Microsoft 365 & Copilot in the Enterprise · Chapter 6 of 12
Licensing — the part you actually came for
Every tier, what each really includes, the Teams unbundling in all four of its acts, and the twelve months of changes that compound.
This is the chapter people need and the one nobody writes down, because it goes stale. Every price here was observed in August 2026, in US dollars, at list, on annual commitment. Treat the structure as durable and the numbers as a snapshot — and note that your price will differ, for reasons the purchasing section explains.
Business tier — up to 300 seats
| Plan | Per user / month | Without Teams |
|---|---|---|
| Apps for Business — desktop Office only, no email | $10.00 | — |
| Business Basic | $7.00 | $5.40 |
| Business Standard with Copilot | $23.50 | — |
| Business Premium with Copilot | $32.00 | — |
The 300-seat cap is stricter than people assume. Microsoft's own wording: if an organisation is provisioned for 250 seats of Business Premium, it may provision only 50 more in total across the whole Business family.
It is 300 across all Business plans combined, not 300 of each. And the 301st hire does not just need a different licence — it forces the organisation onto Enterprise tiers.
If you are advising a company near 250 people, this is the number that should be in the plan a year early, because the jump from Business Premium at $32 to E3 at $39 or E5 at $60 is a step change in the bill, not a gradient.
Enterprise tier
| Plan | Now | Before 1 Jul 2026 | Without Teams |
|---|---|---|---|
| Office 365 E1 | $10.00 | unchanged | — |
| Office 365 E3 | $26.00 | ~$23.00 | — |
| Microsoft 365 E3 | $39.00 | $36.00 | $30.45 |
| Microsoft 365 E5 | $60.00 | $57.00 | $51.45 |
| Microsoft 365 E7 (new) | $99.00 | did not exist | $90.45 |
| Teams Enterprise, standalone | $8.55 | — | — |
A number worth pausing on
The no-Teams discount is a flat $8.55 on every enterprise plan — and $8.55 is exactly the standalone Teams price.
Bundled Teams is priced at precisely its own marginal cost. There is no bundling discount at the enterprise tier at all.
Which tells you the unbundling was engineered to be revenue-neutral, and that dropping Teams from your suite saves you nothing unless you genuinely stop using it.
Office 365 versus Microsoft 365 — the actual difference
These are two different product lines and the names are almost identical. Microsoft's own framing: Office 365 includes foundational productivity apps — Word, Excel, PowerPoint, Outlook, email, storage. Microsoft 365 includes everything in Office 365, plus Windows, built-in security, and device and identity management.
Concretely, Microsoft 365 E3 adds over Office 365 E3: Windows 11 Enterprise upgrade rights, Entra ID P1, Intune Plan 1, Defender for Endpoint P1, plus Autopilot and Remote Help. That last point matters more than it looks: Office 365 E3 gives you only the free tier of Entra ID, so no Conditional Access. The $13 gap between $26 and $39 is largely buying you the ability to write security policy at all.
Frontline tiers — F1 and F3
| Plan | Per user / month | Mailbox | Office apps |
|---|---|---|---|
| M365 F1 | $3.00 | None — Teams calendar access only | Web and mobile, read-only |
| M365 F3 | $10.00 | Kiosk mailbox, 2 GB | Web and mobile, full editing |
Both give 2 GB of cloud storage and no desktop Office at all. F3 is frequently mis-sold internally as ‘E3 but cheaper’. It is not remotely that. It is licensed per task worker — a retail floor, a warehouse, a shop counter — and giving it to a knowledge worker produces an immediate complaint about Excel.
E7, and what it says about the pricing strategy
Microsoft 365 E7 was announced 9 March 2026 and became generally available 1 May 2026 — the first new top tier since E5 in 2015. It bundles E5 + Entra Suite + Microsoft 365 Copilot + Agent 365, a new control plane for governing AI agents.
The arithmetic: bought separately those come to roughly $117 (E5 $60 + Copilot $30 + Entra Suite $12 + Agent 365 $15). Bundled, $99. About a 15% bundle discount — and, not coincidentally, a tier that captures the customer who was about to question whether E5 was worth $60 after the July increase.
Add-ons worth knowing by name
- Microsoft Defender Suite and Microsoft Purview Suite — the renamed E5 Security and E5 Compliance, around $12 per user per month each.
- Teams Phone Standard — hosted phone system, around $10. A calling plan is a further add-on on top; the licence gives you the switchboard, not the calls.
- Audio Conferencing — dial-in numbers for meetings. Genuinely contested: two live Microsoft pages disagree about whether this is still a paid add-on for E1 and E3. One states plainly that it is and that E5 includes it; another presents it as free with a metered allowance. Check it against your own agreement rather than trusting any third-party summary, including this one.
The Teams unbundling — four acts, and most retellings stop at two
| When | What happened | |
|---|---|---|
| Act 1 | 1 Oct 2023 | Europe and Switzerland only. Teams separated from the suite, following Slack's antitrust complaint. |
| Act 2 | 1 Apr 2024 | Worldwide. New enterprise customers had to buy two products to get both the suite and Teams. Existing subscribers grandfathered. The delta was about $2.25. |
| Act 3 | 12 Sep 2025 | The European Commission accepted Microsoft's commitments and closed the case with no fine. Microsoft applied them worldwide. |
| Act 4 | 1 Nov 2025 | With-Teams suites came back. Anyone can buy a single bundled product again — but no-Teams prices were cut and standalone Teams raised, simultaneously, to keep the gap wide. |
Act 4 reverses Act 2, and almost nothing written in 2024 mentions it.
If your understanding is ‘you have to buy Teams separately now’, that has been wrong since November 2025. What changed permanently is the size of the gap — $2.25 at launch, $8.55 today, roughly 3.8 times larger — not the availability of the bundle.
This is a good example of why licensing questions need a dated source. A confident, well-written, entirely stale answer is the most common failure mode here.
Where you buy it changes what you pay
| Channel | Who bills you | Term | Notes |
|---|---|---|---|
| Enterprise Agreement | Microsoft | 3 years | Practical floor around 500 seats. Microsoft is actively narrowing eligibility and steering mid-size customers elsewhere. |
| Microsoft Customer Agreement | Microsoft, direct | No fixed expiry | The newer default for direct enterprise deals. More flexible than the EA's fixed anniversary. |
| Cloud Solution Provider | A partner, not Microsoft | Monthly, annual or triennial | List price plus partner margin. Most flexible, least leverage at scale. |
A concrete illustration that the same product name is not the same price. A December 2025 partner price list showed Business Standard with Copilot at $30.50 and Business Premium with Copilot at $43.00 — against direct retail prices today of $23.50 and $32.00. Some of that gap is timing and some is partner margin, and the published figures do not let you separate them. The point stands: a quoted SKU price means nothing without the channel attached.
Term versus billing frequency — and a 2025 premium many people missed
These are two separate choices that combine. Term is how long you are locked in; billing frequency is how often you are charged.
| Term | Billing | Price |
|---|---|---|
| Annual or triennial | Upfront | Baseline — cheapest |
| Annual or triennial | Monthly instalments, still locked in | +5%, from 1 April 2025 |
| Monthly, no lock-in | Monthly | +20% — full flexibility, cancellable each renewal |
The middle row is the one that surprises people. You are still committed for the year; you are paying 5% purely for the cash-flow convenience of not paying it all at once. It can be dropped at renewal by switching to upfront.
The twelve months that compound
The 1 November 2025 discount removal deserves particular attention, because it is the least visible and the most consequential. Volume discount tiers were eliminated: everyone now pays the single published rate regardless of size. Estates over roughly 2,400 seats absorb the biggest increase — the customers who previously had the most negotiating leverage lost the most. It also removes the cushion that made over-provisioning tolerable, which is exactly why licensing governance became a real discipline in 2026 rather than an afterthought.
The commonest overspend patterns, from consultancy sources: E5 issued to people who do not need it; no F-tier used for genuine task workers; duplicate licensing, where standalone security add-ons were bought before anyone checked what E5 already contained; and Copilot purchased ahead of any deployment plan — which chapter 11 has rather a lot to say about.
Check yourself