If you've searched "Microsoft E3 explained," you've probably already hit the problem this post is trying to solve: Microsoft's own licensing pages are thorough, but they're not written for someone trying to work out, in five minutes, whether this is the right plan for their business. The naming alone (E3, E5, Business Premium, Plan 1, Plan 2) makes it feel more complicated than it needs to be.

So here's the plain version. This guide covers what Microsoft 365 E3 actually includes, what it costs in the UK, how it stacks up against Microsoft E5 on security, and where it sits next to Business Premium, so you can walk into a licensing conversation (with us or anyone else) already knowing what you're comparing.

(Pricing and features below are drawn directly from Microsoft's UK pricing pages as of writing. Microsoft updates its licensing and pricing periodically, so it's worth confirming current figures before budgeting.)

What is Microsoft 365 E3?

Microsoft 365 E3 is one of Microsoft's enterprise licensing plans: a single per-user, per-month subscription that bundles the full Office apps (Word, Excel, PowerPoint, Outlook, and more), Teams, Exchange email, and SharePoint and OneDrive storage together with enterprise-grade identity management, device management, threat protection, and compliance tools, all under one licence.

Within Microsoft's line-up, it sits above the Business plans (which cap out at 300 users) and below E5, the top-tier plan built around advanced security and compliance. E3 is aimed at organisations that have outgrown Business Premium's user limit, or need enterprise-level identity, device management, and compliance tools that Business Premium doesn't fully cover, without paying for the full security stack that comes with Microsoft E5.

In practice, E3 is the plan most mid-sized and growing businesses land on once they need more than "Microsoft 365 with decent security" and start needing proper device management, data governance, and identity controls across a larger, less predictable environment.

What features are included in Microsoft 365 E3?

E3 bundles together the full Microsoft 365 productivity suite with a meaningful layer of enterprise security and compliance tooling. The headline inclusions are:

Productivity apps. Desktop, web, and mobile versions of Word, Excel, PowerPoint, Outlook, OneNote, and Access, plus Teams for chat, calls, and meetings, Exchange (Plan 2) for business email, and SharePoint and OneDrive (1TB or more per user) for file storage and collaboration.

Identity and access management. Microsoft Entra ID (Plan 1), covering single sign-on, conditional access, and multi-factor authentication, the baseline most businesses need to control who can get into what.

Device management. Windows 11 Enterprise E3 licensing and Microsoft Intune (Plans 1 and 2) for managing and securing laptops, phones, and other endpoints across the business, including Windows Hello for Business for biometric sign-in.

Threat protection. Microsoft Defender for Office 365 (Plan 1) for phishing, malware, and ransomware protection on email and collaboration tools, and Microsoft Defender for Endpoint (Plan 1) for device-level threat protection.

Data protection and compliance. Microsoft Purview tools for data loss prevention, information protection and sensitivity labelling, audit capabilities, and standard eDiscovery, useful for any business that needs to demonstrate where its data is and who can access it.

Automation and AI. Power Apps and Power Automate for building lightweight business tools and workflows, and Microsoft 365 Copilot Chat included at no extra cost, for AI-assisted writing, web-grounded answers, and data analysis inside the apps your team already uses.

That's a genuinely broad feature set for a single licence, which is exactly why E3 tends to come up as the default enterprise plan rather than an upsell people have to be talked into.

How does the E3 subscription compare to the E5 plan in terms of security features?

This is usually the actual decision point once a business is already looking at E3, so it's worth being specific rather than just saying "E5 has more security."

E3 covers the fundamentals well: identity via Entra ID P1, endpoint protection via Defender for Endpoint P1 and Defender for Office 365 P1, and standard data loss prevention and eDiscovery through Purview. For a lot of businesses, particularly ones without a dedicated security function, this is a solid, defensible baseline.

E5 builds on top of that with tools aimed at organisations managing security more actively, or with regulatory pressure to do so:

• Entra ID Plan 2, adding advanced identity protection and risk-based conditional access, useful for spotting compromised accounts before they're used.
• Defender for Endpoint Plan 2, extending endpoint protection into extended detection and response (XDR) and more advanced investigation tools.
• The full Microsoft Purview suite, including insider risk management and advanced eDiscovery, rather than the standard tier included in E3.
• Microsoft Security Copilot, an AI layer built specifically for security and IT operations.
• Microsoft Defender for Cloud Apps and hybrid identity threat protection, extending visibility into cloud app usage and on-premises/cloud identity risk.

The honest way to frame the choice: E3 gives most businesses the protection they actually need day to day. E5's additions matter most once you're actively hunting for threats, managing a larger or more distributed environment, or operating under compliance requirements that specifically call for advanced eDiscovery or insider risk tooling. If that's not where your business is yet, E3 plus a properly configured cyber security services layer on top often covers the gap more cost-effectively than jumping straight to E5.

Microsoft E3 licence cost in the UK

As of writing, Microsoft lists Microsoft 365 E3 at £33.50 per user, per month, billed annually and excluding VAT, direct from Microsoft. For comparison, E5 sits at £51.60 per user, per month on the same billing terms.

