How Is SharePoint Online Licensed?

Licensing may not be the most exciting part of SharePoint Online, but it’s one of the most important decisions you’ll make. The license you choose directly affects cost, available features, storage limits, security, compliance options, and how many users can access the platform.

Whether you’re a small business owner, an IT administrator, or a consultant helping clients adopt Microsoft 365, this guide explains how SharePoint Online licensing works and helps you choose the right plan with confidence.

🧾 How Is SharePoint Online Licensed?

SharePoint Online is licensed in two primary ways:

Bundled with Microsoft 365 plans (most common)
Standalone SharePoint Online plans (for SharePoint-only needs)

Most organizations choose Microsoft 365 bundles because they include SharePoint along with tools like Teams, OneDrive, Outlook, and Office apps.

💼 Microsoft 365 Business Plans (Up to 300 Users)

These plans are designed for small to mid-sized businesses and support up to 300 users per tenant.

🔹 Business Basic

Includes: SharePoint Online, OneDrive, Microsoft Teams, and web versions of Word, Excel, and PowerPoint
Best for: Teams working mostly online
Storage: 1 TB + 10 GB per licensed user
User limit: 300

🔹 Business Standard

Includes: Everything in Business Basic
Plus: Desktop versions of Office apps
Best for: Businesses that need full Office applications

🔹 Business Premium

Includes: Everything in Business Standard
Plus: Intune and Azure AD Premium P1
Best for: Organizations needing device management and enhanced security

🏢 Microsoft 365 Enterprise Plans (Unlimited Users)

Enterprise plans are ideal for large organizations and have no user cap.

🔹 Microsoft 365 E1

Includes: SharePoint Online, OneDrive, Teams, web-only Office apps
Best for: Large teams needing basic collaboration

🔹 Microsoft 365 E3

Includes: Desktop Office apps, advanced security and compliance
Includes: SharePoint Online Plan 2
Most popular enterprise choice

🔹 Microsoft 365 E5

Includes: Everything in E3
Plus: Power BI Pro, Microsoft Defender, advanced analytics
Best for: Highly regulated industries and security-focused organizations

🔄 SharePoint Online Standalone Plans

If you only need SharePoint (without Teams or Office apps), standalone plans are a good option.

🔹 SharePoint Online Plan 1

Best for: Basic document sharing and team sites
Includes: OneDrive, Microsoft Lists, external sharing
Storage: 1 TB + 10 GB per user

🔹 SharePoint Online Plan 2

Includes: Everything in Plan 1
Plus:
- Enterprise search
- Data Loss Prevention (DLP)
- eDiscovery and compliance features
- Unlimited OneDrive storage

🆓 Guest Access (No License Required)

You can invite external users (vendors, partners, clients) to collaborate on SharePoint without assigning them a license.

Just ensure:

External sharing is enabled
Permissions are configured correctly in the SharePoint Admin Center

This makes SharePoint ideal for secure external collaboration.

💡 Real-World Licensing Scenarios

Here’s how licensing typically works in practice:

Startup with 25 users
Needs meetings, document sharing, and collaboration
→ Business Basic or Business Standard
Law firm with 250 users
Needs strong compliance, audit logs, and data protection
→ Microsoft 365 E3 or SharePoint Plan 2
Freelancer collaborating with clients
Just needs secure document sharing
→ SharePoint Plan 1 or Business Basic

📦 Quick Comparison Overview

Plan	Storage	User Limit	Key Features
Business Basic	1 TB + 10 GB/user	300	SharePoint, Teams, OneDrive, web apps
Microsoft 365 E3	Expandable	Unlimited	Office apps, SharePoint Plan 2, security
SharePoint Plan 1	1 TB + 10 GB/user	Unlimited	Team sites, OneDrive, Lists
SharePoint Plan 2	Unlimited (OneDrive)	Unlimited	Compliance, eDiscovery, DLP

✅ Compliance & Support

All SharePoint Online plans benefit from Microsoft’s enterprise-grade platform:

99.9% uptime SLA
Compliance with GDPR, ISO 27001, HIPAA, and more
24/7 support via phone and web
Advanced security and compliance features depend on the chosen license

🧠 Final Thoughts

Choosing the right SharePoint Online license depends on:

The size of your organization
Your collaboration and productivity needs
How critical security and compliance are for your business

For most organizations, Microsoft 365 bundles provide the best value. However, if your requirement is limited to document management and collaboration, standalone SharePoint plans may be sufficient.

Take time to evaluate current needs, consider future growth, and select a license that supports both your technical and business goals.

How is SharePoint Online Licensed?