Microsoft 365 has a lot of flavors. Figuring out which offer fits your needs is not as simple as one might hope. With small or solo businesses, the difference between $5 a month and $25 is a month is a big deal. So what version of Microsoft 365 to choose? That’s what I’m hoping to help you sort out with this article.
A couple of things before you dig in.
- If you are 501(c)3 STOP and go directly to this page. You probably qualify for no or low-cost licenses. There’s a lot less to think about when the cost is that low or free. That said, there’s still some key stuff you need to learn to onboard and use the services effectively.
- The small business offerings are capped at 300 users. You will need one of the Office 365 “E” offerings if you have 300 or more users, or expect to in the near future. (You can upgrade).
Microsoft 365 plans include Microsoft Office desktop applications and a suite of online services. They work together brilliantly, but one does not require the other.
Online Office vs Microsoft Office Apps
Word, Powerpoint, Excel, and Outlook exist in two forms. One is the traditional “download and install” for your PC (and when I say PC, I mean Apple as well) or mobile device. The other is “as a service” in the cloud. So there is PowerPoint (PC installed) and PowerPoint Online (that you can work within your browser). Same for Microsoft Word and Word Online, Excel and Excel Online.
The other BIG consideration is offline use. If you can only use the web versions of Office, you cannot work on your project unless you have an internet connection. For many, that consideration alone drives the decision.
So the number one question is this:
QUESTION #1 (a big one!)
Do you need the PC (or Apple) versions of Microsoft Office?
If you do, it’s going to cost you more than if you don’t (kind of a duh!, right?) But you want to know the choices and tradeoffs? Read on.
The answer to the question – do you need Microsoft Office on your PC ( or Apple) is —– Probably. If you only do basic word processing, email, spreadsheets, or powerpoints – the online versions of these products are good. They are actually really good and have come a looking way over the years. And they support co-authoring in real time. That is actually an extremely complicated technical accomplishment.
Take a look at the PowerPoint PC version (on left) and online version (on right) side by side. They look alike and remarkably act alike when doing basic PowerPoints. When I say “basic” I mean to say that PowerPoints created using PowerPoint Online can look very good and present well. But if you do much with animations, transitions, and all the stuff that makes a deck really stand out, then you need the full-featured versions only to be found in PowerPoint that you install on your computer. The same is true for Excel and Word. The online versions are good for a lot of basic work but are effectively “Lite” versions.
Do you need the online services that are part of the Microsoft 365 such as Teams?
Many of the online services offered by Microsoft are pure online services, meaning, they are used in your browser only. With Excel, for example, there is the version you install on your PC and there is the version (Excel Online) that you use in the cloud. As already stated, you can use one without the other. Teams is where web conferencing is provided so for many small businesses, this is a key service of interest.
So Let’s Sort This Out
Below are a series of cases, one of which should fit your situation. If you need the desktop applications, then answer YES to Microsoft Office Apps. If you need the accompanying online services, then answer YES to Online Services.
I don’t need Online Services but I do need Microsoft Office
You want either Office Home and Business (Buy one time) or Microsoft 365 Apps for Business (monthly subscription)
If you have 300 or more users, skip to the Enterprise offerings. None of the “Business” offerings can be used with 300+ users.
- BUY – One-time payment: Office Home and Business ($245 as of this writing)
If you want the desktop versions of Office with no services provided, you want Office Home and Business. You get the latest version available when you buy it with 60 days of support. Functionally, this should work for many years. It’s hard to say exactly how long as it has to with obsolescence and that’s hard to predict. People are still using Office 2007 all over the place, much to Microsoft’s dismay. At some point, though, your downlevel version starts to be a problem. People sending you files you can’t open or if they open your downlevel files with their updated Office, it will often convert the format to a new format that you cannot use. When they send them back to you, you can’t open them anymore. You have to ask them to “Save As” and then save it as a downlevel version of the file. It’s annoying. It costs time and isn’t the best message to others that you need them to work in a file format that’s obsolete to do business with you. Don’t be that person 😉
Pros: One-time payment, probably good for 5+ years of use with no additional costs.
Cons: Can’t upgrade to the latest versions. Will have to pay for email services and online storage if needed. 1 device per license.
2. Subscribe– Ongoing subscription services: Microsoft 365 Apps for Business ($8.25 per user, annual contract, otherwise $10 monthly)
There are two big advantages here:
You can install Office on 5 devices per user!
If BillyBob has a laptop and a PC, then you can install Office on both from the same price. No, you are not allowed to buy one subscription and install it on devices for 5 different people.
Office is kept up to date. Sweet!
In addition to desktop versions of Outlook, Word, PowerPoint, and Excel you also get Publisher (desktop publishing app for creating posters, mailers, and other highly structured documents), and Access (database application). Also of note – Onedrive (an online service) is included which allows you to store files in the cloud. I don’t know if this is different than the free version of Onedrive available to anyone, but it won’t matter functionally.
– Always current. That’s actually a bigger deal than you might think.
