Microsoft 365 Business Premium vs E SKUs for SMB Security and Savings

Why SMBs Are Rethinking Microsoft 365 Licensing 

For many small and mid-sized organizations, Microsoft 365 licensing has always been a balancing act. Businesses want enterprise-level protection and collaboration without paying for features they do not use.  

Microsoft 365 Business Premium bridges this gap. It offers robust security, device management, and productivity tools in one affordable plan.  

Recent changes now allow customers to add enterprise features, such as Teams Phone and E5 Security, à la carte. This flexibility enables smaller companies to strengthen their environment without committing to a costly enterprise license. 

*Note: Pricing, packaging, and features of Microsoft SKUs are based on public data at the time of publication. 

Understanding Microsoft 365 Licensing: Business vs Enterprise SKUs 

Before choosing between Microsoft 365 Business Premium and E SKUs, it is helpful to understand how these tiers are structured and where each one fits best. 

Business SKUs (for up to 300 users) 

• Microsoft 365 Business Basic: Email, Teams, and web versions of Office apps. 
• Microsoft 365 Business Standard: Adds full desktop Office apps and enhanced collaboration tools. 
• Microsoft 365 Business Premium: Includes everything in Standard plus enterprise-level security, device management, and a Windows Pro upgrade license. 

Enterprise SKUs (unlimited users) 

• Microsoft 365 E1:  Web-based collaboration tools without desktop apps. 
• Microsoft 365 E3: Adds desktop apps, advanced compliance, and core security. 
• Microsoft 365 E5: Includes all E3 capabilities plus the advanced security, Teams voice integration, and advanced analytics.

Business Premium is roughly equivalent to Microsoft 365 E3 in core productivity features but now supports a la carte add-ons that unlock many of the advanced E5-level security and compliance tools. 

Microsoft 365 Business Premium: Designed for Modern SMBs 

Affordable Enterprise-Level Security 

At approximately $22 per user per month, Microsoft 365 Business Premium offers many of the same features found in the E5 license ($57 per user per month) at a significantly lower cost. 

It includes: 

• Microsoft 365 productivity apps (Word, Excel, Outlook, Teams) 
• Intune for device management 
• Conditional Access and MFA for identity protection 
• Defender for Business endpoint detection and response 
• A Windows 10/11 Business license 

This package makes Business Premium an ideal fit for small- and medium-sized businesses seeking an integrated approach to productivity, identity, and endpoint security. 

The Game Changer: Add-Ons for Security and Voice 

Previously, customers using Business Premium could not access the same advanced security or voice functionality available in enterprise SKUs. 

Now, Microsoft allows Business Premium users to purchase add-ons, including: 

• Microsoft 365 E5 Security 
• Teams Phone

This change enables SMBs to enhance their security posture and collaboration capabilities as their needs evolve, while staying within a cost-effective licensing model. 

Add-On Spotlight: Microsoft 365 E5 Security 

The Microsoft 365 E5 Security add-on, priced around $12 per user per month, brings enterprise-grade protection to SMBs using Business Premium. 

It includes: 

• Entra ID Plan 2 - identity protection and risk-based Conditional Access 
• Defender for Identity- hybrid identity threat detection 
• Defender for Endpoint Plan 2 - advanced endpoint detection and response (EDR) 
• Office 365 Plan 2 - anti-phishing, Safe Links, Safe Attachments, and more 
• Defender for Cloud Apps - cloud app discovery, control, and data protection 

If purchased separately, these features would cost more than $28 per user each month. The E5 Security add-on provides about 57% savings while giving smaller organizations access to enterprise-level defenses. 

Entra ID Plan 2: Identity Security and Governance 

Microsoft Entra ID Plan 2 (formerly Azure AD Premium P2) is central to a zero-trust security approach. It provides advanced identity protection and access control, including: 

• Risk-based Conditional Access to enforce policies based on sign-in behavior, location, or risk signals. 
• Identity Protection that detects compromised credentials and automates responses. 
• Privileged Identity Management (PIM) approval workflows and access logging for admins and sensitive roles. 
• Access Reviews to regularly audit and validate user and group permissions over time.

For SMBs, these capabilities bring enterprise-level identity security and automation to environments that previously lacked governance tools. 

Defender for Identity: Protecting Hybrid Environments 

For organizations still using on-premises Active Directory, Microsoft Defender for Identity provides essential threat detection and monitoring. 

It identifies: 

• Pass-the-Hash and Pass-the-Ticket attacks- Credential theft techniques used to move laterally 
• Lateral movement within the network- Early signs of attackers navigating the network to escalate privileges 
• Domain controller compromise attempts- Suspicious behavior targeting high-value identity infrastructure 

Integration with Microsoft Sentinel and other Defender tools helps close one of the most extensive security gaps in hybrid environments: identity-based attacks.

