Office 365 – Licenses, Charges and phrases explained

We hear users talk about Office 365 in various contexts and to imply various meanings and whilst most of these might be technically right, we do feel that there is some general confusion as to what it all means and crucially, how it’s all charged for.

Key Products

Microsoft offer many products and services under the Office 365 umbrella but in the interests of explaining things clearly, we’ll focus on just three. Prices correct at the time of writing. All prices are monthly.

Exchange Online Plan 1£3 + vatEmail Only

Put simply, this is an email address. Every employee needing access to their own mailbox would require a mailbox license.

Please note that this license does not include any mail software (such as Outlook) so if users need to use Office applications, they would need a different license such as Office 365 Business Premium (see below). However, if the users only need to access email via iPad (for example) then the standard Mail application on there works great. Also, each Exchange Online Plan 1 Mailbox comes with Outlook Web Access (OWA) meaning users can log into their email from a web browser in the same way as they might do for Hotmail or Gmail.

Office 365 Business Premium£9.40 + vatEmail, and all the main Office 365 applications;
Outlook, Word, Excel, PowerPoint, OneNote (plus Access and Publisher for PC only)

This license includes a mailbox (like Exchange Online Plan 1) but also, full versions of the Office applications as above. Thus, you’re basically getting Office for £6.40 + vat month. This package on its own retails for well over £200 and also, when Microsoft release a new version of Office, you’re stuck with it whereas with Office 365 you are always on the latest version. Also, crucially, this license entitles the user to install Office on up to 5 of their own machines – the outright purchase does NOT.

Office 365 Business£7.99 + vatNo email, just the main Office applications:
Outlook, Word, Excel, PowerPoint, OneNote (plus Access and Publisher for PC only)

This is intended for users who simply don’t need access to email, or who use Outlook to connect to another user’s mailbox (for example). All the same rights apply as for Office 365 Business Premium.

Backup£1.50 + vatBacks up a mailbox

This protect your mailbox, totally automatically, by doing a nightly “cloud to cloud” backup of your important mail.

Glossary of terms and their impact on charges

Setting the scene

For our examples we’ll use the infamous XYZ Company, with a Domain configured for Office 365 as “”. The following staff are employed there;

John DoeDirector(General business Management)
John DoeDirectorAccounts Manager
Rose SmithEmployeeAccounts Clerk
Jack SmithEmployeeShop Floor operative

We’ve put together a list of some of the more common terms


As mentioned above, this is an email address such as or Every employee needing access to their own mailbox would require a mailbox license.


Another name associated with a mailbox. John Doe might have aliases such as or Aliases are free, but it’s important to note that if a user has an alias on their mailbox, that alias is that NOT available for anyone else. If you needed to do this, you would need a Distribution List (see below). Aliases are free.

Distribution List

This is a special email address that contains a list of other email addresses to distribute the incoming mail to. For example, The XYZ Company might have a Distribution List for which might have and as its members. Distribution Lists are free.

Shared Mailbox

Suppose that instead of a Distribution List for the staff decide that they don’t want two copies of all incoming mail (one to Jane and one to Rose). In this case, they could consider a Shared Mailbox. Here, each user’s Outlook would show not only their own mailbox but also, the Shared Mailbox(es) that the Admin has granted them permission to use. They can view the calendar, send / receive mail and not have to worry about duplicating work since the Shared Mailbox will update for all users when email is sent / received / deleted. Shared Mailboxes are free, but all users of the mailbox must have an email license.

Frequently Asked Questions

Q: “I have five employees so can’t I just get one Office 365 Business Premium license, installed Office for all users on that, and then buy four Exchange Online Plan 1 licenses for the mailboxes on the remaining four?”

A: Sorry, no. We admire your lateral thinking but as the Office 365 Business Premium license permits the installation of five versions Office for the same user this would be a breach of the agreement. In this situation, if no users have Office installed, you would need five Office 365 Business Premium licenses. Of course, if some users do have Office, selecting Exchange Online Plan 1 for them will save some money.

Q: “Is Office 365 reliable? I heard it went down a few months back”

A: It’s true that this happened, but then, what service is 100% reliable? To use the same metric Office 365 has, over the last 3 years, hovered between 99.5% and 99.98% available. To achieve this level with your own on-premise server solution would be tremendously difficult, not to mention very expensive to set up.

Q: “My email is with Microsoft so it must be safe. Why should I bother backing it up?”

A: It is true that Microsoft have invested a great deal of money in the infrastructure (Datacentres) to house your Email safely. Your email will in fact be duplicated across a number of physical servers so it’s pretty safe from hardware failure. However, what if you accidentally delete an important email, and then delete it from your “Deleted Items” folder? In that situation, the email deletion be reflected across all Microsoft’s servers and an email recovery would require a restore from a backup.

Q: “I might just buy Office outright and save some monthly costs. Then, I don’t need 365 do I?”

A: The Office purchase(s) would certainly mean that you don’t need Office 365 Business Premium, at least until the version you have bought goes out of date in a few years, but you would still need to think about how you’re getting your email. If you don’t have an email service anywhere else, you could use Exchange Online Plan 1 with your purchased Office applications, no problem.

Q: “Our email is currently on an old server in our office, that we would like to get rid of. Can we move the old email from there into 365 and take it out?”

A: Yes you can! Nemark Professional IT Services Ltd. has been handling this exact sort of migration for years. You won’t lose any email, and the whole process is made painless. We’ll even remove your old server and securely recycle it for you if you wish!


We hope that the above gives you a measure of understanding as to the various possibilities afforded by Office 365 both in terms of application deployment and email. It really is a great solution and with careful planning, you can end up with a secure, fully licensed solution that needn’t cost you the earth! If any of the above has piqued your curiosity, why don’t you contact us to find out more? We’re always happy to help, and we’ll do everything in our power to make you very glad you called us!