Side-by-Side: Microsoft 365 E3 vs E5
Complete enterprise comparison: pricing, security, compliance, telephony, analytics, and ROI analysis for 2026.
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Complete enterprise comparison: pricing, security, compliance, telephony, analytics, and ROI analysis for 2026.
Last updated by Errin O'Connor, Founder & Chief AI Architect, EPC Group
Microsoft 365 E3 vs E5 Enterprise Comparison 2026 is a frequent enterprise comparison question. EPC Group helps Fortune 500 organizations evaluate platforms, score against compliance and total cost of ownership requirements, and select the right Microsoft-ecosystem fit. Microsoft enterprise consulting since 1997, in its 30th year.
What is the difference between Microsoft 365 E3 and E5?
Microsoft 365 E3 ($36/user/month) offers essential enterprise productivity and security features. This includes:
In contrast, Microsoft 365 E5 ($57/user/month) includes all E3 features plus:
The $21/user/month cost offers enterprise SOC capabilities and automates regulatory compliance. It also includes built-in business intelligence.
This solution can replace the $30-$50/user/month spent on third-party tools for many organizations.
The decision between Microsoft 365 E3 and E5 licensing is crucial for any enterprise. With over 430 million commercial Microsoft 365 users worldwide, this choice affects your:
Many organizations focus only on the sticker price. They often ignore the total cost of ownership, which shows that E5 is the more economical option for regulated enterprises.
This guide offers a detailed comparison of E3 and E5 for enterprise IT leaders. It includes:
This information is based on EPC Group's Microsoft 365 deployment experience in Fortune 500 organizations since 1997 (in its 30th year). For independent user feedback on the suite itself, see the Microsoft 365 reviews on G2, where licensing tier and security features are recurring themes.
Whether you are evaluating a new Microsoft 365 deployment, considering an E3-to-E5 upgrade, or optimizing a hybrid licensing strategy, this comparison will help you make a data-driven decision aligned with your organization's security, compliance, and budget requirements. For personalized guidance, contact our Microsoft 365 consulting team.
The following table summarizes every major capability difference between Microsoft 365 E3 and E5 enterprise licenses as of 2026.
| Feature Category | E3 ($36/user/mo) | E5 ($57/user/mo) |
|---|---|---|
| Office Desktop Apps | Included | Included |
| Exchange Online | Plan 2 (100 GB) | Plan 2 (100 GB) |
| SharePoint Online | Plan 2 | Plan 2 |
| Microsoft Teams | Full | Full + Phone System |
| Windows 11 Enterprise | E3 | E5 |
| Entra ID (Azure AD) | P1 | P2 (PIM, Identity Protection) |
| Microsoft Intune | Plan 1 | Plan 1 |
| Defender for Office 365 | Plan 1 | Plan 2 (auto-remediation) |
| Defender for Endpoint | Plan 1 | Plan 2 (EDR, AIR) |
| Defender for Cloud Apps | Not included | Included (CASB) |
| Defender for Identity | Not included | Included |
| eDiscovery | Standard | Premium (predictive coding) |
| Insider Risk Management | Not included | Included |
| Communication Compliance | Not included | Included |
| Information Barriers | Not included | Included |
| Advanced Audit | Not included | Included (10-year retention) |
| Power BI Pro | Not included | Included ($14/user value) |
| Viva Insights (Advanced) | Not included | Included |
| Phone System | Not included | Included (cloud PBX) |
| Audio Conferencing | Not included | Included |
| Customer Lockbox | Not included | Included |
| Auto-labeling (Sensitivity) | Not included | Included |
The basic price comparison shows $36 versus $57 per user per month. However, this does not tell the whole story.
Enterprise organizations using E3 often pay an additional $15 to $40 per user per month. This extra cost is for security, compliance, and productivity features. In contrast, these features are included with E5.
When you consider the third-party tools that E5 replaces, the actual cost difference becomes much smaller or may even flip in favor of E5.
Microsoft 365 E3 costs $36/user/month, which equals $432/user/year. For organizations with 2,500+ users, Enterprise Agreements can reduce this to about $30-$33/user/month.
Microsoft 365 E5 costs $57 per user per month. This totals $684 per user per year. For large enterprises, EA pricing usually ranges from $48 to $53 per user per month.
