Current prices
From July 1, 2026, Microsoft 365 E3 lists at $39 per user per month, up from $36, and Microsoft 365 E5 at $60, up from $57. These are US list prices on an annual commitment. Existing customers move to them at their first renewal after July 1, 2026.
The difference is $21 per user per month, or $252 per user per year at list. Across 5,000 users, that is $1.26 million a year.
What E5 adds
- Identity
Entra ID P2 instead of P1
Risk-based conditional access, identity protection and privileged identity management.
- Endpoint
Defender for Endpoint Plan 2
Endpoint detection and response, automated investigation and threat hunting, plus Defender for Identity and Defender for Cloud Apps.
- Email
Defender for Office 365 Plan 2
E3 now includes Plan 1, added in the 2026 packaging update. E5 includes Plan 2.
- Compliance
Purview premium features
Premium eDiscovery and audit, insider risk management, communication compliance and endpoint data loss prevention.
- Voice and analytics
Teams Phone, Audio Conferencing and Power BI Pro
All three are add-ons for E3 users. E5 also gains Security Copilot in the 2026 packaging update.
What it means at renewal
Most organizations do not need E5 for every user. The security team, compliance and legal staff and some executives often do; many knowledge workers do not use E5's advanced features day to day. A renewal proposal that moves everyone to E5, or to E7, is the vendor's preferred outcome, not a neutral starting point. For a structured review of what you are licensed for against what you use, see our software licensing optimization practice.
Where Deal IQ comes in
This page covers what has changed and where the cost sits. Turning that into a better price on your contract is the negotiation itself. Deal IQ has run 270+ Microsoft negotiations covering $2.4B+ in contract value, with a network of 350+ former vendor sales, pricing and deal desk leaders that includes people who sold Microsoft. We negotiate directly with Microsoft or behind the scenes with your team, and our fee comes from the savings.
Frequently asked questions
How much do Microsoft 365 E3 and E5 cost in 2026?
From July 1, 2026, E3 lists at $39 and E5 at $60 per user per month, US pricing on an annual commitment.
What is the main difference between E3 and E5?
E5 adds advanced security, identity, compliance, voice and analytics: Entra ID P2, Defender for Endpoint Plan 2, Defender for Office 365 Plan 2, Purview premium features, Teams Phone, Audio Conferencing and Power BI Pro.
Should we move everyone to E5 at renewal?
Usually not. Base the decision on which E5 features are deployed and who uses them. Many organizations keep most users on E3 and license E5 for the groups that need it.
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