Microsoft 365 E3 vs E5 (and Office 365 E1, E3 and E5) Compared

Microsoft 365 E5 is E3 plus Microsoft's top tier of security, compliance and calling: Defender for Endpoint Plan 2, Defender for Office 365 Plan 2, Defender for Identity, Defender for Cloud Apps, Entra ID P2, premium Purview audit and eDiscovery, Teams Phone and Power BI Pro. As of October 2026, E3 lists at $39.00 and E5 at $60.00 per user per month with an annual commitment, so the decision comes down to whether your organization will actually run $21.00 a person of extra tooling.

This guide compares the two line by line, covers the Intune features Microsoft folded into both in July 2026, explains how Office 365 E1, E3 and E5 differ, and shows the add-on route between E3 and E5. If you have fewer than 300 people, read the section on fit first, because Business Premium often beats both. Our Microsoft 365 management service reviews these licenses for clients at renewal.

From Microsoft's enterprise plans and pricing page and its E3 and E5 plan pages, checked October 2026. Both plans have no user limit, desktop Office apps, a 100 GB mailbox with an archive up to 1.5 TB, and 1 TB or more of OneDrive per user.

What is the difference between Microsoft 365 E3 and E5?

E3 is the complete productivity platform with solid baseline security: the Office apps, Exchange, SharePoint, OneDrive and Teams, Windows Enterprise, Intune and Conditional Access. E5 keeps all of it, moves each security and compliance product up to its higher plan, and adds tools E3 doesn't have at any tier, such as Defender for Identity, Insider Risk Management and Power BI Pro.

Microsoft describes E5's data security and compliance as built for higher data risk and regulations, which is a fair summary of the gap. The E5 tools pay off when someone reviews their alerts, investigations and reports. Licensed but unwatched, they add cost and little else.

What security does E5 add?

• Defender for Endpoint Plan 2. Endpoint detection and response across platforms, vulnerability management and automatic disruption of human-operated ransomware. E3 carries Plan 1, the lighter tier.
• Defender for Office 365 Plan 2. Microsoft's fuller phishing protection across email, Teams, SharePoint and OneDrive, on top of the Plan 1 protection E3 now includes.
• Defender for Identity. Uses on-premises Active Directory signals to detect compromised accounts and attacks on identity. It matters most if you still run domain controllers.
• Defender for Cloud Apps. Discovers and controls the cloud apps staff use, including generative AI tools.
• Entra ID P2. Risk-based Conditional Access, which can block or challenge a sign-in Microsoft scores as risky, plus Privileged Identity Management for time-limited admin rights.
• Security Copilot. Microsoft added it to E5 in its July 2026 update.

Microsoft Defender XDR ties these together, correlating signals from endpoints, identities, email and apps into single incidents in one portal. It isn't bought separately: access comes with E5 and with each Defender product, and what it can correlate depends on which Defender products you license, according to Microsoft's Defender XDR prerequisites.

What Intune features do E3 and E5 include since July 2026?

Microsoft folded several paid Intune add-ons into both suites in its July 2026 packaging update. Microsoft 365 E3 gained Intune Plan 2, Remote Help and Advanced Analytics. E5 gained those plus Endpoint Privilege Management, Microsoft Cloud PKI and Enterprise App Management, which Microsoft's Intune pricing page sums up as all Intune and advanced endpoint management capabilities.

Bought separately, those three E5-only tools list at $3.00, $2.00 and $2.00 per user per month as of October 2026, so they cover a third of the E3 to E5 gap only if you would buy them anyway. One caution: Microsoft's E3 product page also lists Endpoint Privilege Management, while its packaging update and Intune pricing page place it in E5. Check which capabilities your tenant shows as licensed in the Intune admin center before you buy an add-on.

How do Office 365 E1, E3 and E5 compare?

The Office 365 E plans are the apps-and-services versions: no Windows license, no Intune and only the free tier of Entra ID. They differ by apps, mailbox size and the compliance and calling tools on top.

So Office 365 E1 vs E3 is mainly desktop apps and a bigger mailbox for $16.00 more, and E3 vs E5 is calling, analytics and stronger email protection. When people say Microsoft 365 E1 they usually mean Office 365 E1; Microsoft's July 2026 price list has no Microsoft 365 E1. Our Microsoft 365 vs Office 365 guide explains what the Microsoft 365 versions add to each.

Can you buy E3 plus add-ons instead of E5?