The $21 per user per month premium, which adds up to $252 per user per year, is a major concern for many IT leaders.
However, it is crucial to consider what this $21 premium replaces:
| Scenario | 500 Users | 2,500 Users | 10,000 Users | 25,000 Users |
|---|---|---|---|---|
| E3 Annual Cost | $216,000 | $1,080,000 | $4,320,000 | $10,800,000 |
| E5 Annual Cost | $342,000 | $1,710,000 | $6,840,000 | $17,100,000 |
| E5 Premium (Difference) | $126,000 | $630,000 | $2,520,000 | $6,300,000 |
| Typical E3 Add-on Costs* | $108,000 | $540,000 | $2,160,000 | $5,400,000 |
| E3 + Add-ons Total | $324,000 | $1,620,000 | $6,480,000 | $16,200,000 |
| Net E5 Savings (vs E3+Add-ons) | -$18,000 | -$90,000 | -$360,000 | -$900,000 |
Typical E3 add-on costs include the following:
Actual costs may vary by organization.
Organizations needing three or more E5-exclusive features can save money by upgrading to E5. This is often cheaper than purchasing individual add-ons for E3.
For a 10,000-user organization, the average annual savings of E5 compared to E3 plus equivalent add-ons is $360,000. This estimate does not include operational savings from managing one license SKU instead of multiple add-on subscriptions.
Security is the main reason for upgrading from E3 to E5. E3 offers a strong security foundation, including:
In contrast, E5 provides the complete Microsoft security stack needed by most enterprise security operations centers. This includes:
It is important to understand that 68% of enterprise breaches in 2025 involved identity compromise or email-based attacks. E5's advanced Defender and Entra ID P2 capabilities provide better protection in these areas compared to E3.
Organizations that use E3 for security often add tools like CrowdStrike or Palo Alto. These tools usually cost between $12 and $25 per user each month.
In contrast, E5 offers similar protection built directly into the Microsoft ecosystem.
| Security Capability | E3 | E5 | Why It Matters |
|---|---|---|---|
| Entra ID | P1 | P2 | P2 adds Privileged Identity Management (just-in-time admin access), Identity Protection (risk-based sign-in policies), and access reviews |
| Conditional Access | Standard | Risk-based | E5 enables risk-based policies that adapt MFA requirements based on real-time sign-in risk scoring |
| Defender for Office 365 | Plan 1 | Plan 2 | Plan 2 adds automated investigation and response (AIR), attack simulation training, and threat explorer |
| Defender for Endpoint | Plan 1 | Plan 2 | Plan 2 adds endpoint detection and response (EDR), automated investigation, and advanced hunting |
| Defender for Cloud Apps | Not included | Full CASB | Discovers shadow IT (avg. enterprise has 1,000+ unauthorized cloud apps) and applies real-time session controls |
| Defender for Identity | Not included | Included | Monitors on-premises Active Directory for lateral movement, pass-the-hash, and credential theft attacks |
| Microsoft Sentinel integration | Basic | Native XDR | E5 Defender suite feeds directly into Sentinel SIEM with pre-built detection rules and automated playbooks |
| Attack Simulation Training | Not included | Included | Simulated phishing campaigns to train employees, reducing successful phishing by 50-70% |
For organizations considering Microsoft Copilot deployment, E5 security features become even more critical. Copilot surfaces data based on user permissions, which means overshared SharePoint sites and Teams channels expose sensitive information through natural language queries. E5's Defender for Cloud Apps, sensitivity labels with auto-classification, and Information Barriers prevent Copilot from becoming a data leakage vector. Read our Copilot deployment guide for details on governance prerequisites.
Compliance is the second most common reason for upgrading to E5. This is particularly true in healthcare, financial services, legal, and government sectors. E3 offers basic compliance features, including:
E5 enhances compliance by turning it from a manual task into an automated, AI-driven capability that adapts to organizational complexity.
The eDiscovery difference makes E5 a strong choice for organizations dealing with active litigation or regulatory reviews. E3's eDiscovery Standard provides basic case management and content search. In contrast, E5's eDiscovery Premium offers:
Law firms and corporate legal departments report saving 60-80% of their time when upgrading from Standard to Premium eDiscovery.
