If you've already compared Business Standard against Business Premium and picked Premium, the next question shows up as your business grows: what actually happens above 300 users, and is E5's security bundle worth paying for even below that cap? Here's the honest answer.
The 300-User Cap Is the Trigger, Not the Only Reason
Business plans, including Premium, stop being available once a tenant passes 300 licensed users, at that point a move to an Enterprise SKU (E3 or E5) is mandatory, not optional. But plenty of businesses well under that cap also choose E5 specifically, not because they're forced to, but because its security features are worth the cost for their situation.
What E3 Actually Adds Over Business Premium
E3 is closer to a like-for-like step up than a security upgrade, unlimited mailbox archiving, Windows Enterprise licensing rights, and access to more advanced Intune device configuration options aimed at larger, more complex device fleets. For most Perth SMBs under 300 users, E3 alone is rarely the deciding factor, it's usually chosen as the mandatory step above the cap rather than for a specific feature.
What E5 Adds That Actually Matters for Security
- Microsoft Defender for Office 365 Plan 2 - advanced phishing simulation and automated investigation, well beyond the baseline protection in lower tiers.
- Microsoft Purview - data loss prevention and information protection, relevant for businesses handling regulated or highly sensitive client data.
- Advanced identity protection in Entra ID - automated risk-based sign-in policies beyond standard Conditional Access.
- Microsoft Teams Phone - included in E5 rather than needing a separate add-on, worth factoring in if you're evaluating Teams Phone anyway.
A Practical Way to Decide
Most growing Perth businesses don't need to license the entire tenant at E5, mixing licence types is normal and often the more cost-effective approach: E5 for finance, leadership, or anyone handling particularly sensitive data, Business Premium or E3 for everyone else. Start from what an IT security audit actually flags as a gap, rather than upgrading everyone on the assumption that more expensive means more secure.
Frequently Asked Questions
Do we need over 300 staff before we can buy E3 or E5?
No, that's a common misconception. Enterprise SKUs are available regardless of headcount, the 300-user cap only applies to Business tier plans. A 40-person business can buy E5 licensing if the features justify the cost.
Can we mix licence types across the business?
Yes, and most growing businesses do exactly that, putting E5 on staff who need advanced security or compliance features and Business Premium or E3 on everyone else, rather than upgrading the entire tenant at once.
Is E5 mostly about Copilot?
No, Copilot is licensed separately as an add-on regardless of which base plan you're on. E5's value is almost entirely in advanced security, compliance, and voice features, not AI.
What's the realistic cost difference we should budget for?
E3 typically sits above Business Premium per user per month, and E5 sits meaningfully above E3 again. The gap is usually only worth paying for the subset of staff who actually need the advanced features, not the whole tenant.
We can model out the licensing mix that actually fits your business before you commit.
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Book a Free IT Health CheckFor related reading, see Microsoft 365 Business Premium vs Standard, Microsoft Entra ID Explained, and What an IT Security Audit Covers.