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Microsoft 365 licensing is where most SMBs either overpay or leave major security features unused. The gap between Business Standard and Business Premium is the biggest decision. Business Premium adds Intune, Defender, Entra ID P1, and Information Protection for roughly $14 more per user per month. It is almost always worth it.
A note on naming. Office 365 licensing still exists as a product line (Office 365 E1, E3 and E5), but for most businesses under 300 users the Microsoft 365 Business plans have replaced it. If you are searching for the PIM licence cost, Privileged Identity Management is an Entra ID P2 feature. It is included in Microsoft 365 E5 and is not in Business Premium or Entra ID P1, so the cost is the Entra ID P2 add-on per privileged user, not a whole-tenant upgrade.
July 2026 price changes
From 1 July 2026: Business Basic up 16%, Business Standard up 12%, Office 365 E3 up 13%. Business Premium is unchanged, making it relatively better value. New permanent Business Standard plus Copilot SKUs at $23.50 per user per month, and Business Premium plus Copilot at $32 per user per month (1 to 300 seats). Copilot Cowork is now GA with consumption-based credit billing, disabled by default with admin spend controls.
The Plans Compared
Business Basic
~$12.50/user/month
- Web / mobile Office apps
- Exchange, Teams, SharePoint, OneDrive (1 TB)
- No desktop Office apps
Fit
Frontline or light-use staff
Business Standard
~$25/user/month
- Everything in Basic
- Desktop Office apps (Word, Excel, PowerPoint, Outlook)
- No Intune, no Defender, no advanced security
Fit
Businesses that do not need device management or advanced security
Business Premium
~$39.50/user/month
- Everything in Standard
- Intune (device and app management)
- Defender for Business (EDR)
- Entra ID P1 (Conditional Access)
- Information Protection (labelling, DLP)
- Up to 300 users
Fit
Default for most SMBs. Best value bundle Microsoft sells. Price unchanged in July 2026.
Office 365 E3
~$40/user/month
- No user cap
- Office apps + core services
- Unlimited mail, archive
- No Entra ID P1, no Intune included
Fit
Large businesses on Enterprise, often combined with EMS
Microsoft 365 E3
~$55/user/month
- Office 365 E3 + Enterprise Mobility + Security E3
- Intune, Entra ID P1, full Windows Enterprise
- No user cap
Fit
Businesses beyond 300 users or needing Windows Enterprise
Microsoft 365 E5
~$87/user/month
- Everything in M365 E3
- Defender for Endpoint P2, Defender for Office P2, Defender for Cloud Apps
- Entra ID P2 (risk-based Conditional Access, PIM)
- Power BI Pro, Teams Phone
- Audit Premium (1 year retention)
Fit
Regulated industries, security-heavy shops, larger enterprises
Prices ex GST, approximate, based on current Australian CSP pricing. Actual pricing varies by partner and commitment.
Our Recommendation
For most Australian SMBs: Microsoft 365 Business Premium for all staff. The security features (Intune, Defender, Conditional Access, DLP) are worth far more than the $14/user/month gap over Business Standard. With the July 2026 increases lifting Standard by 12% and leaving Premium unchanged, the value gap has only widened. For regulated or larger orgs: M365 E3 with Defender for Endpoint P2 add-on, or the full E5.
Mix plans where it makes sense. Frontline staff on Business Basic, office staff on Business Premium. Rarely gives enough savings to justify the admin overhead unless you have 50+ very light users.
Add-Ons Worth Buying
Defender for Office 365 P1
Safe Links, Safe Attachments, anti-phishing. Add to Business Standard or E3 if not moving to Premium / E5.
Defender for Endpoint P2
EDR + threat intel + automated investigation. Add to E3.
Entra ID P1
Conditional Access, self-service password reset. Essential. Already in Premium / E5.
Entra ID P2
Risk-based policies, PIM, access reviews. Included in E5.
Teams Phone
Add to any plan. $10-15/user/month. Replaces traditional PBX.
Power BI Pro
$14/user/month. Almost always cheaper than buying separately.
Copilot for M365
Standalone Copilot ~$44/user/month. New permanent bundled SKUs from July 2026: Business Standard plus Copilot at $23.50/user/month, Business Premium plus Copilot at $32/user/month (1 to 300 seats). Copilot Cowork is now GA with consumption-based credit billing, disabled by default.
Entra ID P2 and PIM Licensing Costs
Microsoft Entra ID Privileged Identity Management (PIM) is the just-in-time admin activation feature that lets you grant permanent eligibility to a privileged role without granting permanent standing access. PIM is a feature of Entra ID P2, not P1, and there is no standalone PIM licence.
What PIM costs
Entra ID P2 is included in Microsoft 365 E5 at no extra per-user cost. For organisations on Business Premium, Business Standard or E3, Entra ID P2 is available as a standalone add-on at approximately $9/user/month. PIM itself carries no separate line item — the Entra ID P2 licence unlocks it along with risk-based Conditional Access and access reviews.
When you need PIM
Any business with more than two permanent Global Admins should be on Entra ID P2. PIM lets those admins activate the role for a time-boxed window, produces an audit trail, and removes standing admin access as the default state. Without PIM, every admin is a permanent target.
Cost-efficient path
Licencing only the admin population (not every user) for Entra ID P2 keeps PIM affordable. A 50-user business with 3 admins pays for 3 P2 seats, not 50.
When to Move Up
Basic to Standard
Staff need desktop Office apps, or mailbox beyond 50 GB.
Standard to Premium
Almost always. Unless you are covering Intune and EDR elsewhere, Premium pays for itself in security.
Premium to E3
Over 300 users, need Windows Enterprise, or advanced compliance.
E3 to E5
Regulated industry, need advanced Defender coverage, Teams Phone, Power BI Pro, and Audit Premium.
Common Mistakes
Business Standard for everyone, then buying security tools separately
Business Premium is almost always cheaper than Standard plus third-party EDR / MDM / CA tooling.
Paying for unused licences
Staff leave, licences stay. Audit quarterly.
Buying Copilot for every staff member
Evaluate per role. Most businesses get value from 20-40% of staff with Copilot, not 100%.
Missing the 300-user cap on Business Premium
Plan the move to E3 before crossing. No downgrade path.
Buying Enterprise when Business fits
E3 / E5 are often overkill for under-300-user orgs. Business Premium wins on value.
Right-Size Your M365 Licensing
We audit M365 licensing for Australian businesses, identify waste, and recommend the mix of Business and Enterprise plans that gives the best value.