Most IT managers have had the same quiet thought at some point, usually just before a renewal comes up: are we paying for features we’ll never actually touch?
It’s a fair question and a harder one to get a straight answer to than it probably should be. When businesses compare Microsoft 365 E3 vs E5, E5 is the pricier option (and the one Microsoft tends to nudge you toward), so it’s easy to talk yourself into an assumption that dearer must automatically mean safer. However, more expensive isn’t automatically more needed, and whether the upgrade earns its cost comes down entirely to how your business actually works.
So, before you sign off on the higher tier, it’s worth understanding what you’re really getting for the difference and whether you’d ever use it.
Start With What You Already Have
Before weighing up the upgrade, it helps to be clear on how much Microsoft 365 E3 already does, because it’s a lot more than a starter tier.
E3 gives you the full working toolkit most businesses run on every day: the desktop versions of Word, Excel, PowerPoint and Outlook, business email through Exchange, file storage and sharing across SharePoint and OneDrive, and Teams for calls, meetings and collaboration. It also includes a solid layer of the less visible essentials, the identity, access and device management that decides who can log in, from where, and on what, alongside baseline protection against the everyday threats most businesses face.
For a large number of organisations, that combination is genuinely enough. E3 isn’t the cut-down option you upgrade away from as a matter of course. For plenty of businesses, it’s the right answer full stop, and the real question is whether anything about your situation justifies going further.
What E5 Adds, and Why Everyone Gets Nudged Toward It
Step up to E5 and you’re paying for four things on top of everything above:
- Advanced security: Protection that actively looks for trouble, catching malicious links and attachments, spotting compromised devices, and flagging unusual sign-ins before they turn into something worse, rather than simply filtering the obvious.
- Compliance and data governance: A set of tools marketed under the name Microsoft Purview. In practice that means things like advanced eDiscovery, the ability to find and pull together every email and document relevant to a legal case, dispute or investigation, and stronger controls to stop sensitive data leaving the business by accident.
- Proper analytics: Reporting and dashboards through Power BI Pro.
- Built-in telephony: Teams can replace a separate phone system entirely.
Microsoft bundles all of this so the headline jump looks modest, and if E5 lets you drop tools you already pay for separately, it can genuinely work out cheaper overall. But the gap shouldn’t be ignored. Based on Microsoft’s published enterprise pricing, E3 sits at around £37 per user each month and E5 at around £59, a difference of roughly £20 a user every month, and with Microsoft having raised list prices across most of its Microsoft 365 and Office 365 plans from July 2026, a renewal is a sensible moment to check whether you’re carrying features nobody uses.
The Tipping Point: When E5 Earns Its Cost
Whether the upgrade is worth it has little to do with the feature list and almost everything to do with your business. Four questions decide it:
- How big is your team? The per-user gap looks trivial until you multiply it. At roughly £20 a user each month, moving a thirty-person business from E3 to E5 adds more than £7,000 a year. On a few users it barely registers; across a whole organisation it becomes a real number that deserves a real reason.
- What is your risk profile? Do you hold genuinely sensitive data, or have senior people whose accounts are worth attacking? It pays to be honest rather than complacent here: Around 43% of UK businesses reported a breach or attack last year, with phishing the most common way in by a wide margin. E5’s advanced protection is built for exactly that threat, but only you can judge how exposed you really are.
- Do you have a compliance obligation? In regulated sectors such as legal, finance and healthcare, being able to run a proper eDiscovery process or prove how data is governed is not optional. If that is you, E5 stops looking like a luxury.
- Would an add-on do the job instead? The point most people miss: you can bolt individual E5 capabilities, such as advanced threat protection, onto E3 without buying the whole tier, which is often far cheaper than upgrading wholesale.
The Middle Path Most People Miss
There is a third answer that rarely gets mentioned, largely because it doesn’t suit whoever is doing the selling. You don’t have to put everyone on the same plan. Microsoft is perfectly happy for you to run mixed licensing within a single business, giving E5 to the handful of people who genuinely need it (your leadership, finance team, IT administrators and anyone handling sensitive data) while everyone else stays on E3.
For most businesses, that is where the honest answer lands. It protects the people most worth protecting, keeps you compliant where it actually matters, and stops you paying premium rates for staff who would never touch the difference. It tends to be the option we reach for first, precisely because it usually costs our clients the least.
The Right Licence Is the One That Fits
The honest takeaway is a simple one. The right Microsoft 365 licence isn’t the most expensive or the cheapest; it’s the one that matches how your business actually works and what it genuinely needs to protect. Get that wrong in either direction, and it costs you, whether that’s paying for capabilities nobody uses or leaving a real gap unprotected.
The good news is that this is a straightforward thing to check, and checking where you stand is a different exercise from deciding to change anything. If you’d like a clear, no-obligation view of whether your current licensing fits, our free Microsoft 365 assessment is a sensible place to start.
