Microsoft 365 Business Premium vs E3: which is right for your business?

Microsoft 365 Business Premium is designed for businesses with up to 300 users, while Microsoft 365 E3 is an enterprise plan without that user limit. Both offer productivity, security and device management capabilities, but they differ in their licensing, security and compliance features.

The right choice depends on the size of your business and your security and compliance needs. For organisations with up to 300 users, Microsoft 365 Business Premium covers most productivity, security and device management needs at a lower cost. Microsoft 365 E3 earns its place when you need more than 300 users, Windows Enterprise security features or additional Intune device management.

Many businesses get the best value by mixing the two. But even that means knowing which users will really benefit from the upgrade to E3. Choosing the wrong licence, or the wrong mix of licences, can lead to a poor user experience, business risk and significantly inflated costs.

In this article, we cover the most important ‘Business Premium vs E3’ questions and explain what you need to know to get the right mix of licences for your business, avoiding both unnecessary costs and capability gaps.

Table of contents

1. What are Microsoft 365 Business Premium and Microsoft 365 E3?

2. Business Premium vs E3: side-by-side comparison

3. Office 365 E3 vs Business Premium: not the same as Microsoft 365 E3

4. How to choose between Business Premium and E3: questions to address

5. What happens when you go over 300 users on Business Premium?

6. Upgrade to E3 or add Defender and Purview to Business Premium?

7. Common Microsoft 365 licensing mistakes to avoid

8. How Texaport can help you find the right licence mix

9. E3 vs Business Premium: frequently asked questions
   
   

What are Microsoft 365 Business Premium and Microsoft 365 E3?

Microsoft 365 Business Premium is the most advanced Microsoft 365 edition for small and medium-sized businesses. Microsoft describes it as delivering “enterprise-grade technology built for businesses with fewer than 300 users”.

Microsoft 365 E3 is the most affordable enterprise edition of Microsoft 365 that includes the full desktop versions of Microsoft 365 applications. It also comes with enterprise licensing rights, Windows Enterprise, additional Intune device management capabilities and expanded scalability for larger organisations.

Both editions include Microsoft Intune for managing company devices and Entra ID P1 for controlling user access. Business Premium includes Defender for Business for endpoint security, while E3 adds Windows Enterprise licensing, which provides additional operating system security and management capabilities, and removes the 300-user limit.

What do Microsoft 365 Business Premium and E3 both include?

Features common to both Microsoft 365 Business Premium and E3 include:

• Microsoft 365 apps, email and OneDrive storage for everyday work.

• Microsoft Teams and SharePoint for communication, file sharing and collaboration.

• Microsoft Intune Plan 1 for managing devices, applications, policies and security.

• Microsoft Entra ID P1 for identity management, authentication and access control.

• Microsoft Defender for Office 365 Plan 1.

• Microsoft Purview capabilities for data protection and compliance, including data loss prevention, retention and standard eDiscovery.

What does Microsoft 365 Business Premium include?

Features of Microsoft 365 Business Premium include:

• Defender for Business, for endpoint protection, detection and response.

• Microsoft 365 business licensing designed for organisations with up to 300 users.

What does a Microsoft 365 E3 licence include?

Features of Microsoft 365 E3 include:

• Enterprise licensing for organisations of any size, without the 300-user limit.

• Windows 11 Enterprise E3 licensing for additional security and management capabilities.

• Expanded OneDrive storage for eligible users (up to 5 TB per user).

• Intune Remote Help, Intune Advanced Analytics and selected Intune Plan 2 capabilities for remote support and device management.

If your compliance requirements go beyond E3, see our comparison of Microsoft 365 E3 and E5.

Business Premium vs E3: side-by-side comparison

For organisations with up to 300 users, Business Premium offers productivity, device management, and security in one package. E3 is better suited to larger businesses or those needing enterprise Windows licensing or additional Intune capabilities.

For an SMB, the key differences between the two editions are:

1. Price: Microsoft 365 E3 costs £33.50 per user per month, while Microsoft 365 Business Premium costs £16.90 per user per month.*

2. Scalability: Microsoft 365 E3 has no cap on the maximum number of users, while Microsoft 365 Business Premium has a 300-user cap.

3. Windows Enterprise security: Microsoft 365 E3 includes security and management capabilities beyond those offered by Microsoft 365 Business Premium, in particular:

   1. Credential Guard: protects employee sign-in credentials against theft, reducing the risk of unauthorised access.

   2. AppLocker: prevents employees from running unauthorised applications and scripts, reducing security risks from potentially malicious software.

   3. Always On VPN device tunnel: enables secure remote access and device management even before Windows sign-in.

4. Differing endpoint security capabilities: Microsoft 365 E3 lacks equivalent bundled EDR and automated investigation and remediation capabilities.

   1. Microsoft 365 Business Premium: includes Defender for Business, with endpoint detection and response (EDR) and automated remediation.