Defender for Endpoint Plan 2: Advanced Device Protection 

Defender for Endpoint Plan 2 offers advanced endpoint detection and response (EDR) capabilities such as: 

• Threat and vulnerability management- continuously assesses endpoint risk posture 
• Automated investigation and remediation- accelerates response with AI-powered workflows 
• Integration with Defender XDR and Microsoft Purview- enables unified protection across identities, data, and endpoints 

This gives SMBs the same level of device protection that large enterprises use, comparable to solutions like CrowdStrike or SentinelOne, but natively integrated into Microsoft 365 ecosystem. 

Office 365 Plan 2: Compliance and Data Governance 

Office 365 Plan 2 enhances compliance and data management, especially for organizations in regulated industries. 

Key features include: 

• Advanced eDiscovery and case management 
• Data Loss Prevention (DLP) 
• Advanced auditing and retention policies 
• Customer Key and information barriers 

These tools provide greater control over sensitive data, enabling SMBs to meet legal and compliance requirements without upgrading to a full enterprise SKU. 

Defender for Cloud Apps: SaaS Oversight and Shadow IT Control 

As cloud adoption grows, Defender for Cloud Apps (MCAS) helps IT teams maintain visibility and control over third-party SaaS usage. 

It enables: 

• App discovery - shadow IT detection 
• OAuth governance- monitor risky third-party integrations 
• Risk scoring and anomaly detection - user behavior 
• Session control - popular cloud applications such as Salesforce or Dropbox 

This helps SMBs monitor and secure their growing SaaS environments, an increasingly critical area of risk. 

Teams Phone Add-On: Turning Teams into a Complete Business Phone System 

The Teams Phone add-on allows organizations to replace separate VoIP systems by turning Microsoft Teams into a full-featured cloud-based phone platform. 

Benefits include: 

• Unified communications across chat, meetings, and voice 
• Reduced third-party telephony costs 
• Simplified administration through one Microsoft environment 

For SMBs consolidating their technology, this add-on can deliver measurable savings and increased efficiency. 

Business Premium vs. E3/E5: A Cost and Capability Comparison 

For many SMBs, Business Premium + E5 Security Add-on ($34 total) delivers nearly all the E5-level protection at 60% of the cost. 

Cost Example: Real-World Savings for SMBs 

For a 100-user organization: 

• Business Premium = $22 x 100 = $2,200/month 
• E5 Security add-on = $12 x 100 = $1,200/month 
• Total = $3,400/month 

In comparison, Microsoft 365 E5 would cost $5,700/month, resulting in $2,300 in monthly savings. This flexibility allows SMBs to gain E5-grade protection while staying within budget. 

User Profiling: When Business Premium Is the Right Fit 

Ideal for: 

• Organizations with fewer than 300 users 
• Businesses adopting zero-trust security 
• Companies using Entra ID and Intune for identity and device management 
• SMBs that want to scale security and Teams features over time 
• Firms seeking compliance and data protection tools at a lower cost 

May Not Be Needed If: 

• PCs already have valid Windows licenses 
• The business uses third-party endpoint or identity protection 
• The organization needs more than 300 users under one license 

In those cases, Business Standard or a mixed approach using Business and Enterprise licenses may be more cost-effective. Assigning Microsoft 365 licensing based on each user's profile is a sound strategy to save money and ensure each user has the necessary tools.  

Key Takeaway: Business Premium Delivers Enterprise Security at SMB Pricing 

Microsoft 365 Business Premium has evolved into one of the most strategic and affordable licensing options for SMBs. 

By combining productivity, device management, and enterprise-level security features, it offers organizations the best of both worlds: simplicity and strength. 

For most small and mid-sized organizations, Business Premium provides the right mix of cost efficiency, advanced protection, and scalability to meet their security and compliance goals. 

Frequently Asked Questions 

Q: Is Microsoft 365 Business Premium worth it for small businesses? 

Yes. It provides enterprise-grade security, device management, and productivity tools for up to 300 users at a significantly lower cost than E3 or E5. 

Q: What is included in the Microsoft 365 E5 Security add-on? 

It includes Entra ID Plan 2, Defender for Identity, Defender for Endpoint Plan 2, Defender for Cloud Apps, and Office 365 Plan 2 features. 

Q: Can Business Premium users access Teams Phone? 

Yes. Teams Phone is now available as an add-on, allowing full voice and calling features directly within Teams. 

Q: What if I already have endpoint security or Windows licenses? 

In that case, Business Standard or a mixed-license strategy may be more economical, depending on your existing environment. 

Next Steps and Educational Resources 

To evaluate which Microsoft 365 SKU is right for your organization: 

• Review your current Windows licensing and security setup. 
• Assess the number of users who require advanced security or compliance. 
• Compare the cost of Business Premium with E5 Security against full enterprise SKUs. 

If you manage Microsoft 365 licenses for your organization, consider using a Microsoft License Optimization tool to align your licensing strategy with your security and compliance goals. Many organizations are paying for features they never use. 

With ENow’s M365 License Optimization tool, you can visualize your current Microsoft 365 usage, detect over-licensing, and uncover cost-saving opportunities, especially when comparing Business Premium and Enterprise SKUs. 

See how ENow helps you right-size your Microsoft 365 licenses →