E3 vs. E5 in 2026: When the upgrade actually pays off
The $21 per user per month premium usually only pays off if you need security AND compliance. A decision guide with the prices since July.
Since July 1, 2026, Microsoft 365 E5 costs $60 (US list) per user per month and E3 $39 – a $21 premium. At its core, E5 is E3 plus two building blocks that are also sold separately: Microsoft Defender Suite (until October 2025 "Microsoft 365 E5 Security": Defender for Endpoint P2, Defender for Office 365 P2, Defender for Identity, Defender for Cloud Apps, Entra ID P2) and Microsoft Purview Suite (formerly "E5 Compliance"). On top come Teams Phone, Power BI Pro, Security Copilot, and Windows E5.
That leads to a simple calculation: if you only need security, take E3 plus Defender Suite for $51 and save $9 per user per month compared with E5. If you need security and compliance, E3 plus both suites comes to $63 – then E5 at $60 is cheaper and includes telephony and Power BI.
Check first what E3 already includes: since summer 2026, Defender for Endpoint P1 and Defender for Office 365 P1 are part of it. If you only want baseline protection for email and devices, you may not need an add-on at all.
Mixed licensing is often the most economical: E5 for groups with extra needs – for example employees with Teams Phone, for whom E5 costs barely more than E3 plus Defender Suite plus Teams Phone – and E3 plus Defender Suite for everyone else. For tenant-wide features such as Defender for Identity, make sure all protected users are licensed.
365Butler calculates the scenario for your user numbers – with sources and the prices of the day.
Independent guidance, not legally binding licensing advice. The Microsoft Product Terms and your CSP partner’s quote are authoritative.