   2. Microsoft 365 E3: includes Defender for Endpoint Plan 1 for malware prevention and attack surface reduction, but lacks EDR and automated remediation.

5. Compliance capabilities: both plans include data loss prevention, retention and eDiscovery, and E3 adds little in this area beyond Exchange Online Archiving for on-premises Exchange Server.

6. Online storage: Microsoft 365 E3 can provide up to 5 TB for eligible users, compared to 1 TB with Microsoft 365 Business Premium.

For SMBs, the choice comes down to whether E3’s additional scalability, security (particularly Credential Guard), device management and storage capabilities justify its higher cost, particularly given the endpoint protection already included in Business Premium.

*UK list prices excluding VAT, as at July 2026, for plans that include Microsoft Teams by default and for annual commitments, billed annually.

Office 365 E3 vs Business Premium: not the same as Microsoft 365 E3

If you’re comparing Business Premium with Office 365 E3, you’re comparing two very different plans. Office 365 E3 covers productivity, email and collaboration, but unlike Microsoft 365 Business Premium it doesn’t include Microsoft Intune for device management, Microsoft Entra ID P1 for conditional access or Microsoft Defender for Business for endpoint security. Its main advantage over Business Premium is that it has no 300-user limit.

Office 365 E3 is easily confused with Microsoft 365 E3, which builds on Office 365 E3 by adding Intune, Entra ID P1, Defender for Endpoint and Windows 11 Enterprise. Checking which E3 you’re comparing can change the answer completely.

To check which E3 plan your business uses, sign in to the Microsoft 365 admin centre and go to Billing > Your products. This displays your subscriptions by product name, allowing you to distinguish between Office 365 E3 and Microsoft 365 E3. You'll need global administrator or billing administrator permissions to view this information.

How to choose between Business Premium and E3: questions to address

Which edition of Microsoft 365 you choose depends on your organisation’s specific business, security and compliance needs, and on how many users you need to support.

Here are the most important questions you should ask before making your decision:

1. How many users do you need to support, now and in the foreseeable future?

Microsoft 365 Business Premium only supports up to 300 users. If you have more users than this, or your organisation is growing and will soon exceed the 300-user cap, choose Microsoft 365 E3 or mix licences to achieve the best balance of cost and capabilities.

2. Do you need compliance capabilities beyond those included in Business Premium?

Microsoft 365 Business Premium already includes a substantial range of compliance capabilities, including data loss prevention for email and files, retention policies and labels, eDiscovery content search, Litigation Hold, email archiving and standard auditing.

Businesses should therefore identify the specific additional capabilities they need before assuming that an upgrade to E3 is necessary.

In practice, E3 adds very little compliance capability beyond Business Premium. The main exception is Exchange Online Archiving for Exchange Server, which helps organisations retain email records for the periods required by their internal policies or for legal or regulatory compliance.

3. Have you checked the impact on existing workflows and integrations?

If you decide to migrate some or all of your users in either direction, make sure first that doing so will not break key dependencies, deprive users of features they need, or interrupt important workflows.

For instance, migrating from Microsoft 365 E3 to Microsoft 365 Business Premium can help you reduce licensing costs. But your organisation might rely on Windows Enterprise configurations, Intune Plan 2 capabilities such as Remote Help or specialist compliance capabilities. Review these dependencies and any additional licensing costs before making the switch.

The same kind of question arises when you upgrade from Microsoft 365 Business Premium to Microsoft 365 E3. Microsoft 365 Business Premium includes Defender for Business, with endpoint detection and response (EDR), vulnerability management and automated remediation. E3 instead includes Defender for Endpoint Plan 1, which does not provide the same built-in EDR capabilities. Businesses needing equivalent protection may need to license additional products.

4. Do all users need the same licence, or could a mix reduce cost?

Some users or teams may genuinely need the advanced features of Microsoft 365 E3. For instance, staff handling large datasets may need extra online storage; legal or compliance personnel may need extra security and compliance features.

But that doesn't mean that you should upgrade the whole organisation, or even whole teams. A targeted licensing approach can help you get exactly the right mix of capabilities without unnecessary expense.

5. Is your reason for upgrading valid?

Before upgrading to Microsoft 365 E3, check whether you actually need the additional features. For example, a business might assume that an accounting application requires E3 licences and upgrade all its employees, only to discover that the software works perfectly well with Business Premium. Always verify application requirements and licensing dependencies before upgrading, rather than paying for capabilities you may not need.

What happens when you go over 300 users on Business Premium?

Business Premium has a 300‑user limit, but hitting it doesn’t mean moving everyone to E3. You can keep up to 300 users on Business Premium and license additional employees with E3. This is usually the more cost-effective option when most users don’t need E3’s additional features.

On the other hand, moving everyone to E3 may make sense if more staff require enterprise capabilities or if licence standardisation would simplify management. Before reaching the limit, assess expected growth, user needs, and the total cost of each option, including additional security licences.

