Microsoft 365 Licensing: Which Plan Do You Actually Need?

Microsoft 365 licenses are often inherited from day one and never reviewed again. Since plans are paid monthly per user, the wrong choice can result in a difference of several thousand euros over three years. Let's look at what you actually get.

TL;DR — Key Highlights

• Business Basic does not include desktop Office apps — web versions only.
• Business Premium adds Intune, Entra ID P1, and Defender — usually the best value for SMBs.
• You can mix licenses: Basic for production, Premium for office staff.
• Annual subscriptions are cheaper than monthly but less flexible.

What Each Plan Includes

Business Basic covers email, Teams, SharePoint, and OneDrive with web apps — sufficient for users who do not edit complex documents. Business Standard adds installed Office apps on up to five devices per user.

Business Premium is the security bundle: Intune for device management, Entra ID P1 for conditional access, Defender for Office 365 for email protection, and Azure Information Protection for document labeling. For companies working hybrid, the price difference almost always pays for itself.

Why an Annual License Review Makes Sense

The number of users changes, but plans are rarely updated.

• Licenses for former employees often remain active for months after their departure.
• Duplicate features (separate anti-spam, separate backup) mean you pay twice.
• Some users do not need desktop Office.
• Frontline licenses (F1/F3) are significantly cheaper for production workers.

How to Get Started — Recommended Process

1. Export a list of active licenses and compare them with the employee list.
2. Divide users into profiles: office, management, production, external.
3. Assign each profile the lowest plan that covers their needs.
4. Check for overlaps with existing tools and eliminate them.
5. Switch to an annual subscription for your stable core of users.
6. Set up an offboarding process: archiving and license release.

Comparison of Plans

Common Mistakes

The most common mistake is a 'one-size-fits-all' plan. A company with 40 employees often has 15 people who only need email and Teams on a phone.

The second mistake is purchasing separate security tools that duplicate Business Premium features — you pay twice and get two consoles that nobody monitors.

How VitalIT Can Help

At VitalIT, we perform license audits, propose optimizations, and take over subscription management. View our Cloud and Microsoft 365 services.

Related: Microsoft Intune: Centralized Device Management and SharePoint for Teamwork.

Frequently Asked Questions (FAQ)

Do we need a specific backup for Microsoft 365?

Yes. Microsoft ensures service availability, not recovery after deletion or an attack; we recommend a separate backup.

How many devices does one license cover?

Business Standard and Premium allow installation on five computers, five tablets, and five phones per user.

Can we mix plans within one tenant?

Yes, and in practice, this is the most economical approach.

What happens to an employee's email after they leave?

A mailbox can be converted to a shared mailbox or archived, and the license can then be released.

Is it possible to switch from monthly to annual billing?

Yes, upon renewal or by switching the subscription; we handle the transition without service interruption.