– Allows installation on 5 PCs and 5 mobile devices per user. This is very useful if you have a laptop and a PC at the office as do many. Just one license covers both.
– It comes with Access and Publisher.
– Fixed costs – you know exactly what your costs are going to be each month. Finally, it’s super convenient and that’s important.
Cons: After 29 months, you’re paying more to rent Office than if you bought it outright. Over a period of 6 years or so, if you have one PC, the costs are significantly more than if you bought Office outright.
In order to make this choice, work out how much the value of multiple installations for a single user means to you. If you have just one user with single laptop or PC, it could make sense to buy Office outright. Note that you can use a purchased version of Office with Microsoft Business Basic for $5 to add online service to your business. This is well worth examining.
I need online services, but don’t want to rent or buy Microsoft Office
You want Microsoft 365 Business Basic which costs only $5 per user per month.
You get web-based versions of Outlook, Excel, and PowerPoint as well as Onedrive, SharePoint and Teams and other services. Teams is HUGE and at $5 per month includes voice and online meeting capability for up to 250 in a meeting. Yeah – TWO HUNDRED AND FIFTY. That’s $20 per month on Zoom with largely the same capabilities.
If you already have Microsoft Office be sure to check this page for requirements to connect to Office 365 or Microsoft 365. Microsoft is ending “support” for Office 2013 to connect to online services in Oct 2020. That said, the announement (MC190854) further states that they will not actually stop you from using Office 2013 with the online services after that date, just that they don’t support it. In short, if you can still use it. Even so, you may want to upgrade from time to time cause they really do make it better.
Pros: CHEAP. Easy to start working with right away. You can use a custom domain name which is cool and gives your business a professional shine. Works anywhere, anytime – all you need is a browser. If you already have Microsoft Office, it can work with the online services.
Cons: The online versions of Outlook, PowerPoint, Excel, etc are good, but not as full-bodied as their desktop counterparts. You must have internet access in order to work so no working on a plane without good wi-fi and you know that is probably not happening. No network and you’re disconnected from your services which are needed to access your stuff.
I need the online services and want to rent to Microsoft Office applications
You want the Microsoft 365 Business Standard plan at $12.50 per user annual contract.
This is the full-bodied offering that includes the installed Office applications and all the online services needed to run a small business including email, team collaboration, cloud file storage, presentations, web conferencing, and more.
While mail (Outlook), Teams, and Onedrive are the most popular services, take a look at what actually comes with the Business Standard. This is a list of “all apps” from a freshly deployed Business Premium service as of the time of this writing.
Dynamics for sure is a separate thing with separate licenses. It’s listed here probably because things like PowerApps are built on top of it. Bookings is included as is Planner, Forms, Tasks Whiteboard, and ToDo. Power Automate is a geek dream come true allowing you to create no-code workflows where events in one service trigger activities in others. Drop a form in toOnedrive, get an email, and notify a team and blink your lights at home. Sweet!
Pros: Everything you need for $150 per user per year. Always current. Install Office on 5 devices per user. Work online or offline.
Cons: $150 per user can add up fast for a small business. 3K for 20 users annually. If you only need basic services, a smaller package will do.
I need Microsoft Office, Online Services, and Windows 10 licenses
You want Microsoft 365 Business Premium at $20 per month per user.
This service has a LOT of features and is of interest to businesses with legal requirements or business needs for enforced privacy and security. Also, if you need Windows 10 licenses for computers, this is the service you need. You can enforce policy on like “must have virus scanning enabled” or “must use 2-factor authentication on mobile devices”. There is a lot of capability here so plan on spending some quality time with the online guidance or taking some training on how to set it up.
As mentioned, Microsoft 365 Business Premium includes Windows 10 as follows:
“If you have devices that are licensed for Windows 7, 8, and 8.1 Professional, Microsoft 365 Business Premium provides an upgrade to Windows 10 Pro, which is the prerequisite for deploying Windows 10 Business.“
In short, this plan is not for everyone, but is great if you need the additional capability and Windows 10.
PRO TIP! You can mix and match plans. If you have 10 people in the office and some are front desk while others on the road, consider Business Basic for the front desk and Business Standard for those on the road.
The Enterprise Plans
Microsoft has a set of offerings called the “E” plans for companies with 300 or more people.
They use the exact same services as the small business plans and are also staged versions with varying degrees of capacity and features. These services are sold to larger companies that often deploy “hybrid” setups where the Microsoft cloud services interact with on-premise servers at a companies data center. The mainstay Enterprise offering is the “E3” plan which is $20 per user per month and includes Microsoft Office.
The main offering for SMB is the Microsoft Business Standard plan which includes the online services and Microsoft Office for you computers. The Business Basic service at $5 per user is hard to beat if you don’t need Office or already have it. Don’t fuss too much about the choices as you can switch between plans and mix-and-match as well. This allows you to provide just online services for some, while having Office for others.
Please report any updates or needed clarifications! Keeping up with a cloud service is no small task.