Most Microsoft 365 licensing decisions are made under time pressure, by reading a feature-comparison table that runs to 200 rows. The result is predictable: SMEs end up either over-licensed (paying for capability they will never use) or under-licensed (missing security and compliance features they actually need). Here is the version of the decision that we walk clients through.
Business Standard — the productivity baseline
Business Standard gives every user the full desktop and web apps (Outlook, Word, Excel, PowerPoint, Teams, SharePoint, OneDrive, Exchange Online). It does not include any meaningful security or device management. For a small team that uses cloud email, Teams and shared SharePoint sites — and is comfortable accepting baseline Microsoft security — this is the right starting point. Capped at 300 users.
Business Premium — the SME sweet spot
Business Premium is what most of our clients land on. It bundles everything in Business Standard plus the security and device-management features SMEs genuinely need: Microsoft Defender for Business (EDR), Intune (device management), conditional access via Entra ID P1, data loss prevention, sensitivity labels, and the Windows 11 Pro to Enterprise upgrade. For Cyber Essentials and most cyber-insurance requirements, Business Premium is the cheapest licence that covers you out of the box. Also capped at 300 users.
Enterprise E3 — when you outgrow Business Premium
E3 is the right answer when you exceed 300 users, when you have specialist compliance requirements (eDiscovery, advanced auditing, customer key management), or when you need unlimited archive mailbox storage. It does not include Defender for Business — you add Defender for Endpoint Plan 1 or 2 separately. For SMEs under 300 users, E3 is almost always more expensive than Business Premium for less SME-focused security.
The decision in one paragraph
Under 300 users and want a productivity-only setup? Business Standard. Under 300 users and want Cyber Essentials–ready security included? Business Premium. Over 300 users or need specialist compliance? E3 with the right Defender add-on. We help SMEs across Hertfordshire, Bedfordshire and London size their tenancy correctly — including catching the common mistake of paying for Business Premium and not enabling half of what it includes.
