TL;DR: Microsoft 365 has three main business licence tiers - Basic, Standard, and Premium - plus an enterprise tier (E3/E5) for larger organisations. For most Australian SMBs, Business Premium is the right choice: it includes everything in Standard plus device management and enterprise-grade security. This guide tells you exactly what each licence includes and how to decide what each role in your business needs.
Why Licence Choice Matters
Microsoft 365 licence selection affects security, productivity, and cost. The most common mistake is under-licencing: choosing Business Basic or Business Standard to save money, and missing the security and device management capabilities that are only available in Business Premium.
The second most common mistake is over-licencing: assigning Business Premium to every user, including light users who only need email access and do not require the full Office desktop applications.
The right approach is to understand what each tier includes and match the licence to the role.
Quick Reference: What’s in Each Tier
Microsoft 365 Business Basic - ~$9 AUD/user/month
Includes:
- Exchange Online (email and calendar) - web and mobile only
- Microsoft Teams (chat, meetings, calls)
- SharePoint Online (document storage and intranet)
- OneDrive (1TB personal storage per user)
- Microsoft Forms, Lists, Planner, Power Automate (standard)
- Microsoft 365 web apps (Word, Excel, PowerPoint, OneNote - browser only)
- Microsoft Defender for Office 365 Plan 1 (basic email security)
- Exchange Online Protection (spam and malware filtering)
Does NOT include:
- Office desktop applications (Word, Excel, PowerPoint, Outlook as installed programs)
- Microsoft Defender for Business (endpoint security)
- Microsoft Intune (device management)
- Azure AD P1 (Conditional Access, SSPR)
- Microsoft Defender for Office 365 Plan 2 (advanced threat protection)
Best for: Light users who work primarily in a browser, do not need Office desktop applications, and work on company-managed devices where security is handled at the device level.
Typical users: Reception staff, warehouse staff, basic data entry roles.
Microsoft 365 Business Standard - ~$18 AUD/user/month
Everything in Business Basic, plus:
- Office desktop applications (Outlook, Word, Excel, PowerPoint, OneNote, Access) on up to 5 PCs/Macs
- Office mobile apps on up to 5 smartphones and 5 tablets
- Teams Phone Standard (calling licence - PSTN calling via Microsoft Calling Plans or Direct Routing)
- Microsoft Bookings (appointment scheduling)
- Microsoft Loop (collaborative workspace tool)
- Publisher (Windows only)
Does NOT include:
- Microsoft Defender for Business (endpoint security)
- Microsoft Intune (device management)
- Azure AD P1 (Conditional Access, SSPR)
- Microsoft Defender for Office 365 Plan 2
Best for: Knowledge workers who need Office desktop applications and full collaboration tools, working in an environment where device security is managed separately.
Typical users: Administration staff, project managers, marketing, most professional services roles.
Microsoft 365 Business Premium - ~$28 AUD/user/month
Everything in Business Standard, plus:
Security and compliance:
- Microsoft Defender for Business (EDR endpoint security - replaces third-party antivirus)
- Microsoft Defender for Office 365 Plan 2 (Safe Links, Safe Attachments, anti-phishing, Attack Simulator)
- Azure Information Protection P1 (sensitivity labels, data loss prevention)
- Microsoft Purview Information Protection
- Intune Plan 1 (mobile device management and application management)
- Azure AD Premium P1 (Conditional Access Policies, Self-Service Password Reset, dynamic groups)
- Microsoft Entra ID P1
What this means in practice:
- You can enforce MFA via Conditional Access Policies (not just security defaults)
- You can require compliant devices before allowing access to Microsoft 365
- You can manage all company devices (Windows, Mac, iOS, Android) from Intune
- You can automatically configure new devices via Autopilot
- You can remotely wipe company data from personal devices
- You can protect against sophisticated phishing and malware via Defender for Office 365 Plan 2
- You get endpoint detection and response (not just antivirus) on all company devices
Best for: This is the recommended licence for the majority of staff at most Australian SMBs. The security and device management capabilities are not optional extras - they are the foundation of a properly protected business IT environment.
