What is actually different between Microsoft Teams Free, Teams Essentials, Microsoft 365 Business Basic, and Business Premium? A practical comparison for Australian SMBs deciding which plan to use.
Microsoft Teams is used by over 300 million people worldwide. But “using Teams” can mean anything from a free account with basic chat to a full enterprise deployment with phone system, compliance recording, and advanced security. For an Australian SMB evaluating Microsoft 365, understanding which plan you actually need - and what you are paying for - is more complex than it should be.
This article compares the main Teams-relevant plans available to Australian businesses in 2026, with honest assessments of who each plan suits.
The Plans Compared
Here is a simplified comparison of the main options:
| Feature | Teams Free | Teams Essentials | M365 Business Basic | M365 Business Premium |
|---|---|---|---|---|
| Price (AUD/user/month) | Free | ~$5.30 | ~$8.00 | ~$28.00 |
| Teams chat & channels | ✓ | ✓ | ✓ | ✓ |
| Video meetings | Up to 60 min | Up to 30 hrs | Up to 30 hrs | Up to 30 hrs |
| Meeting recording | ✗ | ✓ | ✓ | ✓ |
| Exchange email | ✗ | ✗ | ✓ | ✓ |
| Office web apps | ✗ | ✗ | ✓ | ✓ |
| Office desktop apps | ✗ | ✗ | ✗ | ✓ |
| SharePoint / OneDrive | 5GB | 10GB | 1TB | 1TB |
| Microsoft Intune (MDM) | ✗ | ✗ | ✗ | ✓ |
| Defender for Business | ✗ | ✗ | ✗ | ✓ |
| Azure AD P1 | ✗ | ✗ | ✗ | ✓ |
Pricing as of early 2026. Microsoft pricing changes regularly - verify current pricing through a Microsoft partner.
Microsoft Teams Free
What it is: A free, standalone Teams account not connected to a Microsoft 365 subscription.
What you get: Chat, channels, video meetings up to 60 minutes, screen sharing, file sharing (5GB storage), and basic collaboration. No meeting recording, no Exchange email, no Office apps.
Who it suits: Very small teams (under 5 people) who only need internal collaboration and have another email solution. Or individuals who want to participate in Teams meetings hosted by other organisations.
The honest assessment: Teams Free is a demonstration product, not a business solution. The 60-minute meeting limit alone disqualifies it for most business use cases. The lack of email, the 5GB storage limit, and the absence of any security or compliance features make it unsuitable for any business with real operational requirements.
If you are currently on Teams Free and your team has grown beyond 3-4 people, you need a paid plan.
Microsoft Teams Essentials
What it is: A standalone Teams subscription without the broader Microsoft 365 suite.
Price: Approximately $5.30 AUD per user per month (annual commitment).
What you get: Unlimited chat and channels, meetings up to 30 hours, meeting recording, 10GB OneDrive storage per user, external collaboration with guests, and basic phone/audio conferencing.
What you do not get: Exchange email (you need to use Gmail or another email provider), Office applications, SharePoint, or any of the security/compliance/device management features.
Who it suits: Teams Essentials makes sense only in a narrow scenario: a small business that has another email solution (typically Gmail through Google Workspace) and only wants Teams for video meetings and collaboration. Even in this scenario, the lack of SharePoint means file storage is limited to OneDrive personal folders, which creates document management limitations.
The honest assessment: At $5.30 per user, Teams Essentials is almost never the right choice. Microsoft 365 Business Basic costs about $2.70 more per user per month and adds Exchange email, SharePoint, 1TB storage, and Office web apps. For most businesses, Business Basic is a far better value proposition than Essentials.
Microsoft 365 Business Basic
What it is: The entry-level Microsoft 365 for Business subscription, including Teams, Exchange email, SharePoint, and Office web apps.
Price: Approximately $8.00 AUD per user per month (annual commitment).
What you get: Exchange email with a custom domain (yourname@yourcompany.com.au), Teams with full meeting functionality including recording, SharePoint for team document storage, OneDrive with 1TB per user, Office web applications (browser-based Word, Excel, PowerPoint, OneNote), and Microsoft Forms and Lists.
What you do not get: Desktop Office applications (you can only use Office in a browser), Microsoft Intune for device management, Defender for Business security, Azure Active Directory Premium, or Conditional Access.
Who it suits: Very small businesses (under 10 staff) with simple requirements where everyone is comfortable working in a browser, or businesses where staff primarily use shared devices rather than personal workstations.
The honest assessment: Business Basic is the right entry point for businesses that genuinely only need cloud access to Office and are comfortable without desktop apps. But for any business with security requirements, personal devices, or a need for device management, Business Basic lacks the tools to run a properly managed IT environment.
For businesses in professional services, healthcare, legal, or accounting - where compliance matters and devices need to be managed - Business Basic is not sufficient.
Microsoft 365 Business Premium
What it is: The comprehensive Microsoft 365 for Business subscription, including everything in Business Basic plus desktop Office, Intune, Defender for Business, and Azure AD Premium P1.
Price: Approximately $28.00 AUD per user per month (annual commitment).
What you get: Everything in Business Basic, plus:
- Microsoft Office desktop applications (Word, Excel, PowerPoint, Outlook, OneNote on up to 5 devices)
- Microsoft Intune - mobile device management and app protection
- Microsoft Defender for Business - enterprise-grade endpoint protection
- Azure Active Directory Premium P1 - Conditional Access policies, MFA enforcement, and sign-in risk detection
- Azure Information Protection P1 - document classification and protection
- Intune for device compliance and management
Who it suits: Any business that wants to properly manage and secure its IT environment. Business Premium provides the security foundation that a managed IT provider needs to do their job effectively: device management through Intune, endpoint security through Defender, and identity governance through Azure AD P1.
The honest assessment: For any business with 10 or more staff that takes IT security seriously, Business Premium is the correct licence tier. The combination of Intune, Defender, and Azure AD Premium provides capabilities that would otherwise require separate purchases at significantly higher cost.
The cost difference between Business Basic ($8/user) and Business Premium ($28/user) is $20 per user per month. For a 20-person business, that is $400/month or $4,800/year. In exchange, you get desktop Office applications and a complete security toolset. For most professional services firms, the desktop applications alone justify the cost difference.
The Licensing Decision Framework
Ask yourself these questions:
Do your staff need desktop Office applications (Word, Excel, PowerPoint on their computer)? If yes → Business Premium minimum.
Do you need to manage and secure company devices? If yes → Business Premium (for Intune).
Does your industry have compliance requirements (legal, medical, financial, government)? If yes → Business Premium minimum; may need E3 or E5 for advanced compliance features.
Do you only need web browser access to Office and email? Possibly Business Basic, but evaluate whether the security limitations are acceptable.
Are you using Teams just for video calls and already have another email system? This is the Teams Essentials use case, though Business Basic is usually better value.
A Note on Pricing and Resellers
Microsoft 365 pricing varies based on whether you purchase directly from Microsoft or through a Microsoft partner (CSP - Cloud Solution Provider). CX IT Services is a Microsoft Cloud Solution Provider, which means:
- We can manage your licences and billing centrally
- We can adjust licence quantities monthly (no annual commitment penalties for changes we manage)
- We provide local support for Microsoft 365 issues that would otherwise require Microsoft support tickets
If you are purchasing Microsoft 365 for your business and want help selecting the right licence tier and managing it, book a Right Fit Call and we can walk you through the options for your specific situation.