Insider Risk Management is essential for organizations in hybrid work environments. This feature is available only in E5. It helps identify patterns of data exfiltration, such as when employees download large amounts of data before leaving.
Additionally, it detects policy violations and security issues from verified internal users.
When paired with Communication Compliance, which monitors regulatory breaches in Teams, email, and Copilot interactions, E5 offers the internal threat detection that regulated industries need.
| Compliance Feature | E3 | E5 |
|---|---|---|
| Data Loss Prevention (DLP) | Standard policies | Advanced with Endpoint DLP |
| Sensitivity Labels | Manual only | Auto-labeling (AI-driven) |
| Retention Policies | Included | Included + Advanced |
| eDiscovery | Standard | Premium (predictive coding) |
| Insider Risk Management | Not included | Included |
| Communication Compliance | Not included | Included |
| Information Barriers | Not included | Included |
| Customer Lockbox | Not included | Included |
| Advanced Audit | Not included | 10-year retention |
| Compliance Manager | Basic assessments | Full with auto-scoring |
For a deeper look at security and compliance configurations for Microsoft 365 enterprise deployments, see our Microsoft 365 security best practices guide.
Microsoft 365 E5 includes the Teams Phone System. This is a cloud PBX that replaces traditional on-premises phone systems. It offers features such as:
The E3 plan does not include the Phone System. To add it, you need to pay an extra $8 per user per month.
Organizations using on-premises PBX systems, such as Cisco, Avaya, or Mitel, can achieve significant savings with the E5 Phone System.
A typical enterprise PBX costs:
Switching to the E5 Phone System removes the PBX cost completely. This savings can nearly offset the price difference between E3 and E5 plans.
E5 includes Audio Conferencing. This feature lets meeting participants dial in by phone when they cannot join Teams meetings online. It is crucial for organizations with:
As an E3 add-on, Audio Conferencing costs $4 per user per month.
Microsoft 365 E5 includes Power BI Pro for every licensed user. This feature is valued at $14 per user per month. It provides full capabilities for report creation, sharing, and collaboration within the Power BI service.
E3 users can only access Power BI Free. This restricts them to viewing reports shared from Power BI Premium capacity. They cannot create or share their own content.
Organizations that focus on data-driven decision making can see a big impact on costs by including Power BI Pro. For instance, a company with 10,000 users, where 40% need Power BI Pro, would spend:
With E5, the cost for Power BI Pro is eliminated. All 10,000 users receive Power BI Pro at no additional cost.
Even if only 20% of users actively use Power BI, the total savings amount to $240,000 each year.
E5 includes Viva Insights (advanced). This tool offers organizational analytics that help leaders understand:
These insights can help identify risks of burnout, meeting overload, and after-hours work patterns. HR and executive leadership teams are increasingly seeking these capabilities.
The standalone Viva Insights add-on costs $6/user/month with E3.
Microsoft MyAnalytics offers personal productivity insights and is available in both E3 and E5 plans. However, the following features are exclusive to E5:
These E5 features give leadership the visibility that enterprise organizations need.
Both E3 and E5 include Microsoft Purview Information Protection with sensitivity labels. However, their automation features are quite different.
E3 supports:
E5 enhances this with:
This distinction is crucial for large enterprises. Organizations with millions of documents in SharePoint cannot depend on users to apply sensitivity labels manually. Auto-labeling guarantees consistent classification across all documents. This consistency is essential for:
Organizations using Microsoft Copilot without auto-labeling risk data leakage. Natural language queries may reveal unclassified sensitive content.
E5 offers advanced Data Loss Prevention (DLP) features. These include:
In contrast, E3 DLP is limited to Exchange Online and SharePoint/OneDrive policies. It does not cover endpoint or Teams actions.
E3 is ideal for organizations that meet certain criteria. It offers a solid productivity and basic security foundation at a lower cost per user. Additionally, the add-on model lets you buy advanced features only for the users who require them.
