E3 vs E5 vs E7: What You’re Actually Paying For
A plain-English comparison — no Microsoft marketing fluff.
Microsoft just announced their biggest licensing change in a decade — Microsoft 365 E7, also called the Frontier Suite. It launches May 1, 2026 at $99 per user per month.
But before you panic about another price tier, let’s break down what E3, E5, and E7 actually give you — in plain English, no Microsoft marketing fluff.
Microsoft 365 E3 — The Foundation
Price: $36/user/month (going to $39 in July 2026)
This is where most small and mid-sized businesses live, and honestly, it’s solid. You get:
- All the Office apps (Word, Excel, PowerPoint, Outlook, Teams)
- Exchange Online for email
- SharePoint and OneDrive for file storage
- Basic device management through Intune
- Standard security features and data loss prevention
Who it’s for: Businesses that need the core productivity tools with baseline security. If you’re a small business running M365, you’re probably on E3 or something similar.
The catch: E3 gives you the basics, but it doesn’t include advanced threat protection, full Defender capabilities, or serious identity management. You’re covered, but you’re not locked down.
Microsoft 365 E5 — The Security Upgrade
Price: $57/user/month (going to $60 in July 2026)
E5 is E3 with the security dial turned up. Everything in E3 plus:
- Microsoft Defender for Endpoint, Office 365, Identity, and Cloud Apps
- Full Purview compliance suite (eDiscovery, insider risk, information protection)
- Entra ID Plan 2 (conditional access, identity protection, privileged identity management)
- Audio conferencing and Phone System
- Power BI Pro
Who it’s for: Organizations that take security seriously and need advanced threat detection, compliance tools, and identity protection. If you’re in a regulated industry — banking, healthcare, legal — this is typically where you need to be.
The catch: E5 is powerful, but AI tools like Copilot are not included. You’d need to add that separately at $30/user/month. And some of the newer identity features in the full Entra Suite aren’t included either.
Microsoft 365 E7 — The AI + Security Bundle
Price: $99/user/month (available May 1, 2026)
E7 is Microsoft’s play for the AI era. Everything in E5 plus:
- Microsoft 365 Copilot — The AI assistant built into Word, Excel, PowerPoint, Outlook, and Teams. This alone is a $30/month add-on if you’re buying it separately.
- Agent 365 — A brand new control plane for managing AI agents across your organization. Think of it as a dashboard where IT can see, govern, and secure every AI agent operating in your environment.
- Full Entra Suite — Goes beyond E5’s Entra ID Plan 2. Adds Private Access (modern VPN replacement), Internet Access (secure web gateway), identity governance with lifecycle workflows, and verified ID capabilities.
- Advanced Defender, Intune, and Purview capabilities — Enhanced security features specifically designed for environments where AI agents operate alongside human employees.
Who it’s for: Large enterprises that are going all-in on AI and need a single license to cover productivity, security, compliance, and AI governance. Microsoft is betting that organizations want one SKU instead of stitching together E5 + Copilot + Entra Suite + Agent 365 separately.
The catch: At $99/user/month, this is an enterprise play. For context, buying E5 ($60) + Copilot ($30) + Entra Suite ($12) + Agent 365 ($15) separately would cost $117/user/month. So E7 saves about $18 per user. At 1,000 users, that’s over $200K a year. But for a 25-person company? The math gets hard to justify unless every single employee is actively using Copilot.
The Quick Comparison
| E3 | E5 | E7 | |
|---|---|---|---|
| Price | $39/mo | $60/mo | $99/mo |
| Office Apps | Yes | Yes | Yes |
| Exchange, SharePoint, OneDrive | Yes | Yes | Yes |
| Teams | Yes | Yes | Yes |
| Basic Intune | Yes | Yes | Yes |
| Microsoft Defender (Full) | No | Yes | Yes |
| Purview Compliance (Full) | No | Yes | Yes |
| Entra ID Plan 2 | No | Yes | Yes |
| Full Entra Suite | No | No | Yes |
| Power BI Pro | No | Yes | Yes |
| Microsoft 365 Copilot | No | No | Yes |
| Agent 365 | No | No | Yes |
| Advanced AI Security | No | No | Yes |
So What Should You Actually Do?
Here’s my honest take:
If you’re a small business on E3 or Business Premium, E7 isn’t your move right now. But the July 2026 price increases are real, and this is a good time to make sure you’re actually using the security features you’re already paying for. Most businesses I assess aren’t even using half of what their current license includes — conditional access policies not configured, Defender settings left at defaults, no email protection rules in place.
If you’re on E5, the question is whether Copilot is delivering enough value to justify the jump to $99. If you’ve already been paying for Copilot as an add-on and your team actually uses it, E7 could save you money. If Copilot has been sitting unused, bundling it into a more expensive license won’t fix that.
If you’re considering E7, make sure your identity and security foundations are solid first. Agent 365 and Copilot are powerful, but they amplify whatever state your tenant is in — good or bad. If your permissions are a mess, AI will just make that mess faster.
The Real Takeaway
Microsoft is making it clear: the future of M365 is AI plus security, tightly integrated. Whether you’re on E3, E5, or eventually E7, the organizations that get the most value are the ones that actually configure and use what they’re paying for.
That starts with knowing where your gaps are.
[Take My Free M365 Security Assessment →]
Not sure if your M365 tenant is configured correctly? My free 15-question assessment covers identity and access, email protection, data security, and endpoint management. It takes 5 minutes and shows you exactly where your gaps are — no sales pitch, just answers.
Edith Forestal, CISM | Microsoft 365 Security Specialist (SC-200, SC-300, MS-102) | Founder, Forestal Security | forestalsecurity.com
