← Back to Licensing Guides

Microsoft 365 E3 vs E5: Which is Right for You?

A comprehensive comparison to help you choose the right enterprise license

Overview

Microsoft 365 E3 and E5 are the premium enterprise licenses for large organizations. While E3 provides a comprehensive productivity and security foundation, E5 adds advanced security, compliance, analytics, and voice capabilities. Understanding the differences helps you balance cost against feature requirements.

Microsoft 365 E3

$36 /user/month

Enterprise productivity and security foundation

Microsoft 365 E5

$57 /user/month

Advanced security, compliance, and analytics

Core Productivity Features (Both E3 and E5)

Both licenses include the full Microsoft 365 productivity suite:

  • Office Apps: Word, Excel, PowerPoint, Outlook, OneNote, Access (PC only)
  • Cloud Services: Exchange Online, SharePoint Online, OneDrive for Business
  • Collaboration: Microsoft Teams (meetings, chat, channels)
  • Storage: 1TB OneDrive storage per user
  • Email: 100GB mailbox, custom domain email

Security Features Comparison

Security Feature E3 E5
Azure AD Premium P1 (Conditional Access, MFA) ✓ ✓
Azure AD Premium P2 (Identity Protection, PIM) ✗ ✓
Microsoft Defender for Office 365 P1 ✓ ✓
Microsoft Defender for Office 365 P2 ✗ ✓
Microsoft Defender for Endpoint P2 ✗ ✓
Microsoft Defender for Cloud Apps ✗ ✓
Microsoft Defender for Identity ✗ ✓
Insider Risk Management ✗ ✓

E5 Security Advantage: Microsoft 365 Defender

E5 includes the full Microsoft 365 Defender suite, providing extended detection and response (XDR) across identities, endpoints, email, and cloud apps. This integrated approach correlates signals across your entire digital estate for advanced threat hunting and automated remediation.

Compliance Features Comparison

Compliance Feature E3 E5
Data Loss Prevention (DLP) ✓ ✓
Sensitivity Labels ✓ ✓
Retention Policies ✓ ✓
eDiscovery (Standard) ✓ ✓
eDiscovery (Premium) ✗ ✓
Advanced Audit ✗ ✓
Communication Compliance ✗ ✓
Information Barriers ✗ ✓
Customer Lockbox ✗ ✓
Privileged Access Management ✗ ✓

Analytics and Voice

Feature E3 E5
Power BI Pro ✗ ✓
Viva Insights (Personal) ✓ ✓
Viva Insights (Advanced) ✗ ✓
Phone System ✗ ✓
Audio Conferencing ✗ ✓
Pro Tip: Power BI Pro alone costs $10/user/month. If your organization needs Power BI for most users, E5 becomes more cost-effective when combined with other E5-exclusive features.

When to Choose E3

Microsoft 365 E3 is ideal when:

  • You need core productivity and collaboration tools
  • Basic security with Conditional Access and MFA is sufficient
  • You can add security products à la carte as needed
  • Budget is a primary constraint
  • You have fewer than 500 users (smaller organizations may find E5 overkill)

When to Choose E5

Microsoft 365 E5 makes sense when:

  • Security is a top priority (regulated industries, sensitive data)
  • You need advanced threat protection across email, endpoints, and identity
  • Compliance requirements include eDiscovery Premium or audit capabilities
  • You want integrated SIEM/XDR capabilities
  • Phone System is needed (replaces traditional PBX)
  • Power BI is widely needed across the organization

Cost Analysis: Add-Ons vs E5

Compare the cost of E3 + add-ons versus E5:

Component Add-on Price
E3 Base $36/user/month
+ Azure AD P2 $9/user/month
+ Defender for Endpoint P2 $5.20/user/month
+ Defender for Office 365 P2 $5/user/month
+ Power BI Pro $10/user/month
E3 + Add-ons Total $65.20/user/month
E5 $57/user/month
Key Insight: If you need 3+ E5-exclusive features, E5 typically provides better value than purchasing E3 plus individual add-ons.

Migration Considerations

Moving from E3 to E5

  • License change can be done in Microsoft 365 Admin Center
  • No data migration required - services activate automatically
  • Plan for user training on new security features
  • Configure new security features before relying on them

Hybrid Licensing

Many organizations use a mix of E3 and E5:

  • E5 for executives and IT: Users handling sensitive data or requiring advanced security
  • E3 for general staff: Users with standard productivity needs
  • Frontline F3: Deskless workers with limited needs

Additional Resources

Disclaimer: Pricing and licensing information provided on this page is for general guidance only and may not reflect the most current Microsoft pricing or licensing terms. Microsoft frequently updates its licensing models, pricing, and feature inclusions. We are not responsible for any inaccuracies or outdated information. Always verify current pricing and licensing requirements directly with Microsoft's official licensing resources or your Microsoft partner before making purchasing decisions.

Need Help Choosing the Right License?

Get personalized guidance for your organization's needs.

Get In Touch