Organizations not subject to HIPAA, SOC 2, FINRA, or FedRAMP that do not require advanced compliance automation
Smaller organizations where the total E5 premium is significant and security can be managed with focused E3 add-ons
Organizations with multi-year contracts on CrowdStrike, Palo Alto, or similar tools that cannot be displaced yet
Organizations with strict per-user budget caps where $36/user is approved but $57/user exceeds authorization
Organizations with basic retention and DLP requirements that eDiscovery Standard adequately addresses
Organizations satisfied with existing PBX systems and not planning a Teams Phone migration in the near term
E5 is the best option for organizations that view security, compliance, and advanced analytics as essential business needs. These features are not just optional extras.
When analyzing total cost of ownership, E5 often proves more cost-effective, especially when three or more advanced capabilities are required.
Healthcare (HIPAA), financial services (SOC 2, FINRA), government (FedRAMP), and legal organizations
Organizations deploying Microsoft Copilot that need data governance guardrails — auto-labeling, information barriers, and DLP
Organizations with ongoing legal matters requiring eDiscovery Premium, legal hold, and predictive coding capabilities
Organizations replacing on-premises phone systems with Teams Phone, eliminating $20-$40/user/month PBX costs
Organizations where 30%+ of users need Power BI Pro for report creation and self-service analytics
Organizations requiring Insider Risk Management for data exfiltration detection and communication monitoring
Many enterprises discover that a hybrid E3/E5 licensing strategy is the most cost-effective choice. Microsoft allows mixed licensing within a single tenant. This lets organizations assign E5 licenses to users who need advanced features while keeping most users on E3.
EPC Group applies this model in over 60% of our Microsoft 365 enterprise engagements.
A well-designed hybrid strategy focuses on E5 licenses for roles that have the highest security, compliance, or analytics needs. This approach ensures organization-wide protection through tenant-level E5 features. These features benefit all users, no matter their individual license assignment.
| User Group | License | Justification | Typical % |
|---|---|---|---|
| IT Security & SOC Analysts | E5 | Need Defender XDR, Cloud App Security, and advanced hunting | 3-5% |
| Compliance & Legal Teams | E5 | eDiscovery Premium, Insider Risk, Communication Compliance | 2-5% |
| Executives (C-Suite, VPs) | E5 | High-value targets for identity attacks; need PIM and Identity Protection | 3-5% |
| Data Analysts & BI Teams | E5 | Power BI Pro included; Viva Insights for organizational analytics | 5-10% |
| Customer-Facing Sales/Support | E5 | Phone System for Teams calling; Audio Conferencing for client meetings | 5-15% |
| General Knowledge Workers | E3 | Core productivity, basic security, standard compliance — sufficient | 60-80% |
| Approach | Monthly Cost | Annual Cost | Annual Savings |
|---|---|---|---|
| All E3 ($36 x 5,000) | $180,000 | $2,160,000 | — |
| All E5 ($57 x 5,000) | $285,000 | $3,420,000 | — |
| Hybrid: 25% E5 + 75% E3 | $206,250 | $2,475,000 | $945,000 vs all-E5 |
| E3 + Equivalent Add-ons | $262,500 | $3,150,000 | — |
The hybrid model offers significant savings of $945,000 each year when compared to a full E5 deployment. This model guarantees that users who need advanced security, compliance, and analytics still have access to these essential features.
This approach leads to a 27.6% reduction in costs compared to the all-E5 method. It provides minimal trade-offs in security or compliance.
These benefits are achieved when license allocation is handled by experienced Microsoft licensing consultants.
When calculating the E5 ROI, it is important to consider more than just licensing costs. You should also include:
According to EPC Group's deployments in Fortune 500 companies, this framework provides a clear way to quantify ROI.
CrowdStrike, Palo Alto, Proofpoint, or Zscaler licenses replaced by native Defender suite
Relativity, Veritas, or separate eDiscovery/DLP platforms replaced by Purview
Included in E5 for all users, eliminating per-user add-on cost
On-premises phone system hardware, maintenance, and carrier costs replaced by Teams Phone
Single management console instead of 5-8 separate security and compliance platforms
Unified XDR with automated investigation vs manual correlation across multiple tools
When summed, the total displaced cost for a typical regulated enterprise ranges from $40-$80/user/month — exceeding the $57/user/month E5 list price. This means E5 is not just cheaper than E3-plus-add-ons; it is often cheaper than the disparate tool stack organizations already pay for today. The challenge is demonstrating this to CFOs and procurement teams, which requires a detailed tool-displacement analysis that EPC Group provides as part of every Microsoft 365 consulting engagement.