Upgrade to E3 or add Defender and Purview to Business Premium?

Upgrading to E3 isn't the only way to access additional security and compliance capabilities. Microsoft offers Defender Suite, for more advanced protection against malware and other cyber threats, and Purview Suite, for additional data security, governance and compliance capabilities. Both are available as add-ons for Business Premium, allowing businesses to extend their existing licences without moving to E3.

Before upgrading, compare the total cost of Business Premium plus the relevant add-ons against E3 plus any additional features you need. The most cost-effective choice depends on your requirements, not just the headline licence prices.

Common Microsoft 365 licensing mistakes to avoid

Choosing the wrong Microsoft 365 licences can mean unnecessary costs, security gaps and operational disruption. Common mistakes include:

Starting with a licence rather than business requirements: identify what your employees need before deciding which Microsoft 365 plan to buy.

• Assuming E3 is better full stop: Business Premium includes Defender for Business with EDR and automated remediation. Moving to E3 means losing these or buying security add-ons.

• Paying for compliance features you already have: Business Premium includes DLP, retention policies, eDiscovery and email archiving. E3 adds little on top, so check what you actually need.

• Ignoring the 300-user limit: waiting until you reach the cap can force rushed licensing decisions. Plan for growth before it becomes a problem.

• Comparing headline prices, not total costs: factor in any security, compliance or other add-ons required to meet your needs, rather than comparing subscription prices alone.

For more ways to identify unnecessary licensing costs, read our guide to Microsoft 365 optimisation.

How Texaport can help you find the right licence mix

Most licensing overspend comes from habit rather than need: users upgraded without a clear requirement, licences carried over from old roles, and add-ons that duplicate what Business Premium already includes. Texaport engineers see this most often in businesses approaching the 300-user limit, where it’s tempting to move everyone to E3 at once.

As a Microsoft Solutions Partner for Modern Work, Texaport can help you make informed licensing decisions. Our Microsoft 365 specialists can:

• Audit your licences and usage to find overlaps, unused seats and add-ons you’re paying for twice.

• Match each user to the right plan, identifying where Business Premium is enough and where E3 justifies the cost.

• Plan for future growth, including expansion beyond the 300-user Business Premium limit.

• Configure and deploy your Microsoft 365 environment to minimise disruption.

• Provide ongoing support and optimisation as your business requirements change.

Contact Texaport to arrange a licensing audit and find out whether you're paying for the right mix of licences.

E3 vs Business Premium: frequently asked questions

What is the difference between Microsoft 365 Business Premium and Microsoft 365 E3?

Microsoft 365 Business Premium is designed for organisations with up to 300 users, while E3 supports larger organisations and includes additional enterprise capabilities. Both provide Microsoft 365 applications, security and device management. But E3 also includes Windows 11 Enterprise E3, additional Intune capabilities such as Remote Help and Advanced Analytics, and more OneDrive storage, while Business Premium includes Defender for Business for endpoint detection and response.

Is Microsoft 365 Business Premium worth it for businesses under 300 users?

Yes, Business Premium offers comprehensive productivity, security and device management capabilities at a lower price than E3. For businesses with fewer than 300 users, it's often the more cost-effective choice unless they need specific enterprise features.

For more detail, read our guide to the benefits of Microsoft 365 Business Premium.

Is Microsoft 365 E3 worth the extra cost for a business under 300 users?

Only if some of your users need features that Business Premium doesn’t include, such as Windows 11 Enterprise, Intune Remote Help and Advanced Analytics, or OneDrive storage beyond 1 TB. Even then, it’s often more cost-effective to license only those users with E3 and keep everyone else on Business Premium. Bear in mind that E3 doesn’t include Defender for Business, so moving to E3 can mean buying extra endpoint security.

Can you mix Business Premium and E3 licences in the same organisation?

Yes, you can assign Business Premium and E3 licences to different users within the same Microsoft 365 organisation. This allows businesses to provide enterprise features to employees who need them while keeping others on the less expensive Business Premium plan.

Can you buy Microsoft 365 E3 for fewer than 300 users?

Yes, Microsoft 365 E3 has no minimum requirement of 300 users. Businesses can purchase E3 licences for individual employees who need additional enterprise capabilities, even if the organisation has far fewer than 300 users.

What is the mailbox size for Business Premium compared with E3?

Both Microsoft 365 Business Premium and Microsoft 365 E3 provide 100 GB primary mailboxes per user. Both also support archive mailboxes of up to 1.5 TB with auto-expanding archiving enabled, so mailbox capacity is no longer a significant difference between the plans.

Do you lose any security features moving from Business Premium to E3?

Yes, moving from Business Premium to E3 can mean losing some endpoint security capabilities. Business Premium includes Defender for Business, with endpoint detection and response (EDR) and automated investigation and remediation, while E3 includes Defender for Endpoint Plan 1. Additional licensing may be needed to maintain equivalent protection.