A few things worth knowing before budgeting off these figures:

• Pricing is per user, per month, so the total scales directly with headcount, and it's easy to underestimate at renewal time if the team has grown.
• Annual commitment pricing (paid yearly) is typically the rate quoted; monthly-commitment pricing, where available, tends to run higher per seat.
• Managed service providers, including Lyon Tech, can often provide E3 licensing bundled into a wider support agreement, sometimes at a better effective rate than buying directly, alongside the setup, security configuration, and ongoing management that a raw licence doesn't include on its own.
• List prices change. It's worth confirming current pricing directly with Microsoft or a licensing partner before finalising a budget, rather than relying on any single blog post, including this one.

Microsoft 365 E3 vs Business Premium: what's the actual difference?

This is the comparison that trips people up most, because on paper the feature lists can look closer than they are.

User limits. Business Premium is capped at 300 users. E3 has no such ceiling, which is often the deciding factor on its own for a business that's growing past, or close to, that number.

Identity and access management. Business Premium includes Entra ID (Plan 1) for up to 300 users. E3 includes the same Entra ID Plan 1 tier, but without the user cap, and pairs it with a broader Windows Enterprise licensing model.

Device management. Business Premium includes Intune Plan 1. E3 includes both Intune Plan 1 and Plan 2, giving more advanced device management and app protection capability.

Threat protection. Both plans include Defender for Office 365 at Plan 1 level. E3 adds Defender for Endpoint (Plan 1), which Business Premium doesn't include at the same depth, giving E3 stronger device-level threat protection alongside its email protection.

Compliance and data governance. Business Premium includes Purview Information Protection at Plan 1. E3 goes further, adding data loss prevention, audit capabilities, and standard eDiscovery, tools that matter more as a business takes on more client data, more regulatory scrutiny, or more complex contractual data obligations.

Price. Business Premium runs cheaper, at £24.60 per user, per month versus E3's £33.50, which makes sense given the narrower scope and user cap.

The practical takeaway: if your business is comfortably under 300 users with reasonably simple compliance needs, Business Premium may genuinely cover what you need at a lower cost. If you're approaching that ceiling, need standard eDiscovery or fuller data loss prevention, or want device management and endpoint protection that isn't capped by plan tier, E3 is the more future-proof choice, even before headcount forces the decision.

Is Microsoft 365 E3 the right plan for your business?

E3 tends to be the right call for growing businesses that need enterprise-grade identity, device management, and compliance tooling, but don't yet need the advanced threat-hunting and insider risk features that come with E5. That describes a lot of the creative, architecture, and design-led businesses we work with: teams handling sensitive client files and project data, often across freelancers and multiple sites, without an in-house security team dedicated to running E5's more advanced tooling day to day.

The plan itself is only half the picture, though. E3 gives you the licences; how those identity policies, device management rules, and Purview settings are actually configured is what determines whether you get the security benefit on paper or in practice. That's usually where a managed IT services provider earns its keep: setting up conditional access properly, actually enrolling devices in Intune rather than leaving it switched on and unused, and making sure Defender and Purview policies reflect how your business actually works rather than Microsoft's defaults.

Frequently asked questions

What features are included in Microsoft 365 E3?

‍Full desktop, web, and mobile Office apps, Teams, Exchange, SharePoint and OneDrive, Entra ID (Plan 1) identity management, Windows 11 Enterprise and Intune device management, Defender for Office 365 and Defender for Endpoint (both Plan 1), Purview data protection and compliance tools including standard eDiscovery, and Microsoft 365 Copilot Chat.

How does the E3 subscription compare to the E5 plan in terms of security features?

‍E3 covers core identity, endpoint, and email protection well. E5 adds advanced identity protection, extended detection and response (XDR), the full Purview compliance suite including insider risk management, and Microsoft Security Copilot. E5 is built for businesses actively managing security operations or under specific compliance requirements; E3 is a strong baseline for most other growing businesses.

How much does a Microsoft E3 licence cost in the UK?

‍As of writing, Microsoft lists E3 at £33.50 per user, per month on an annual commitment, excluding VAT. Confirm current pricing directly with Microsoft or a licensing partner, as list prices change.

What's the difference between Microsoft 365 E3 and Business Premium?

‍Business Premium is capped at 300 users and includes a narrower set of identity, device management, and compliance tools. E3 has no user cap and adds fuller device management (Intune Plan 1 and 2), Defender for Endpoint, and broader Purview compliance tools including data loss prevention and standard eDiscovery, at a higher per-user price.

Do I need Microsoft 365 E3, or is Business Premium enough?

‍If you're comfortably under 300 users with straightforward compliance needs, Business Premium may be enough. If you're approaching that user limit, handling more sensitive client data, or need standard eDiscovery and fuller device management, E3 is the more future-proof option.

Getting more from your Microsoft licensing

Whichever plan turns out to be the right fit, the licence itself is only the starting point. The value comes from how it's set up and managed day to day, from identity and device policies through to how it fits alongside your wider cyber security services. If you'd like a second opinion on whether E3, E5, or Business Premium actually matches how your business works, talk to Lyon Tech and we'll walk through it with you.

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