Upgrading from E3 to E5 is a license-level change within the same Microsoft 365 tenant. This process does not require data migration, mailbox moves, or user disruption.
However, if you reassign licenses without activating and configuring the new E5 features, you will:
A structured enablement roadmap helps your organization achieve the full value of E5 from day one. This roadmap includes:
EPC Group shortens the typical 8-week roadmap to just 4-6 weeks for most organizations. We achieve this with our proven E3-to-E5 migration accelerator.
Our fixed-fee engagement covers:
This approach ensures your team can maximize E5 capabilities right away, rather than waiting months to discover new features after the license change.
Microsoft 365 E3 ($36/user/month) includes Office apps, Exchange Online, SharePoint, Teams, basic security (Entra ID P1, Intune, Defender for Office 365 Plan 1), and standard compliance (eDiscovery Standard, DLP, retention policies). Microsoft 365 E5 ($57/user/month) adds advanced security (Entra ID P2, Defender for Office 365 Plan 2, Microsoft Defender for Endpoint Plan 2, Cloud App Security), advanced compliance (eDiscovery Premium, Insider Risk Management, Communication Compliance, Information Barriers), Power BI Pro, Phone System, and Audio Conferencing. The $21/user/month premium delivers significantly enhanced threat protection, compliance automation, and built-in analytics.
For regulated enterprises, E5 almost always delivers positive ROI. The advanced security features (Defender for Endpoint P2, Cloud App Security, Entra ID P2) replace third-party security tools costing $15-$25/user/month. Power BI Pro alone costs $14/user/month as an add-on. Phone System replaces PBX costs of $24-$40/user/month. When you factor in the compliance features that eliminate separate GRC tool licenses ($8-$15/user/month), E5 typically saves $10-$30/user/month compared to E3 plus equivalent add-ons. EPC Group helps organizations model the exact ROI based on their current tool stack.
Microsoft 365 E3 costs $36/user/month with an annual commitment. Volume licensing through Enterprise Agreements (EA) can reduce this to approximately $30-$33/user/month for organizations with 2,500+ users. The price includes Office desktop apps (Word, Excel, PowerPoint, Outlook), Exchange Online Plan 2, SharePoint Online Plan 2, Microsoft Teams, Windows 11 Enterprise E3, Intune Plan 1, Entra ID P1, and standard compliance features. Additional costs may apply for add-ons like Power BI Pro ($14/user/month), Phone System ($8/user/month), or advanced compliance ($12/user/month).
Microsoft 365 E5 costs $57/user/month with an annual commitment. Enterprise Agreement pricing for large organizations (5,000+ users) typically ranges from $48-$53/user/month. E5 includes everything in E3 plus: Microsoft Defender for Endpoint Plan 2, Defender for Office 365 Plan 2, Microsoft Defender for Cloud Apps, Entra ID P2, Power BI Pro, Phone System, Audio Conferencing, eDiscovery Premium, Insider Risk Management, Communication Compliance, Information Barriers, and advanced Information Protection with auto-labeling.
Yes, Microsoft allows mixed E3 and E5 licensing within the same tenant. This is a common and recommended strategy. A typical approach is E5 for security operations teams, compliance officers, executives handling sensitive data, and legal teams requiring eDiscovery Premium — then E3 for general knowledge workers. EPC Group typically sees organizations deploy 20-30% E5 and 70-80% E3, saving 40-50% compared to full E5 deployment while maintaining compliance coverage where it matters most.
E5 adds several critical security capabilities beyond E3: Microsoft Defender for Endpoint Plan 2 (advanced endpoint detection and response with automated investigation), Defender for Office 365 Plan 2 (automated threat remediation and attack simulation), Microsoft Defender for Cloud Apps (CASB for shadow IT discovery and app governance), Entra ID P2 (Privileged Identity Management and Identity Protection with risk-based conditional access), and Microsoft Defender for Identity (on-premises Active Directory threat detection). These features provide the security operations center (SOC) capabilities that E3 organizations must purchase separately.
