Microsoft 365 / O365

Choosing Wisely: A Deep Dive into Microsoft E1 vs E5 Licenses

Microsoft E1 vs E5 Licenses

  • Microsoft E1 License:
    • Basic online Office apps (Word, Excel, PowerPoint).
    • Core services like email, calendar, and Microsoft Teams.
    • Ideal for businesses needing essential productivity tools.
  • Microsoft E5 License:
    • Includes all E1 features plus full desktop Office apps.
    • Advanced security, compliance tools, and analytics (Power BI Pro).
    • Suitable for larger organizations with complex security and compliance needs.

Introduction: Microsoft E1 vs E5 Licenses

Microsoft E1 vs E5 license

Microsoft E1 and E5 licenses represent two distinct tiers of the Microsoft 365 enterprise plans, each designed to cater to varying business requirements.

  • Microsoft E1 License Overview: The E1 license is part of the Microsoft 365 suite, aimed at businesses seeking essential productivity tools and services. It primarily includes online versions of Office apps along with core communication and collaboration tools.
  • Microsoft E5 License Overview: The E5 license, on the other hand, is the more advanced tier within Microsoft 365. It’s designed for larger organizations requiring a comprehensive suite of tools, including advanced security, compliance, and analytics features.
  • Significance for Business Needs: The choice between E1 and E5 licenses hinges on an organization’s size, security requirements, and the need for sophisticated compliance tools. E1 serves basic business needs effectively, while E5 is tailored for enterprises demanding higher security and data analysis capabilities.

Core Features and Differences

Core Features and Differences

A detailed comparison of the E1 and E5 licenses reveals several key distinctions:

Features Common to Both E1 and E5:

  • Basic Office applications like Word, Excel, and PowerPoint are available online.
  • Essential services like email hosting, cloud storage, and Microsoft Teams for collaboration.

Primary Distinctions in E5:

  • Advanced Security: E5 includes sophisticated security features like threat protection and advanced compliance tools not available in E1. These are crucial for businesses handling sensitive data or requiring stringent compliance measures.
  • Compliance Capabilities: The E5 license provides advanced compliance solutions, such as eDiscovery and audit capabilities, which are essential for regulatory compliance in many industries.
  • Analytics Tools: E5 uniquely offers tools like Power BI Pro, providing powerful data analysis and visualization capabilities.

These differences make E5 a more robust option for large enterprises or those with specific security and compliance needs.

In contrast, E1 is suitable for businesses needing basic productivity tools without the necessity for advanced security or analytics.

Security and Compliance Analysis

Security and Compliance Analysis

Microsoft E5’s security and compliance capabilities are significantly more advanced than those offered in the E1 plan, catering to businesses with higher security needs and regulatory requirements.

Enhanced Security in E5:

  • Threat Protection: E5 includes comprehensive security measures like Microsoft Defender for Office 365, protecting against sophisticated cyber threats like phishing and malware.
  • Data Loss Prevention (DLP): With DLP, E5 enhances the security of sensitive information, preventing unauthorized access and data leaks.

Advanced Compliance Tools:

  • eDiscovery and Audit Capabilities: E5 offers advanced eDiscovery and audit features, which are crucial for organizations that must comply with legal and regulatory standards.
  • Information Rights Management: This feature in E5 helps protect sensitive information both within and outside the organization.

Business Context Importance:

  • These security and compliance features are vital for large enterprises or sectors like finance, healthcare, and government, where data security and adherence to strict regulatory standards are paramount.

Pricing and Cost-Effectiveness

The pricing structures of Microsoft E1 and E5 licenses reflect the difference in their feature sets, impacting their cost-effectiveness for different business needs.

Comparative Pricing:

  • E1 License: The E1 plan is generally more affordable, making it a cost-effective solution for businesses needing basic productivity tools without advanced security features.
  • E5 License: E5 is priced higher, given its extensive range of advanced features, particularly in security and compliance.

Cost-Effectiveness Analysis:

  • For businesses that require basic office applications and collaboration tools, E1 offers a budget-friendly option.
  • Despite its higher cost, E5 provides value for money for large enterprises or those with specific needs for advanced security, compliance tools, and analytics capabilities.

The choice between E1 and E5 should consider the budget constraints and the specific business requirements, ensuring that the selected plan aligns well with the organization’s operational and security needs​.

Best Practices for Choosing Between E1 and E5

Making the right choice between Microsoft E1 and E5 licenses involves careful consideration.