Yes, and for some firms it's the better deal. Microsoft sells the E5 security and compliance layers as two add-ons for E3 customers, each at $12.00 per user per month as of October 2026, on its security suites page:

• Microsoft Defender Suite, previously Microsoft 365 E5 Security: Defender XDR, Defender for Endpoint Plan 2, Defender for Identity, Defender for Office 365 Plan 2, Defender for Cloud Apps and Entra ID P2.
• Microsoft Purview Suite, previously Microsoft 365 E5 Compliance: the data security and compliance tools.

E3 plus the Defender Suite comes to $51.00, $9.00 less than E5, and buys most of E5's security without Teams Phone, Power BI Pro or the premium compliance tools. Add the Purview Suite too and you reach $63.00, more than E5 itself. The rule of thumb: E3 plus the Defender Suite when security is the gap, full E5 when you also need compliance, calling or analytics.

Which fits a small team?

For a business under 300 people, usually neither. Microsoft 365 Business Premium, at $22.00, already includes Intune, Entra ID P1 with Conditional Access, Defender for Business and Defender for Office 365 Plan 1. Our Business Premium vs E3 comparison explains why Premium often protects a small firm better than E3 does.

E3 and E5 come into the picture in three situations:

• You have more than 300 users, or expect to soon. Business plans stop at 300 seats.
• You need an E-plan feature, such as Windows Enterprise, eDiscovery, larger OneDrive allowances or Teams Phone for everyone.
• A regulator, insurer or client expects E5-level tools, such as Insider Risk Management, premium audit logs or identity threat detection, and someone will review what they find.

Licenses are assigned per user, so a mix is common: E3 for most staff, and E5 or the Defender Suite for administrators, finance and anyone handling sensitive records. Microsoft licenses risk-based sign-in protection per user, so cover everyone those policies need to protect.

What does each cost?

As of October 2026, Microsoft lists Microsoft 365 E3 at $39.00 and E5 at $60.00 per user per month with an annual commitment, or $30.45 and $51.45 without Teams; Teams Enterprise is $8.55 on its own. Both rose on July 1, 2026, from $36.00 and $57.00, according to Microsoft's pricing and packaging update, and existing customers move to the new prices at renewal. Above E5 sits Microsoft 365 E7 at $99.00, which bundles E5 with Microsoft 365 Copilot, Agent 365 and the Entra Suite.

For a 120-person company, the step from E3 to E5 is $30,240 a year at list price. Before paying it, cost the work: deploying Defender for Endpoint Plan 2, connecting Defender for Identity to your domain controllers, writing risk-based policies, setting up Purview, and above all deciding who reads the alerts. An E5 tenant nobody watches is an E3 tenant with a bigger bill.

How does NetSys help?

We compare which features each license carries with which ones are actually switched on. License waste is one of the most common savings we find in a new tenant review. Then we right-size: E5 or an add-on where the tools will be used, E3 or Business Premium elsewhere, unused seats retired and renewals managed. Our Microsoft 365 security hardening work configures Conditional Access, Defender and audit logging in an order that avoids lockouts.

Book a call with a NetSys engineer before your next renewal and we'll compare what your tenant uses today with what E5 would add.

Frequently asked questions

Is Microsoft 365 E5 worth it for a small business?

Rarely, unless a regulator, insurer or client requires its tools. Under 300 users, Business Premium covers device management, Conditional Access and endpoint protection for $22.00 per user per month as of October 2026. E5, at $60.00, makes sense when you will run its identity threat detection, insider risk and premium audit features with someone reviewing the results.

What is the difference between E3 and E5 in Intune?

Since Microsoft's July 2026 update, E3 includes Intune Plan 1, Plan 2, Remote Help and Advanced Analytics. E5 adds Endpoint Privilege Management, Cloud PKI and Enterprise App Management, which makes it the suite with every Intune advanced capability included.

Does Microsoft 365 E3 include Teams Phone?

No. Teams Phone is included in Microsoft 365 E5 and Office 365 E5, in the versions with Teams. E3 includes Teams Audio Conferencing as a no-cost add-on, and Microsoft lists Teams Phone Standard at $10.00 per user per month on its business plans page as of October 2026.

Is there a Microsoft 365 E1?

Not on Microsoft's current price list. The E1 plan is Office 365 E1, at $10.00 per user per month as of October 2026: web and mobile Office apps, a 50 GB mailbox, 1 TB of OneDrive and Teams, without desktop apps, Intune or Windows licensing.

Can we mix E3 and E5 licenses?

Yes. Licenses are assigned per user, so many organizations put most staff on E3 and give E5, or the $12.00 Defender Suite add-on, to administrators and people who handle sensitive data. Plan the split around the people your security policies must cover, because those protections are licensed person by person.