Yes, Microsoft 365 E5 includes Power BI Pro at no additional cost. With E3, Power BI Pro requires a separate $14/user/month add-on license. E5 also includes Viva Insights (advanced), which provides organizational analytics. For organizations where 50%+ of users need Power BI, the Power BI inclusion alone justifies a significant portion of the E3-to-E5 upgrade cost. Note: Power BI Premium per capacity is still a separate purchase regardless of E3 or E5 licensing.
E5-exclusive compliance features include: eDiscovery Premium (advanced case management, review sets, predictive coding), Insider Risk Management (detecting data theft, policy violations, and security anomalies from internal users), Communication Compliance (monitoring Teams, email, and Copilot interactions for regulatory violations), Information Barriers (preventing unauthorized communication between departments), Customer Lockbox (requiring Microsoft to get approval before accessing your data), and advanced auto-labeling for sensitivity labels. These are essential for HIPAA, SOC 2, FINRA, and FedRAMP compliance frameworks.
Yes, E5 includes Microsoft Teams Phone System, which provides cloud PBX capabilities: auto attendants, call queues, voicemail, call transfer, and call parking. However, you still need a PSTN connectivity option to make and receive external calls — either Microsoft Calling Plans ($8-$24/user/month depending on domestic/international), Operator Connect (through a certified telecom carrier), or Direct Routing (connecting your existing SBC infrastructure). E3 does not include Phone System, which costs $8/user/month as an add-on.
The break-even point is typically 3-4 add-ons. If you need advanced security (Defender Suite), compliance (eDiscovery Premium), and either Power BI Pro or Phone System, upgrading to E5 is almost always cheaper than purchasing E3 plus individual add-ons. The add-on approach makes sense only when you need one specific capability for a small user group. EPC Group recommends E5 when: you operate in regulated industries, you are deploying Copilot (which requires strong data governance), or you currently spend $15+/user/month on third-party security and compliance tools.
HIPAA-regulated organizations should deploy Microsoft 365 E5 for users handling Protected Health Information (PHI). E5 provides the required controls: sensitivity labels with auto-classification for PHI, DLP policies that prevent PHI leakage across email and Teams, eDiscovery Premium for HIPAA breach investigations, Insider Risk Management to detect unauthorized PHI access, Communication Compliance for monitoring PHI discussions, and audit log retention (10 years with E5 add-on). E3 covers basic HIPAA requirements but leaves gaps in automated classification, insider threat detection, and advanced audit capabilities. EPC Group deploys HIPAA-compliant Microsoft 365 configurations for healthcare organizations nationwide.
Migrating from E3 to E5 is a license-level change — no data migration is required since both plans operate in the same tenant. The process involves: license reassignment in the Microsoft 365 admin center, Conditional Access policy updates to leverage Entra ID P2, Defender for Endpoint deployment to all endpoints, eDiscovery Premium case configuration, Insider Risk Management policy creation, sensitivity label auto-labeling rules, and Phone System configuration if using telephony features. EPC Group recommends a phased rollout: security features first (Week 1-2), compliance features (Week 3-4), then analytics and telephony (Week 5-6). Most organizations complete the full E3-to-E5 transition in 4-8 weeks.
EPC Group offers free Microsoft 365 license optimization assessments for enterprise organizations. Our analysis covers:
Microsoft 365 E3 costs $36 per user per month. It includes the essential productivity and security tools. Microsoft 365 E5 costs $57 per user per month. This plan adds:
The $21 difference is often justified in regulated enterprise environments.
| Feature | M365 E3 | M365 E5 |
|---|---|---|
| Price (2026 list) | $36/user/month | $57/user/month |
| Office apps (Word, Excel, PowerPoint, etc.) | Yes | Yes |
| Exchange Online, SharePoint, Teams, OneDrive | Yes | Yes |
| Entra ID P1 (Conditional Access, SSPR) | Yes | Yes |
| Microsoft Defender for Office 365 Plan 1 | Yes | Plan 2 (upgraded) |
| Intune device management | Yes | Yes |
| Basic audit log (90-day retention) | Yes | Yes (Premium: 10-year) |
| eDiscovery Standard | Yes | eDiscovery Premium (upgraded) |
| Entra ID P2 (PIM, Identity Protection) | No | Yes |
| Microsoft Defender for Endpoint Plan 2 | No | Yes |
| Microsoft Defender for Cloud Apps (CASB) | No | Yes |
| Microsoft Defender for Identity | No | Yes |
| Insider Risk Management | No | Yes |
| Communication Compliance | No | Yes |
| Customer Lockbox | No | Yes |
| Information Barriers | No | Yes |
| Phone System (PBX replacement) | No | Yes |
| Audio Conferencing | No | Yes |
| Power BI Pro | No | Yes |
| Microsoft Purview Information Protection P2 | No | Yes |
Microsoft 365 E3 is the standard enterprise license. It includes the complete M365 productivity suite, which features:
The security offered is robust for most standard business environments.