Here are some best practices and pitfalls to avoid:


  • Assess Your Security Needs: E5’s advanced security features are crucial for industries handling sensitive data. Choose E5 if your business demands high-level security and compliance tools.
  • Evaluate Your Budget: While E5 offers more features, it’s also more expensive. Ensure the choice aligns with your budget.
  • Understand Your Workforce’s Requirements: If your team relies heavily on desktop apps and advanced collaborative tools, E5 might be more beneficial.

Pitfalls to Avoid:

  • Overbuying Features: Don’t opt for E5 if your business won’t leverage its advanced features; it could lead to unnecessary expenses.
  • Underestimating Security Needs: Avoid choosing E1 for cost reasons if your organization has high-security requirements.

Scenarios and Use Cases

Scenarios and Use Cases

Different business scenarios can dictate the suitability of either the E1 or E5 license.

E1 License Scenarios:

  • Small to Medium Businesses: Ideal for SMBs needing essential cloud services and online Office applications.
  • Startups and Non-profits: Organizations with limited budgets can benefit from E1’s essential services.

E5 License Scenarios:

  • Large Enterprises: E5’s comprehensive suite suits large companies needing robust security and advanced analytics.
  • Industries with High Compliance Needs: Sectors like healthcare or finance should consider E5 for its advanced compliance and security features.


What are the key differences between Microsoft E1 and E5 licenses?

The primary differences are that E5 includes all the features of E1, such as basic online Office apps and core services, but adds full desktop Office apps, advanced security and compliance tools, and analytics capabilities with Power BI Pro, making it more suitable for larger organizations with complex needs.

Who should opt for the Microsoft E1 license?

The E1 license is best suited for businesses that require essential productivity tools like basic online Office apps, email, calendar, and Microsoft Teams but do not need advanced security, compliance, or analytics features.

What advanced security features are included in the E5 license?

E5 provides comprehensive security features, including threat protection, identity and access management, information protection, and advanced compliance solutions to help protect your organization against advanced cyber threats.

How does the E5 license support compliance needs?

The E5 license includes advanced compliance tools to help organizations meet legal and regulatory standards. These tools offer capabilities for data governance, eDiscovery, risk management, and audit trails.

Is Microsoft Teams available in both E1 and E5 licenses?

Yes, Microsoft Teams is included in both E1 and E5 licenses, providing a unified communication and collaboration platform for both levels of licensing.

Can I upgrade from E1 to E5 if my organization’s needs change?

Yes, you can upgrade from E1 to E5 as your organizational needs evolve, especially if you require the additional security, compliance, and analytics features offered by E5.

What are the benefits of the full desktop Office apps in E5 compared to the basic online apps in E1?

The full desktop Office apps included in E5 offer more advanced features, functionalities, and offline capabilities than the basic online versions in E1, enhancing productivity for users requiring comprehensive Office suite capabilities. Then, the basic online versions in E1 enhance productivity for users.

How does Power BI Pro in E5 enhance organizational analytics?

Power BI Pro in E5 offers powerful analytics and visualization tools, enabling organizations to analyze data, share insights across the business, and make more informed decisions based on real-time information.

Which license is more suitable for organizations concerned with cyber security?

Organizations with significant cybersecurity concerns should consider the E5 license for its comprehensive security features to protect against advanced threats, manage identity and access, and secure cybersecurity concerns.

Are there any additional communication tools included in E5?

Yes, E5 includes advanced communication tools such as PSTN conferencing and Cloud PBX, enabling more sophisticated communication capabilities like making and receiving business calls in Microsoft Teams.

How does the E5 license cater to large organizations’ needs?

The E5 license caters to the needs of large organizations by providing comprehensive tools for productivity, security, compliance, and analytics, all designed to support complex environments and sophisticated operational requirements.

What makes the E5 license suitable for companies with international compliance concerns?

E5’s advanced compliance tools are designed to help companies navigate international legal and regulatory requirements. They offer features like advanced eDiscovery, data governance, and protection capabilities essential for global operations.

Can small businesses benefit from the E5 license?

While small businesses can benefit from E5’s advanced features, the license’s cost and complexity may be more suited to larger organizations with specific requirements for security, compliance, and analytics.

How do organizations decide between E1 and E5?

Organizations should consider their specific needs for productivity tools, security, compliance, analytics, and budget constraints. Consulting with a Microsoft partner can also help determine the best fit based on current and future business requirements.

Is there a significant cost difference between E1 and E5 licenses?

Yes, there is a significant cost difference between E1 and E5. E5 is more expensive due to its additional features, such as full desktop Office apps, advanced security, compliance tools, and analytics capabilities. When considering the investment, organizations should assess the value these advanced features bring to their operations.


  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, improving organizational efficiency.

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