Office 365 E1 vs. Business Basic and E3 vs. Business Premium: Can You Save Money?
Many organizations are overpaying for Office 365 E1 or E3 licenses when Microsoft 365 Business Basic or Business Premium would cover the same needs at a lower cost. Switching from E1 to Business Basic can save approximately 30%, and moving from E3 to Business Premium can save around 15%, though actual savings vary by org size and contract terms. If your headcount is under 300, a license review is worth doing now.
When evaluating Office 365 E1 vs. Business Basic and E3 vs. Business Premium, the real question is whether your current license tier actually matches how your organization works, and whether you're paying for capabilities you never use.
Microsoft's licensing structure has evolved significantly over the past few years. The commercial Business plans have matured into serious options for organizations with up to 300 users. Meanwhile, many IT teams are still running on E1 or E3 SKUs that were provisioned years ago without a formal review. We see this constantly with clients who inherited their license structure during a migration and never revisited it.
What Is the Difference Between E1, E3, Business Basic, and Business Premium?
Office 365 E1 is a legacy enterprise plan. It includes web and mobile Office apps, Exchange Online, SharePoint, Teams, and 1 TB of OneDrive storage. It does not include desktop Office app installs. It has no user cap.
Microsoft 365 Business Basic is the modern SMB equivalent. Feature-for-feature, it's nearly identical to E1 for most workloads. It includes web and mobile apps, Exchange, SharePoint, Teams, and OneDrive. It is capped at 300 users.
Office 365 E3 is a full enterprise plan. It adds desktop Office app installs (Word, Excel, PowerPoint, etc.), advanced compliance tools, eDiscovery, Azure Information Protection Plan 1, and unlimited archiving for Exchange. No user cap.
Microsoft 365 Business Premium is the top-tier Business plan. It includes everything in E3's core productivity stack plus Intune device management, Azure AD Premium P1, Microsoft Defender for Business, and several security features that historically required add-ons or enterprise-only SKUs. Business Premium does not technically include Exchange Online Plan 2, but it offers many comparable capabilities. Microsoft is rolling out 100 GB primary mailboxes for eligible Business Premium tenants, along with advanced archiving, retention, hold, and eDiscovery capabilities where supported by the applicable licensing and rollout. Some tenants still have 50 GB mailboxes during the transition, so organizations should verify current availability before making a switch. Capped at 300 users.
You can review the full plan comparison in Microsoft's official Exchange Online mailbox and archiving limits. Or if you'd prefer a guided recommendation, RyanTech can help you identify the right plan before you commit.
Office 365 E1 vs. Microsoft 365 Business Basic: Where Does the Savings Come From?
E1 → Business Basic
~30% Less
Similar core experience for many users
E3 → Business Premium
~15% Less
With security and management included
How Much Can You Save Switching from E1 to Business Basic?
The approximate savings when moving from Office 365 E1 to Microsoft 365 Business Basic is around 30% per user per month. For a 150-user organization, that difference adds up quickly on an annualized basis. And because the feature set is nearly identical for most users, the decision often comes down to one question: does anyone in your organization need enterprise-grade compliance or eDiscovery features that go beyond what Business Basic provides?
What Do You Give Up Moving from E1 to Business Basic?
You Keep
Exchange Online, SharePoint, Teams, OneDrive 1 TB, and web and mobile Office apps.
You Lose
The 300-user ceiling becomes a hard cap. Certain enterprise compliance features tied to the E SKU family, including specific eDiscovery capabilities, are not available.
For organizations under 300 users that don't operate under heavy regulatory compliance requirements, the tradeoff is typically minimal. You can purchase Business Basic through RyanTech and have a licensing specialist confirm the plan is the right fit before your order is placed.
Office 365 E3 vs. Microsoft 365 Business Premium: Is the Upgrade Worth It?
How Much Can You Save Switching from E3 to Business Premium?
Moving from Office 365 E3 to Microsoft 365 Business Premium delivers approximately 15% savings per user per month, with variation based on contract terms.
Is Litigation Hold a Reason to Stay on E3?
Microsoft 365 Business Premium now includes Litigation Hold, which preserves mailbox content for users subject to legal holds regardless of end-user deletion. This removes one of the most common reasons mid-market organizations assumed they had to stay on E3.
If Litigation Hold was the primary reason your organization selected or retained E3, it's time to revisit that assumption. Business Premium covers the requirement at a lower per-user cost and with a stronger security stack included. You can review how Litigation Hold works across plans in Microsoft Purview's documentation on creating eDiscovery holds.
What Does Business Premium Add That E3 Doesn't Include?
This is where the comparison gets interesting. Business Premium brings in several features that are either absent from E3 or require separate licensing:
- Microsoft Intune for mobile device and app management
- Azure Active Directory Premium P1 for conditional access, group-based access management, and self-service password reset
- Microsoft Defender for Business, which includes endpoint detection and response capabilities
- Litigation Hold for preserving mailbox content under legal requirements
- Azure Information Protection Plan 1 (also in E3, so no delta here)
E3 remains stronger if you need unlimited Exchange archiving, full cross-workload eDiscovery, or if you're above the 300-user cap. For eligible organizations, Business Premium delivers a better security posture per dollar. See Microsoft's overview of Microsoft 365 Business Premium for the complete feature breakdown. When you're ready to move, you can buy Business Premium through RyanTech and have the transition handled by a Microsoft Solutions Partner.
When Might E3 Still Be the Better Fit?
Microsoft is rolling out 100 GB mailboxes for eligible Business Premium tenants, matching Office 365 E3. Some users still have 50 GB during the rollout, so businesses should confirm availability before switching.
Business Premium includes 1 TB of OneDrive storage per user, while Office 365 E3 may offer expanded storage for qualifying organizations. Businesses should review their storage requirements before switching.
Who Should Actually Consider Switching?
Not every organization should make this move. Here's how to frame the decision.
Headcount Under 300
Microsoft 365 Business plans have a 300-license limit per plan. Organizations can combine Business and Enterprise subscriptions in the same tenant, so businesses with more than 300 employees may still use a mix of license types depending on their needs.
Compliance and eDiscovery Requirements
If your legal or compliance team relies on Microsoft Purview eDiscovery, content search across all workloads, or retention policies tied to E-tier compliance features, verify those capabilities exist in the Business plan before switching. Litigation Hold is included in Business Premium, but advanced cross-workload eDiscovery is not a one-to-one match.
Contract Timing
Mid-term Enterprise Agreement changes carry cost implications. Time any license migration to align with your renewal window. Your Microsoft partner can help you model this before you commit.
Before You Renew, Let's Take a Look
A quick licensing review can identify which users may be able to move to Business Basic or Business Premium while maintaining the features they rely on.
We'll review:
- Company size, user count, and eligibility for Microsoft 365 Business plans.
- Mailbox usage, archiving requirements, and 100 GB Business Premium rollout eligibility
- OneDrive usage above or below 1 TB
- Whether expanded OneDrive storage is actually required
- Litigation Hold, retention, and compliance requirements
- Whether Business licensing is appropriate for your organization
Most organizations we work with haven't had a formal license review since their original Microsoft 365 deployment. If you already know Business Basic or Business Premium is the right direction, you can purchase Microsoft 365 directly through RyanTech and skip the guesswork.
Not Sure Which License Tier Is Right for Your Organization?
RyanTech's licensing review process maps your current Microsoft spend against actual usage and compliance requirements. We identify gaps, flag overspend, and model your options before you commit to anything. No obligation, no pressure.
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