E3 security includes:
E3 compliance includes eDiscovery Standard, 90-day audit log retention, and basic retention policies. For organizations without regulatory requirements, E3 provides a complete enterprise foundation.
E5 adds a significantly deeper security stack:
E5 compliance capabilities go significantly beyond E3:
The E5 premium plan costs $21 per user, per month, which is higher than the E3 plan. If you choose to buy the E5-exclusive features separately as E3 add-ons, it will cost around $35 per user, per month.
Thus, the E5 plan is often the more cost-effective option if you require more than two add-ons.
E5 pays off immediately in these scenarios:
E5 offers essential HIPAA controls. It includes features like:
Communication Compliance is required for firms regulated by FINRA. It monitors interactions on Teams, email, and Copilot for any regulatory violations.
Audit Premium offers the long-term data retention needed for SEC Rule 17a-4. Additionally, Customer Lockbox meets data sovereignty requirements for various financial regulators.
eDiscovery Premium provides review sets and predictive coding. These features help reduce costs for large-matter reviews. Information Barriers prevent communication between practice groups, which stops conflicts of interest. Customer Lockbox ensures client confidentiality by requiring explicit approval for Microsoft data access.
Government clients usually require M365 GCC or GCC High rather than the commercial E3/E5 SKUs. These options have different pricing and licensing structures.
EPC Group has expertise in:
EPC Group does not automatically recommend E5 for every organization. We begin with a license optimization assessment. This assessment looks at your:
After this, we compare the total cost of E3 plus add-ons against E5 based on your user count.
Many organizations find they are paying for add-ons that are included in the E5 plan at a lower total cost. Others discover that the E3 plan fits their risk profile. We provide the data you need to make an informed decision.
Microsoft 365 E3 costs $36 per user each month. E5 costs $57 per user each month. This creates a difference of $21 per user monthly.
For an organization with 500 users, the total cost difference amounts to:
Purchasing E5-exclusive features as add-ons to E3 costs about $35 per user per month more.
This makes E5 a better value if you need multiple add-ons.
eDiscovery Premium is available only with the E5 plan. It includes several key features:
In contrast, the E3 plan offers eDiscovery Standard. This version supports basic case creation, search, and export.
Organizations that handle large legal matters or have strict eDiscovery requirements usually need:
Yes, E5 includes the Microsoft Teams Phone System. This system replaces traditional PBX features with cloud-based options like:
To connect to the PSTN for external calls, you need a Calling Plan or Direct Routing setup. The Phone System alone does not enable external calling.
Yes, Microsoft permits mixed E3/E5 licensing within a single tenant. Many organizations assign E5 licenses to roles that are sensitive to security or compliance. These roles typically include:
Meanwhile, E3 licenses are given to the broader workforce. EPC Group's license optimization assessments pinpoint which roles gain the most from E5 licenses.
E5 includes Power BI Pro. This is the per-user license for creating and sharing reports in the Power BI service.
However, it does not include:
Premium capacity is a separate per-capacity license. You can choose between F-SKU or P-SKU for large-scale, organization-wide analytics deployments.
E5 is not required for Copilot deployment. An E3 license is sufficient as the base requirement. However, E5 provides key security and compliance features that improve deployment. These features include:
These tools make a safe and governed Copilot deployment much easier. EPC Group recommends E5 for any regulated industry using Copilot.
EPC Group has conducted license optimization assessments for enterprise M365 tenants in regulated industries. We analyze your compliance needs, current add-ons, and overall costs.
This allows us to provide a clear recommendation between E3 and E5 licenses, backed by detailed numbers.
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