Microsoft 365 E3 vs E5
Choose the Right Microsoft 365 License for Every Role
Microsoft 365 E3 provides the productivity, identity, device management, security, and compliance foundation many enterprise users need. E5 builds on that foundation with more advanced security, compliance, analytics, and communications capabilities. The right choice often depends on the user, role, and risk level rather than choosing one plan for everyone.
Microsoft 365 E3 vs E5: what’s the difference?
Both Microsoft 365 E3 and E5 provide enterprise productivity, collaboration, identity, device management, security, and compliance capabilities.
The main difference is depth. E5 adds more advanced capabilities for organizations and users with greater security, regulatory, analytics, or communications requirements.
In simple terms:
Provides a strong Microsoft 365 enterprise foundation.
Adds more advanced capabilities where additional security, compliance, analytics, or communications functionality is required.
| Capability | Microsoft 365 E3 | Microsoft 365 E5 |
|---|---|---|
| Microsoft 365 desktop and web apps | ✓ | ✓ |
| Exchange Online | ✓ | ✓ |
| SharePoint and OneDrive | ✓ | ✓ |
| Microsoft Teams | ✓ | ✓ |
| Microsoft Intune | ✓ | ✓ |
| Windows Enterprise | ✓ | ✓ |
| Microsoft Entra ID | Core enterprise capabilities | More advanced identity protection |
| Microsoft Defender | Core protection | More advanced threat protection |
| Microsoft Purview | Core compliance capabilities | More advanced compliance capabilities |
| Power BI Pro | Not included as part of the base E3 plan | Included |
| Teams Phone | Additional licensing may be required | Broader calling capabilities included depending on plan configuration |
| Relative licensing cost | Lower | Higher |
| Best fit | Enterprise productivity, management, and core security | Advanced security, compliance, analytics, and communications |
Microsoft 365 E3 vs E5 feature comparison
Microsoft licensing and product packaging can change, so the exact capabilities included in a plan should always be confirmed against current Microsoft licensing information before making a purchasing decision.
How do Microsoft 365 E3 and E5 costs compare?
Microsoft 365 E5 carries a higher per-user cost than E3 because it includes additional security, compliance, analytics, and communications capabilities.
The important question is not simply which plan costs less. It is whether the additional E5 capabilities are required for a particular user or role.
For some users, E3 may provide everything they need. For others, the additional capabilities included with E5 may justify the higher license cost.
A third option is also worth considering: using E3 with selected add-ons when a user needs one or two advanced capabilities but does not require the full E5 package.
View Current Microsoft 365 Pricing
Should you consider add-ons before moving to full E5?
The choice does not always need to be strictly E3 or E5.
Microsoft offers additional security, identity, compliance, analytics, and communications capabilities that can be added to certain licenses.
If one specific requirement is driving the move toward E5, such as advanced threat protection, it can be worth comparing:
E3 with the required add-on
Full Microsoft 365 E5
Existing third-party tools already providing similar capabilities
The right approach depends on how many additional capabilities a user needs and whether those tools are already being purchased separately.
When should you choose Microsoft 365 E3?
E3 may be the better fit when users need a strong Microsoft 365 enterprise foundation without the full advanced E5 feature set.
Consider E3 when:
Users need Microsoft 365 productivity applications, Exchange, Teams, SharePoint, and OneDrive
You need device and endpoint management through Microsoft Intune
Your identity and access requirements can be supported by the capabilities included with E3
Core Microsoft security capabilities meet the user’s requirements
Advanced compliance capabilities are not required for the role
Power BI Pro or advanced communications features are not required
Advanced security or compliance is already provided through other tools
When should you choose Microsoft 365 E5?
E5 becomes more compelling when several advanced capabilities are required by the same user or role.
Consider E5 when you need:
More advanced identity protection
Advanced endpoint and email threat protection
More advanced Microsoft Purview compliance capabilities
Advanced audit, eDiscovery, or information governance
Power BI Pro
Advanced Microsoft communications capabilities
A more integrated Microsoft security and compliance stack
E5 can be particularly relevant for organizations operating in regulated environments or for users whose roles create greater security, compliance, or data exposure.
Which roles should you evaluate for E5?
| Role or requirement | What to evaluate |
|---|---|
| IT and security teams | Advanced threat detection and identity protection |
| Legal and compliance | Advanced compliance, eDiscovery, audit, and data governance |
| Executives and high-risk users | Additional identity and threat protection |
| Finance | Security, data protection, and compliance requirements |
| Analytics users | Whether Power BI Pro and other E5 capabilities are required |
| Communications users | Whether advanced Teams calling capabilities are needed |
A role appearing here does not automatically mean it needs E5. The decision should be based on actual requirements.
Should you mix E3 and E5 licenses across your organization?
Yes. An organization does not necessarily need to choose one Microsoft 365 license for every employee.
A role-based licensing model can assign E5 where advanced capabilities are justified while keeping other users on E3 or using targeted add-ons where appropriate.
Before changing licenses, review:
Which features each user actually needs
Which advanced capabilities are actively being used
Security and compliance requirements by role
Existing Microsoft add-ons
Third-party tools that may overlap with Microsoft functionality
Agreement and renewal requirements
Explore Microsoft 365 License Optimization
How should multi-entity organizations approach E3 vs E5?
For organizations operating across subsidiaries, business units, acquisitions, or multiple tenants, the decision can become more complex.
Different entities may have different user profiles, security requirements, Microsoft agreements, and renewal schedules. One subsidiary may require a larger concentration of E5 users while another may be adequately supported by E3.
Before standardizing Microsoft 365 licensing across the organization, map:
Users and roles
Identify which capabilities are required by different employee groups.
Microsoft agreements
Understand where licenses are assigned and how requirements differ across the organization.
Renewal and true-up dates
Identify how each entity purchases Microsoft licensing and which agreement terms affect license changes.
Tenants and entities
Use agreement and renewal milestones to plan licensing changes and avoid making decisions in isolation.
Which Microsoft 365 plan is right for your organization?
There is no universal winner between Microsoft 365 E3 and E5.
Provides a strong enterprise foundation for productivity, collaboration, identity, device management, security, and compliance.
Makes sense when additional security, compliance, analytics, and communications capabilities provide enough value for a particular user or role.
Comparing Business Premium instead? See Business Premium vs E3
Ready to right-size your Microsoft 365 licensing?
Tell us about your Microsoft 365 environment, current licenses, and what you are trying to improve. ADNM can help you evaluate where E3, E5, or targeted add-ons better align with your users, security requirements, and Microsoft spend.