Microsoft 365 vs Office 365: what is the difference and which should your business use in 2026?

If you are searching for the difference between Microsoft 365 and Office 365, here is the short answer: Office 365 no longer exists as a standalone product for most business customers. Microsoft rebranded and restructured its business plans in 2022. What was called “Office 365 Business” is now “Microsoft 365 Business”. The apps are largely the same. The licensing structure is different. And the security and management capabilities in Microsoft 365 go significantly further than the old Office 365 ever did.

This guide explains exactly what changed in the Microsoft 365 vs Office 365 shift, what each plan includes today in Australian dollars, and how to choose the right one for your business in 2026.

Microsoft 365 vs Office 365: the key differences at a glance

What “Office 365” means in 2026

The Office 365 brand still exists in two places. First, Microsoft kept the “Office 365” name for a small number of enterprise plans, specifically Office 365 E1, E3, and E5, which are still available for large organisations. Second, many businesses still refer to their Microsoft subscriptions as “Office 365” out of habit, even though they are technically on a Microsoft 365 plan.

For small and medium businesses, the plans are now: Microsoft 365 Business Basic, Business Standard, Business Premium, and Apps for Business. None of these are called Office 365 anymore. If you are buying a new subscription today, you are buying Microsoft 365.

Microsoft 365 business plans compared (AUD)

Prices are Australian list prices ex GST on annual commitment, checked September 2026 after the 1 July price rise. A fourth plan, Apps for Business, provides the desktop apps without business email; it suits almost nobody running an actual business, so we have left it out of the comparison. For most Perth businesses with 10 or more staff, Business Premium is the recommended plan. The $11.90 gap between Standard and Premium buys you Intune device management, Defender for Office 365, Conditional Access policies, and Azure Information Protection: tools that would cost significantly more as individual add-ons. With Business Standard rising to $21 in July 2026 while Business Premium held at $32.90, the case for Premium is stronger than ever.

What Microsoft 365 includes that Office 365 never did

The genuine difference between the old Office 365 and modern Microsoft 365 is in three areas:

Security. Microsoft 365 Business Premium includes Microsoft Defender for Office 365, which provides advanced email threat protection, anti-phishing, malicious attachment scanning, and safe link checking. It also includes Conditional Access: policies that control which devices and locations can access your data. Old Office 365 had none of this.

Device management. Microsoft 365 Business Premium includes Microsoft Intune, which lets your IT provider enforce security policies on every device that accesses your M365 data, company-owned or personal. You can remotely wipe a lost device, enforce encryption, and prevent data from being copied to personal apps. Office 365 had no device management capability.

Identity protection. Microsoft 365 includes Azure Active Directory (now called Microsoft Entra ID) with advanced identity protection features on higher plans: risky sign-in detection, password protection, and privileged identity management. This is what stops compromised accounts from causing widespread damage.

The shared responsibility problem

One thing that has not changed between Office 365 and Microsoft 365 is the shared responsibility model. Microsoft secures the infrastructure. You are responsible for everything inside your tenant: your data, your users, your configuration.

Most businesses assume their Microsoft subscription includes security by default. It does not. A 2025 Verizon data breach report found that 82 per cent of breaches involve compromised identities, and the most common cause is inadequate identity management: no MFA, no Conditional Access, no monitoring. That is a configuration problem, not a Microsoft problem. Even Business Premium customers can be breached if the tools are not properly set up.

This is why working with a managed IT provider who actively manages your Microsoft 365 security configuration matters as much as which plan you choose. Read our guide to Microsoft 365 security best practices for a detailed walkthrough of what needs to be configured in your tenant regardless of plan.

Which plan should your business be on?

As a Microsoft Solutions Partner managing hundreds of M365 tenants across Perth, here is our straightforward guidance:

Business Basic (~$10.50/user/month ex GST): suitable only for businesses with very simple needs: email, Teams, and web-based Office apps. No desktop installs, no security features. Not suitable for any business handling sensitive client data.

Business Standard ($21/user/month ex GST): adds desktop Office apps and basic collaboration tools. Better for most businesses, but still lacks device management and advanced security. A reasonable starting point for businesses not yet ready for Premium.

Business Premium ($32.90/user/month ex GST): our standard recommendation for Perth SMBs. Includes everything in Standard plus Intune, Defender, Conditional Access, and Azure Information Protection. If your business handles client data, financial information, or anything sensitive, this is the right plan.

Enterprise plans (E3/E5): for larger organisations or those with complex compliance requirements. On Microsoft’s USD list, E3 is $38/user/month and E5 is $60/user/month from July 2026; Australian pricing follows Microsoft’s regional model, so confirm current AUD rates with your provider. A new Security + Intune bundle for E3 customers is expected to offer a cost-effective middle path to enterprise-grade security without the full E5 price.