Does NOT include:
- Azure AD Premium P2 (Identity Protection, Privileged Identity Management - requires Microsoft 365 E3/E5 or add-on)
- Microsoft Intune Suite (advanced endpoint management - available as add-on)
- Microsoft Copilot (AI assistant - requires separate licence)
Enterprise Tiers: When They Apply
Microsoft 365 E3 - approximately $45–55 AUD/user/month
Designed for larger organisations (150+ users) or businesses with specific advanced requirements:
- Everything in Business Premium
- Azure AD Premium P2 (Identity Protection, PIM)
- Advanced eDiscovery and compliance features
- Microsoft Purview Compliance Manager
When to consider E3: Large organisations, regulated industries with specific compliance requirements, businesses needing advanced identity governance.
Microsoft 365 E5 - approximately $75–85 AUD/user/month
Microsoft’s most comprehensive licence:
- Everything in E3
- Microsoft Defender for Endpoint Plan 2 (most advanced EDR)
- Microsoft Defender for Office 365 Plan 2
- Microsoft Purview Insider Risk Management
- Phone System and Audio Conferencing
When to consider E5: Financial services, healthcare, government-adjacent businesses with the most stringent security and compliance requirements.
Key Add-Ons and Extras
Microsoft Copilot - ~$38 AUD/user/month
The Microsoft AI assistant that works across Teams, Word, Excel, PowerPoint, Outlook, and other Microsoft 365 applications. Drafts emails, summarises meetings, analyses data, and generates content based on your prompts.
Requires: Microsoft 365 Business Premium or E3/E5 as a base licence.
Best for: Knowledge workers who write frequently, attend many meetings, or work extensively in Office applications. Not cost-effective for light users.
Microsoft Intune Suite - ~$11 AUD/user/month add-on
Advanced device management capabilities beyond standard Intune Plan 1:
- Advanced Endpoint Analytics
- Remote Help (attended remote support in Intune)
- Tunnel for Mobile Application Management
- Privilege Management (temporary admin access for specific tasks)
- Enterprise App Management (streamlined app deployment)
When to add: Organisations with complex device management requirements. See Should Your Business Upgrade to Microsoft Intune Suite? for detailed analysis.
Microsoft Teams Phone Standard - included in Business Standard and Premium
Adds PSTN calling capability to Teams (make and receive phone calls from Teams). Requires a Microsoft Calling Plan or Direct Routing SIP trunk as the carrier.
Microsoft Calling Plan - variable, approximately $16 AUD/user/month
The carrier service that connects Teams Phone to the public phone network. Included domestic calls per month (varies by plan tier). Not required if you use Direct Routing via your own SIP carrier.
Licence Decision Guide
Use this guide to select the right licence for each role in your business:
| Role Type | Recommended Licence | Rationale |
|---|---|---|
| Knowledge worker (writes, presents, analyses) | Business Premium | Needs Office desktop + security |
| IT/Admin/Manager with device management needs | Business Premium | Requires Intune + Conditional Access |
| Light user (email only, browser-based) | Business Basic | No need for Office desktop apps |
| Part-time / casual with minimal needs | Business Basic | Cost-effective for low-use roles |
| Anyone using a laptop outside the office | Business Premium | Needs Intune device management |
| Anyone handling sensitive data | Business Premium | Needs Defender, Information Protection |
Rule of thumb for most Australian SMBs: Default to Business Premium. The cost difference between Business Standard and Business Premium is approximately $10/user/month. The security and device management capabilities in Business Premium are worth significantly more than $10/user/month in risk reduction. Only assign Business Basic for genuinely light users.
Common Licencing Mistakes
Mixed licences without understanding the implications: Assigning some users Business Premium and others Business Basic creates a two-tier security environment. Devices owned by Business Basic users will not be enrolled in Intune or covered by Defender for Business - creating security blind spots.
Assigning licences by cost alone: The $9 difference between Business Basic and Business Premium per user is trivial compared to the cost of a security incident. The security tools in Business Premium are not optional extras.
Not using included features: Many businesses pay for Business Premium and use only the features available in Business Basic. If you have Business Premium and have not configured Defender for Business, enrolled devices in Intune, or set up Conditional Access Policies, you are not getting the value you are paying for.
Over-assigning Copilot: Microsoft 365 Copilot at ~$38/user/month is only cost-effective for users who will genuinely use it daily. Assign to high-ROI users first.
For a walkthrough of everything included in your current Microsoft 365 licence, see Microsoft 365 Hidden Features Guide.
If you want help reviewing your current Microsoft 365 licencing mix and optimising it for your business, build my plan with CX IT Services.
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