E3 vs E5, is the extra $20 worth it?

Most customers we serve pay for E5 without using half the features. They cover the cost of advanced security and compliance tools that no one ever turns on. Let's start with what E3 actually gives you, because it's more than most people think.

E3 costs $36/user/mo (rising to $39 in July 2026) and is the enterprise standard for most organizations. You get everything in Business Premium plus:

• •Windows Enterprise licensing (critical for larger organizations)
• •Intune device management (selected Intune Suite features such as Remote Help, Advanced Analytics, and Intune Plan 2 are added from July 2026, the full Intune Suite remains a separate add-on)
• •Unlimited user count (Business plans cap at 300)
• •Entra ID P1 with Conditional Access
• •Exchange Online Plan 2 with 100 GB mailbox
• •eDiscovery Standard and basic Data Loss Prevention

E3 is the natural choice for organizations over 300 users, or those that need Windows Enterprise licensing.

E5 costs $57/user/mo (rising to $60 in July 2026) and adds three main areas. This is where it gets interesting, and where i see the most overspending:

Advanced security: Defender for Endpoint P2, Defender for Office 365 P2, Defender for Identity, and Defender XDR with automatic investigation and response. This is an enterprise-grade Security Operations Center in a license. Powerful, but only if you actually have people monitoring it.

Advanced compliance: Purview advanced eDiscovery, Communication Compliance, Insider Risk Management, advanced DLP with Endpoint DLP, and automatic classification with trainable classifiers. If you don't know what half of that means, you probably don't need it.

Productivity: Power BI Pro (normally $14/user/mo), Teams Phone System (normally $10/user/mo), and Audio Conferencing. This is often where the real value lies, not in security features that never get configured.

The short answer: the price difference is $21/user/mo ($60 vs $39 from July 2026). That sounds like a lot. But let me put it in perspective.

For 100 users: $2,100/mo extra. For 500 users: $10,500/mo. That's serious money.

But calculate what you're already paying separately. I see this all the time: Power BI Pro (normally $14/mo as add-on to E3), Teams Phone ($8/mo), and a third-party SIEM/SOC solution ($10-20/mo). Many organizations already pay $20-30/user/mo for add-ons that E5 includes. So they're sitting there with E3 plus add-ons that cost more than E5.

The July 2026 price increase is $3 for E5 (5%) vs $3 for E3 (8%), so the price gap remains relatively stable. The key is to calculate your actual add-on spend, not just compare list prices.

My experience is clear: E5 makes sense if you meet at least one of these criteria:

• •Regulated industry: Finance, healthcare, public sector or organizations with GDPR requirements that go beyond basic DLP. Purview's advanced compliance features are hard to replace with third-party tools.
• •Advanced security: You have (or want) a Security Operations Center approach with automatic threat detection and response. Defender XDR replaces expensive third-party SIEM solutions.
• •Telephony: You want to consolidate your telephony in Teams. Teams Phone System is included in E5 but costs $10/mo as an add-on to E3.
• •Power BI: All (or most) users need Power BI Pro, included in E5, $14/mo add-on to E3.

If none of these apply? E3 is more than enough. You can always add specific add-ons later. I see too many organizations buying E5 "just to be safe" and never configuring the advanced features.

E3 is the right choice for most enterprise organizations. It covers productivity, device management and basic security, and that's what you actually use day to day.

E5 is an investment in advanced security and compliance. It's not just an upgrade, it's a fundamentally different approach. It provides the most value for regulated industries, organizations with complex security needs, or those who can consolidate expensive add-ons.

Too many organizations pay E5 prices for years without ever activating Defender XDR or Purview. Only pay for what you actually use.