Microsoft 365 Basic vs Standard vs Premium: which do you need?

Short answer. Microsoft 365 Business Basic is email, Teams, OneDrive and the browser versions of Office. Business Standard adds the installed desktop apps. Business Premium adds the security and device management layer: Defender, Intune, conditional access and information protection. For a business that handles client data, Premium for office staff and Basic for everyone else is the setup I recommend most often. The mistake to avoid is paying for Premium and never switching its security on.

Licensing questions come up on almost every first call, so here is the plain version.

What each plan includes

On UK annual terms the three plans sit at roughly £5, £10 and £18 per user per month ex VAT at the time of writing, with monthly billing costing about five percent more. Microsoft adjusts prices periodically, so check the current list before budgeting. Variants without Teams exist at a slightly lower price if you use another platform for calls.

Who each plan suits

Basic is right for people who need a company email address and Teams but do their real work elsewhere: warehouse staff, engineers on site, part-timers, a shop floor. The web apps are perfectly capable for the occasional spreadsheet.

Standard is the historic default for office staff: full Outlook, Excel, Word and PowerPoint installed on their machine, plus the collaboration tools. It is what most small businesses bought for years, and it is still fine for firms with very low security exposure.

Premium is Standard plus the things that stop you being the subject of a breach notification. In practice that means:

• Defender for Business replaces the third-party antivirus you are probably also paying for.
• Defender for Office 365 catches the phishing and impersonation emails that lead to invoice fraud.
• Intune lets your laptops be set up, encrypted, patched and wiped remotely. Lose a laptop on a train and it is a shrug rather than a crisis.
• Conditional access means a stolen password from a strange country or an unknown device does not get in, even with MFA fatigue attacks.
• Information protection lets you label and restrict sensitive documents, which regulators and clients increasingly expect.

If you handle client money, client data, or anything a regulator cares about, Premium is the plan. The uplift over Standard across ten staff is under a thousand pounds a year, which is less than one afternoon of incident response.

The mistakes I see most

Paying for Premium and using it as Standard. Defender not configured, Intune never enrolled, conditional access at defaults. Premium is a toolkit, not a switch. Somebody has to set it up, and that somebody is usually your IT provider. Ask them what of Premium is actually turned on.

Standard where Premium was needed. Usually a legacy decision that nobody revisited. The business grew into client data and the licensing stayed where it was.

Everyone on the same plan. Twenty Premium licences when eight of those people only read email on a phone. Mixing plans is normal and Microsoft designed it that way.

Licences through a reseller you cannot see. If your provider bills you for licences, the count and the unit price should be on the invoice. A quiet markup on a pass-through cost is a bad sign about everything else. The switching guide covers moving licences between resellers.

Buying Copilot before tidying permissions. Microsoft 365 Copilot is a paid add-on that answers questions using everything the user can already reach in SharePoint and OneDrive. In most small businesses that includes folders nobody realised were open to all staff. Fix the permissions first; more on that in the AI tools post.

A sensible default for a 20-person firm

Twelve office and management staff on Business Premium. Eight field or part-time staff on Business Basic. One shared mailbox for info@ and one for accounts@, which are free. Conditional access requiring MFA and a compliant device for everyone. Defender for Office 365 policies tuned rather than left at defaults. That configuration costs roughly £250 to £270 a month in licences and closes off the majority of ways a firm that size gets breached.

Setting it up properly is a fixed piece of work and running it is what a Microsoft 365 and SharePoint engagement covers. If you are not sure what you are paying for now, send me the licence page and I will tell you in a sentence. Get in touch.