Microsoft 365 Licensing Simplified

The Microsoft 365 suite of solutions is arguably the most comprehensive and powerful productivity platform on the market today. Not only does it include nearly all the productivity, communication, and security tools a business needs through its various growth stages, but it can scale from small startup businesses all the way up to large enterprises with thousands of users. Accommodating the needs of businesses large and small, however, requires that Microsoft have dozens of different licenses and pricing levels all with different features and target use-cases. For small businesses wishing to use the Microsoft platform, this large selection of license types can be confusing. In this article, we will briefly review each of the most common license types for small businesses with fewer than 300 employees.  

“Free” Licenses 

One common mistake small businesses make with the Microsoft 365 platform is assuming that every email address requires a paid license. This is simply not true. The rule of thumb is: Every individual person within the organization who wishes to access any of the Microsoft 365 services needs their own license. Any other email needs, however, can usually be met with the free options below. 

  • Shared Mailboxes: Shared Mailboxes are best suited for “generic” email addresses that one or more people are responsible for. For example, consider an “” email address. One or more people within your company may be responsible for reviewing and replying to emails sent to this accounting mailbox. A Shared Mailbox allows everyone who is granted access to the mailbox to use it collectively, seeing each other’s replies, folder organization, etc. 
  • Distribution Groups: Distribution Groups are best suited for announcements or alerts you wish to send to a group of recipients. Instead of emails sending and receiving from the same mailbox like a Shared Mailbox, Distribution Groups simply send a separate copy of an email to each of the group members. For example, if you wish to send an email to your entire company with details about an upcoming event, an “” Distribution Group is the perfect solution. 

Exchange Online (Email Only) 

Another common mistake small businesses make with Microsoft 365 licensing is assuming they need a higher license level than is necessary. Consider a front-line worker, for example. If a business’s front-line workers only need an email address and don’t require access to SharePoint, Teams, or the other Microsoft 365 solutions, the Exchange Online Plan 1 license is the perfect fit for small businesses. 

Business Basic (Web Apps Only) 

A small step up from the Exchange Online license is Business Basic. In addition to an email mailbox, this license also grants the user access to SharePoint, OneDrive, Teams, and the browser version of the Microsoft Office applications. This license is well suited for “road warriors” who work almost exclusively from their smartphone or web browser. 

Business Standard (Desktop Apps) 

By far the most popular Microsoft 365 plan is Business Standard. This license adds the powerful suite of Microsoft Office desktop applications (Word, Excel, PowerPoint, Outlook, Publisher, and Access) that have remained the industry standard for decades. This license is well suited for any standard employee within the organization that spends much of their day using the Microsoft Office suite of productivity tools. 

Business Premium (Advanced Security) 

A hidden gem of the Microsoft 365 Business plans is Business Premium. Simply put, this plan is focused on cybersecurity and data protection. It allows businesses to implement enterprise-level cyber defenses and data loss prevention policies that help them achieve peace of mind in this cloud-first, remote work world. With built-in capabilities for mobile device management, file encryption, compliance enforcement, strict access control, and much more, this license is well suited for businesses that are concerned about the theft of company information by an employee or threat actor, as well as businesses that have a large number of remote workers. 

Bonus Add-On: Microsoft 365 Audio Conferencing (Teams Dial-In Option) 

After Zoom helped introduce consumers to the benefits of virtual meetings, Microsoft Teams was quickly adopted as the world’s leading virtual meeting platform for businesses and enterprises. By default, however, Microsoft Teams does not include a dial-in phone number option. While this isn’t always necessary, it can be helpful to allow meeting attendees to call in from their phones rather than having to download and run an app. It’s also helpful for attendees that don’t have a microphone built into their computer. Many businesses assume Microsoft Teams lacks this capability, but that’s not true. For only $4, meeting hosts can have a dial-in option automatically added to all their Microsoft Teams meetings. 


While the above list of licenses is by no means a comprehensive review of all the options Microsoft has, they do detail the most common options for businesses with fewer than 300 employees. For more information about what licenses to choose, how to implement the technology, and how to take advantage of the many other included services under each license, Microsoft Gold Partners with the “Cloud Productivity” designation, such as Digital Boardwalk, can help.