M365 Business Basic vs Standard vs Premium and which licence does your team actually need?

If you have ever tried to work out which Microsoft 365 plan your business actually needs, you have probably ended up more confused than when you started. Microsoft's licensing page lists features in ways that make sense to their sales team, not to a business owner trying to decide between plans that differ by £8 a month per user.

This guide cuts through it. We will tell you what each plan actually gives you, which features most small businesses use every day, and which ones sound impressive but sit untouched for years.

The three main business plans

Microsoft 365 for business comes in three tiers that matter for most organisations under 300 users. Here is how they actually compare in practice.

Business Basic and who it actually suits

Basic is often dismissed as the "cheap option" but for a significant number of businesses it is the right option. If your team works primarily in a browser, uses shared devices, or already has Office installed via another route, Basic gives you everything you need and email, Teams, SharePoint, OneDrive and at the lowest cost.

The key limitation is the absence of installed desktop apps. Your team gets fully functional web versions of Word, Excel, and PowerPoint, but not the applications installed on their laptop. For most day to day work the difference is minimal. For power users running complex Excel models or doing heavy document formatting, it matters.

Business Standard and the most common choice

Standard is where most small businesses land, and usually for good reason. The jump from Basic adds desktop Office apps, which is the feature most teams actually need. It also adds webinar hosting with attendee registration and useful if you run events or client presentations through Teams.

For a team of 20 people, the difference between Basic and Standard is around £110 per month. That is worth paying if your team genuinely uses installed Office apps. It is not worth paying if they are comfortable in the browser and do not need the extras.

Business Premium and when security justifies the cost

Premium is a significant price jump, but what you are paying for is not more productivity features and it is enterprise security controls. Intune lets you manage and enforce policies on every device in your organisation. Azure AD Premium P1 gives you conditional access, so you can control exactly who can log in from where and on what. Advanced Defender adds threat protection that Basic and Standard simply do not have.

If you handle sensitive data, are working toward Cyber Essentials Plus, or operate in a regulated sector, Premium is often worth every penny. For a 10 person marketing agency with no compliance requirements, it is probably more than you need.

The feature most people pay for but never use

The single biggest source of wasted licence spend we see is organisations on Standard or Premium who are paying for desktop Office apps but whose staff do all their work in Teams and the browser anyway. Run a quick audit of how your team actually works before renewing and you may find Basic covers 80 percent of your people perfectly well.

Can you mix licence types?

Yes, and this is one of the most cost effective things a growing business can do. You do not have to give everyone the same plan. A sensible approach for a 30 person business might look like this: give your finance and leadership team Premium for the security controls, put your core office staff on Standard for desktop apps, and put your warehouse or field team on Basic since they only need email and Teams on a shared device. The saving can be substantial without any reduction in functionality for anyone.

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