encryption functionality is provided, as well as email retention policies and audit logs.
- Identity and Access Management: Supports Single Sign-On and Multi-Factor Authentication.
Recommendation
E3 is a strong option for most small- and mid-sized businesses looking for Microsoft Office applications, emails, cloud-file management, and file sharing, with strong enterprise analytics and compliance controls. The service provides all the basic enterprise controls that most small businesses require, at an affordable price-point. However, there are two main areas where this solution is lacking.
The first is security. When it comes to protecting email, this solution only provides Exchange Online Protection (EOP), which filters email for malicious links, spam and basic phishing attacks. However, this level of protection is very limited, and will not protect your business against sophisticated email attacks such as social engineering (or “spear-phishing”) and ransomware. These attacks are increasingly common and should be a core consideration for your business when deciding which plan to invest in.
However, there are third-party email security solutions available that can offer a far higher level of protection than EOP and indeed Microsoft’s own email security solution, Defender for Office 365 (available on the E5 plan). These services can be more cost effective than the price difference between E3 and E5, and are often very easy to install. This is because they use the Microsoft Graph API, so users can be easily onboarded with no MX redirects or new configurations necessary.
You can read our guide to the Top Email Security Solutions for Office 365 here.
The second area in which Microsoft E3 is lacking is audio-conferencing and the phone system. Teams is included, but you can only use it to communicate with other Teams users, and not to make external phone calls. If you need to regularly make phone calls—to support a sales team for example—and prefer the convenience of using one solution for all your users, Microsoft E5 may be the better plan to go for. If this is not a consideration, or only small numbers of your employees need telephone functionality, E3 is a good all-rounder.
Office 365 E5
Price: $38.00 Per User A Month
Microsoft Office 365 E5 can be described as the “Premium” Office 365 option, providing the most advanced functionality for businesses. It’s more expensive, has more features, and is also split into two plans.For the purposes of this article, we’ll just be considering Plan 2.
The core differences between E3 and E5 are audio-conferencing features and security functionality. But there are also other benefits, including advanced analytics, compliance and information protection, and advanced retention policies for email. E5 is the best option if you want everything Office 365 has to offer—but it may not always represent the best value.
Features
- Office: The full suite of Microsoft cloud applications is included.
- Email: Email is included with mailbox sizes up to 100GB, with the full range of features.
- Meetings: The full suite of meetings, calling and chat functionality is included. This means you get Teams, Live Events, a business phone system, and audio conferencing.
- File Sharing: SharePoint is included with unlimited personal OneDrive storage for each user.
- Productivity: Power Automate, Planner, and To Do are all included. Power BI Pro is included for more granular analytics and automation.
- Analytics: There are analytics included, such as Productive Score and compliance management. Admins can also access advanced analytics and auditing unavailable in E1 or E5.
- eDisovery and Auditing: Advanced eDiscovery and advanced auditing features are supported.
Security
- Email: Emails are protected by Exchange Online Protection and Windows Defender for Office 365, which provides advanced protection against phishing and ransomware, as well as more advanced reporting and admin controls. Data Loss Prevention is included for emails, Teams, and files. Advanced email encryption functionality is also provided, as well as email retention policies. Customer keys for Office 365 are supported.
- Identity and Access Management: Supports Single Sign-On and Multi-Factor Authentication. Cloud App Security Discovery is also provided to manage third-party application security.
- Information Protection: Automatic sensitivity labels are applied and DLP is also applied to Teams. Rules-based automated archiving and advanced auditing are supported.
- Insider Risk Management: Communication compliance, information barriers, and Privileged Access Management are included.
Recommendation
E5 provides the most features and functionality of the three plans, so from the perspective of getting the best possible version of Office 365, this plan is the way to go. It provides all the Office 365 applications, advanced email control and functionality, better auditing and analytics, and the telephone system and audio-conferencing capabilities.
So, the question for your business has to be: do you need those additional features and, if so, do they need to be part of Office 365?
As we’ve covered, there are numerous extremely powerful third-party solutions dedicated to providing organizations with email security and compliance functionality. This covers security, but also encryption and archiving—two of the other advanced features present in E5 but not E3. These solutions are often more cost-effective than E5 and will often have more extensive security features and reporting. In most cases, for example, we’d recommend that Office 365 E5 users implement a third-party email security solution to augment the security offered by Defender.
However, it is a clear benefit to have one system from which users can access all applications and services. It’s far easier to manage and can boost productivity. This is especially important with the phone system, and adding audio-conferencing to Teams makes it easy for users to make calls and speak to colleagues—especially remotely.
Our final recommendation is that, if you need a telephone system and audio-conferencing, E5 is the best plan. If you’re considering E5 just for the additional security functionality, we’d instead recommend that you invest in E3 and implement a third-party email security, archiving or encryption solution.
Email Security For O365
If you are looking to implement an email security solution for O365 as an alternative to the Office 365 E5 license, there are a number of solutions on the market. You can read our guide to the top email security solutions for Office 365 here.
Summary
Let’s wrap up by recapping our recommendations for each Office 365 plan:
E1: The best option if you’re looking for basic email and file sharing capabilities, and you absolutely do not need to use the Office 365 application suite. Best for a very small team of users.
E3: The best all-round option if you don’t need audio-conferencing or advanced compliance features. Includes the full Microsoft Office 365 suite and better storage for email and file sharing. We recommend using it alongside third-party email security, which is often more cost-effective than E5.
E5: The best option for businesses with more enterprise needs looking for telephone conferencing and additional compliance features. Additional security features are an important consideration, but third-party email security can be more powerful and cost-effective.
Finding the most relevant plan for your organization will come down to your unique business needs and use cases. If you don’t need a telephone system, using a combination of E3 with an additional layer of third-party security is the best option. If you do need a telephone system, E5 would be our recommendation.
If you’d like to take a look at the best email security systems for Office 365, we’ve put together a useful guide, which you can read here:
