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Understanding Microsoft 365 Licensing and Plan Differences
Applies to: Microsoft 365 (all plans)
Article Type: Informational
Last Updated: 2026-05-18
Summary
Your Microsoft 365 license determines which apps and features you can use. Not all plans include desktop Office apps, advanced security, or compliance tools. This article breaks down the major plan families, what each includes, and helps you understand why a feature might be unavailable.
Prerequisites
- A Microsoft 365 account provided by your organization.
Instructions
1. How Microsoft 365 Licensing Works
Microsoft 365 licenses are per-user and cloud-based. Your IT administrator purchases a plan (a bundle of services), then assigns individual licenses to users in the Microsoft 365 Admin Center.
Key concepts:
- Plan — A bundle of services sold together (e.g., Microsoft 365 E3 includes Exchange, Teams, Office apps, and more).
- Service Plan — An individual feature within a plan (e.g., Exchange Online, SharePoint Online). IT can toggle individual service plans on or off.
- Assigned vs. Available — A license must be assigned to your account for you to use it. Available licenses in the tenant do not automatically apply.
- Grace Period — If your organization's subscription expires, there is usually a 30-day grace period before services are suspended.
2. Business Plans Comparison (Up to 300 Users)
Business plans are designed for small and mid-sized organizations.
| Feature | Business Basic | Business Standard | Business Premium |
|---|---|---|---|
| Email (Exchange) | ✅ 50 GB mailbox | ✅ 50 GB mailbox | ✅ 50 GB mailbox |
| Web and Mobile Office Apps | ✅ | ✅ | ✅ |
| Desktop Office Apps (Word, Excel, PowerPoint, Outlook) | ❌ | ✅ | ✅ |
| Teams | ✅ | ✅ | ✅ |
| OneDrive | ✅ 1 TB | ✅ 1 TB | ✅ 1 TB |
| SharePoint | ✅ | ✅ | ✅ |
| Microsoft Bookings | ✅ | ✅ | ✅ |
| Microsoft Loop | ✅ | ✅ | ✅ |
| Intune (Device Management) | ❌ | ❌ | ✅ |
| Entra ID P1 (Conditional Access) | ❌ | ❌ | ✅ |
| Defender for Business | ❌ | ❌ | ✅ |
| Azure Information Protection | ❌ | ❌ | ✅ |
| Max Users | 300 | 300 | 300 |
Key takeaway: Business Basic gives you web-only Office apps and email. Business Standard adds the full desktop apps. Business Premium adds security and device management — it is the closest equivalent to Enterprise E3 for smaller organizations.
3. Enterprise Plans Comparison (Unlimited Users)
Enterprise plans are designed for larger organizations and include advanced compliance and security features.
| Feature | E1 | E3 | E5 |
|---|---|---|---|
| Desktop Office Apps | ❌ | ✅ | ✅ |
| Email (Exchange) | ✅ 50 GB | ✅ 100 GB | ✅ 100 GB |
| Teams | ✅ | ✅ | ✅ |
| SharePoint | ✅ | ✅ | ✅ |
| OneDrive | ✅ 1 TB | ✅ Unlimited* | ✅ Unlimited* |
| Entra ID | Basic | P1 | P1 + P2 |
| Conditional Access | ❌ | ✅ | ✅ |
| Data Loss Prevention (DLP) | ❌ | ✅ | ✅ |
| eDiscovery | ❌ | Standard | Premium |
| Information Protection / Sensitivity Labels | ❌ | ✅ Manual | ✅ Auto |
| Defender for Office 365 | ❌ | ❌ | ✅ Plan 2 |
| Phone System (Teams Calling) | ❌ | ❌ | ✅ |
| Power BI Pro | ❌ | ❌ | ✅ |
| Audio Conferencing | ❌ | ❌ | ✅ |
| Advanced Compliance | ❌ | ❌ | ✅ |
*OneDrive "Unlimited" starts at 5 TB per user and can be expanded by IT upon request.
Key takeaway: E1 is web-only (no desktop apps). E3 adds desktop apps, 100 GB mailbox, and core compliance. E5 adds advanced security (Defender), phone system, Power BI, and premium compliance.
4. Common Add-Ons
Some features are not included in any base plan and require a separate add-on license.
| Add-On | What It Does | Requires Base Plan |
|---|---|---|
| Microsoft 365 Copilot | AI assistant across Word, Excel, PowerPoint, Outlook, Teams | Business Standard/Premium or E3/E5 |
| Visio Plan 2 | Professional diagramming (flowcharts, org charts, network diagrams) | Any M365 plan |
| Project Plan 3 / 5 | Project management with scheduling, resource management | Any M365 plan |
| Power Automate Premium | Advanced workflow automation with premium connectors | Any M365 plan |
| Audio Conferencing | Dial-in phone numbers for Teams meetings | E1 or E3 (included in E5) |
| Microsoft Defender for Endpoint | Advanced endpoint security beyond Defender for Business | E3/E5 or Business Premium |
| Teams Phone | Make and receive PSTN phone calls in Teams | E1/E3 (included in E5) |
5. "Why Can't I Use This Feature?" — License Lookup
If a feature is missing or grayed out, it is usually because your license does not include it.
| Missing Feature | Minimum License Required |
|---|---|
| Desktop Word, Excel, PowerPoint | Business Standard, E3, or higher |
| Copilot in Office apps | Microsoft 365 Copilot add-on (requires Business Standard/Premium or E3/E5) |
| Conditional Access (require MFA by location) | Entra ID P1 — Business Premium, E3, or higher |
| Power BI Pro dashboards and sharing | E5 or Power BI Pro add-on |
| Intune device enrollment | Business Premium, E3, or Intune add-on |
| Data Loss Prevention (DLP) policies | E3 or higher |
| Auto-expanding email archive | E3 or higher (Exchange Online Plan 2) |
| eDiscovery (Standard) | E3 or higher |
| eDiscovery (Premium) | E5 or E5 Compliance add-on |
| Sensitivity labels (automatic) | E5 or E5 Information Protection add-on |
| Teams Phone (PSTN calling) | E5 or Teams Phone add-on |
| Teams meeting dial-in numbers | E5 or Audio Conferencing add-on |
| Advanced threat investigation (Defender) | E5 or Defender for Office 365 add-on |
6. How to Check Your License
Method 1 — My Account (End Users):
- Go to https://myaccount.microsoft.com.
- Sign in with your work account.
- Click Subscriptions in the left menu.
- Your assigned license(s) and included services are listed.
Method 2 — Microsoft 365 Admin Center (IT Staff):
- Go to https://admin.microsoft.com.
- Navigate to Users > Active Users.
- Click a user's name, then click the Licenses and apps tab.
- Expand the license to see individual service plans and their on/off status.
Method 3 — PowerShell (IT Staff):
powershell
Get-MgUserLicenseDetail -UserId [email protected] | Select-Object SkuPartNumber7. Key Terms Glossary
| Term | Definition |
|---|---|
| Tenant | Your organization's instance of Microsoft 365 — all users, data, and settings live here |
| Subscription | The agreement that gives your tenant access to a specific plan (e.g., "Microsoft 365 E3 — 500 licenses") |
| License | A single seat within a subscription that is assigned to one user |
| Service Plan | An individual feature within a license (e.g., Exchange Online, Teams) that IT can toggle on or off |
| Assigned | The license has been explicitly given to a user — they can use the services |
| Available | The license exists in the tenant pool but has not been assigned to anyone yet |
| Grace Period | A 30-day window after subscription expiration during which services continue to work before being suspended |
Troubleshooting
INFO
If a feature is missing or grayed out, the most common cause is that your license does not include it. Check your subscription at myaccount.microsoft.com > Subscriptions and compare with the tables above. If you believe you should have access, contact IT — they may need to assign the license or enable a specific service plan.
| Symptom / Error | Potential Cause | Solution |
|---|---|---|
| Office apps say "Unlicensed Product" | License not assigned or sign-in issue | Sign out of all Office apps, sign in again with your work account. If it persists, contact IT to verify license assignment. |
| "Your admin has turned off this feature" | Service plan toggled off in Admin Center | Contact IT to enable the specific service plan within your license. |
| Cannot install desktop Office apps | Business Basic or E1 license (web-only) | You need Business Standard, E3, or higher for desktop apps. Contact IT to discuss upgrade. |
| Teams Phone / Dial Pad missing | No Teams Phone license | E5 includes Phone System. E1/E3 users need the Teams Phone add-on. |
| Power BI "need a license" prompt | No Power BI Pro license | E5 includes Power BI Pro. Others need the add-on. Ask IT which plan you are assigned and whether a Power BI Pro license can be added to it. |
| Copilot not available in Office apps | Copilot add-on not assigned | Copilot requires a separate add-on license plus E3/E5 or Business Standard/Premium. Ask IT to confirm which base plan you hold and whether a Copilot add-on is available to you. |