Microsoft Licensing Update: Business Premium vs Office 365 E3 Overview

Microsoft 365 Business Premium and Office 365 E3 are often compared because they sit at nearly the same price point today while delivering very different security and management outcomes.

The real decision is not about productivity apps. It is about whether the licensing model you are paying for actually aligns with how identity, devices, email, and data are protected inside your tenant. With Microsoft pricing and feature changes taking effect on July 1, 2026, this comparison matters more now than it did even a year ago. 

How Microsoft 365 Business Premium Compares to Office 365 E3

Timestamped Key Moments

• 00:00 - Introduction and context for the comparison

• 01:10 - How Microsoft positions Office 365 vs Business Premium licensing

• 01:35 - What security and management features are included in Business Premium

• 02:00 - Identity security and Entra ID Plan 1

• 02:35 - Device and application management with Intune

• 03:01 - Endpoint protection and Defender for Business

• 03:20 - Email security and phishing protection

• 03:47 - Data loss prevention and information protection

• 04:15 - Pricing comparison and July 1, 2026 changes

• 04:57 - When Office 365 E3 is still the better option

• 05:38 - Final decision checklist

What is the Core Difference Between Business Premium and Office 365 E3?

Office 365 E3 is fundamentally a productivity license. It delivers email, collaboration, and desktop applications but assumes security, identity controls, and device management will be layered on separately.

Microsoft 365 Business Premium is designed as a bundled baseline. It combines productivity with built in identity protection, endpoint security, device management, and data protection without requiring separate add ons. Microsoft explicitly positions it as the step up when organizations want consistent security controls enforced by default rather than assembled over time.

How Does Business Premium Address Identity Based Attacks?

Identity based attacks such as password spray, MFA fatigue, and token theft remain the most common entry points into Microsoft tenants.

Business Premium includes Microsoft Entra ID Plan 1, which enables conditional access, consistent MFA enforcement, and modern access controls. Office 365 E3 does not include Entra ID Plan 1 by default and requires it to be added separately to reach the same baseline.

This distinction matters because identity protection is not a feature that can be selectively applied without creating gaps. 

Does Office 365 E3 Include Intune Compared to Business Premium?

Endpoint and Email Security in Business Premium vs Office 365 E3

Business Premium includes Microsoft Defender for Business and Defender for Office 365 Plan 1. Together, these tools cover endpoint protection and email based threats such as phishing, malicious links, and attachments.

Microsoft has announced that Defender for Office 365 Plan 1 will be added to Office 365 E3 beginning July 1, 2026. While this closes one gap, endpoint protection and device management still remain separate considerations under E3. 

Does Office 365 E3 Include the Same Data Protection as Business Premium?

Business Premium includes Microsoft Purview Information Protection and foundational DLP capabilities. These allow organizations to classify sensitive data, apply encryption, and reduce accidental data leakage across email and files.

This represents the shift from relying on user behavior to enforcing guardrails at the platform level. While Office 365 E3 supports more advanced compliance scenarios, Business Premium covers the core controls many environments need without additional licensing.

Pricing Changes for Business Premium vs Office 365 E3 After July 1, 2026

Today, Business Premium is priced at $22 per user per month, while Office 365 E3 is $23 per user per month on an annual commitment. After July 1, 2026, Office 365 E3 increases to approximately $26 per user per month, while Business Premium remains unchanged.

This shift makes Business Premium the lower cost option while still bundling identity, device, endpoint, email, and data protection capabilities that often require multiple add ons under E3.

Office 365 E3 remains the better option in specific scenarios. Business Premium is capped at 300 users per tenant, making E3 the practical choice for larger environments or those about to cross that threshold.

E3 also continues to be relevant for organizations with large mailbox storage requirements, advanced compliance needs, or existing security platforms that are already standardized and intentionally separate from Microsoft’s native tooling.

If your environment is under 300 users and you want identity controls, device management, endpoint protection, phishing defense, and basic data protection included by default, Business Premium is the more coherent starting point.

If scale, storage, or advanced compliance requirements are the primary drivers and security tooling is already handled elsewhere, Office 365 E3 remains appropriate.

How to Evaluate Licensing Without Overbuying

Choosing the right Microsoft license is less about feature checklists and more about understanding where security and management are expected to live. If you want help evaluating how your current licensing aligns with how your tenant is actually secured, Sourcepass MCOE works with organizations to map requirements to licenses without unnecessary overlap.

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