How much does Microsoft 365 really cost?

In Focus

Anyone working digitally today can hardly avoid Microsoft 365. Outlook, Teams, Word, Excel – these tools have long since become the standard. In our recent blogs, we’ve already shown how great the strengths are, especially when used together with Outlook. But one question remains: what does Microsoft 365 really cost? And is it worth taking a closer look?

The answer: Yes. Because the monthly license fees are only half the truth. Anyone who doesn’t know the structures can end up paying more – sometimes even twice.

The biggest cost factors at a glance

On paper, Microsoft 365 looks simple: you pay per user, per month. Done. In reality, however, the total costs are made up of several components:

• Licenses – the biggest cost block, ranging from a few euros up to almost €60 per user per month
• Add-ons & Upgrades – e.g., Security, AI, or Power BI
• Duplicate tools – Zoom, Slack, or Dropbox in addition to Teams, OneDrive, and SharePoint
• Lack of license management – ongoing accounts of former employees

Business or Enterprise – what’s the difference?

Microsoft distinguishes between two license families. The Business plans Basic, Standard, and Premium are tailored to small and medium-sized businesses with up to 300 users. Basic covers the core functions such as Outlook, Teams, and OneDrive. Standard adds the desktop programs Word, Excel, and PowerPoint. Premium includes additional security and management features.

For larger organizations, there are the Enterprise plans E1, E3, and E5. E1 is the leanest option with web apps. E3 offers the full Office suite and extended compliance features. Finally, E5 adds advanced security features, analytics, and telephony. This is exactly where costs rise significantly: while E3 is around €35 per user, E5 quickly comes in at nearly double that.

How is the price really made up?

The pure license costs are only the beginning. In practice, the total costs arise from three levels:

1. License fees – the largest item, depending on the choice of plan.

2. Additional tools – security, compliance, telephony, or BI features, which are often only available at an extra cost or included in higher-tier plans.

3. Indirect costs – such as admin effort, training, migration, or the parallel use of external tools.

An example makes this clear: a company with 100 employees and E3 licenses pays around €24,000 per year. If all are upgraded to E5, the costs double. If Copilot, additional security packages, or external tools are added, the actual total costs quickly rise well beyond that.

Where the price traps lie

Most companies pay too much because they don’t differentiate their licenses. Often, all employees are given E3 or E5, even though many only use Outlook, Teams, and Word.

On top of that come duplicate structures: Teams is available, yet Slack is still in use. OneDrive is included, but Dropbox continues to be paid for. Add-ons make things even more complex. Companies that need security or compliance features often end up automatically with the more expensive plan.

And last but not least, there’s administration. An account isn’t deactivated after someone leaves, a new one is added – and suddenly licenses are being paid for that no one is using.

New cost factor: AI

Since 2023, another cost item has been added: Microsoft Copilot. The AI is directly integrated into Outlook, Teams, and the Office programs. It can summarize emails, draft texts, or automatically schedule appointments. That sounds impressive, but it costs an additional €30 per user per month. Anyone who buys Copilot for all employees without careful consideration can double their license costs in no time.

Our Recommendation

Before booking new licenses or expanding existing ones, it’s worth doing a quick self-check:

• License needs: Is it clearly defined who really requires which license?
• Duplicate tools: Are we paying for external software that’s already included in M365?
• Add-ons: Do we really need all the additional modules, or is a smaller plan sufficient?
• Usage: Are all assigned licenses actually being used?
• AI: Is Copilot really useful for everyone – or only for specific roles?

Those who don’t have internal resources for these topics should rely on experienced experts:

As your partner, we take on the honest analysis, optimization, and management of your Microsoft 365 environment and ensure that you only pay for what you really need. Schedule an appointment with us now and reduce your annual costs while we maximize the value for your company at the same time.

Book a free meeting here