There is often a great deal of confusion around how Microsoft Teams is licensed, as the marketing material from Microsoft often doesn’t provide adequate detail about the proper ways to license users and systems for Teams.
To hopefully simplify the guidelines, I’ve written this blog to provide a comprehensive breakdown of how to license your users given your specific needs. I’ll leave out the legacy information on Microsoft Skype for Business and concentrate solely on Teams.
All pricing provided in this blog is provided in US dollars and priced at MSRP through the NCE program.
Microsoft Teams Voice Licenses and Add-Ons:
Phone System ($8/user/month)
Phone System licenses provide the ability for a user to receive and transfer calls. Users can make online, peer-to-peer calls using Teams, but they will need an additional Calling Plan add-on to be able to make outbound calls using Microsoft as the PSTN calling provider.
Phone System is available as an add-on SKU or is included within the Office 365 E5 plan.
Calling Plan ($12/user/month Domestic, $24/user/month Domestic + International)
Calling Plan licenses provide users the ability to make outbound calls using Microsoft as the voice provider.
These can be purchased as domestic per user (3,000 minutes/user/month pooled) or domestic AND international per user (3,000 minutes/user/month pooled domestic, 600 minutes/user/month pooled international).
Microsoft Teams Phone with Calling Plan Bundle ($15/user/month)
This license includes the phone system and domestic calling plan licenses above. It is eligible to be added to Microsoft 365 Business Basic, Business Standard, Business Premium, E3 or A3; Office 365 F3, E1, E3, A1, or A3 Plans.
The Microsoft Teams Phone with Calling Plan Bundle includes all of the following:
- Cloud-based phone system with advanced features including call transfer, multilevel auto attendants, and call queues.
- A domestic calling plan with 3,000 minutes2 per user, per month within the US and Canada.
- Call from anywhere, on any device through the Microsoft Teams app on desktop, mobile, web, and desk phones.
- Around-the-clock customer support seven days a week, backed by Microsoft.
Audio Conferencing (Now Free)
Audio Conferencing provides the ability to create a Teams meeting that contains a PSTN dial-in number for users to call into. This license used to cost $4/user/month, but is now free with all Microsoft 365 subscriptions that include Microsoft Teams. Your Microsoft partner will need to add the free Audio Conferencing license add-on to your accounts.
Cloud Voicemail (included in Exchange Online Plan 2)
A Cloud Voicemail license stores voicemail in Exchange Online and allows users to check their voicemail in both the Outlook and Teams apps. If a user has Office 365 E1, they would not be able to use Cloud Voicemail as the Office 365 E1 plan only comes with Exchange Online Plan 1.
Now that the different plans are outlined, I’ll build out a few use cases to help narrow down which options best fit your needs.
Option #1: Office 365 E1 Approach
In this scenario, the organization would like to use Office 365 E1 as the base plan to license their users for voice. This is the lowest cost method as of today that is fully supported by Microsoft for all Teams functionality. I wouldn’t typically recommend this approach as it doesn’t include the full Office applications downloads, but it does provide the licensing needed to leverage Teams for Enterprise Voice.
- Office 365 Enterprise E1 Plan: $10/user/month
- Exchange Online (Plan 2): $8/user/month (needed for voicemail)
- Teams Phone with Calling Plan Bundle: $15/user/month
- Includes Phone System License
- Includes Domestic Calling Plan
- Audio Conferencing: Free
Total Cost per user = $33/user/month with the domestic Calling Plan and Audio Conferencing
Option #2: Office 365 E3 (and other suites) with Microsoft Teams Phone Add-On
Microsoft has simplified the voice licensing process by standardizing around the Microsoft Teams Phone will Calling Plan add-on. Before March 1, 2022, Business and Enterprise plans weren’t eligible for the same voice add-ons, which gave anyone involved in Teams Voice licensing more than their fair share of headaches.
This licensing bundles allow organizations, regardless of whether they use the enterprise or the small and medium business plans (Microsoft 365 Basic, Standard, or Premium) to use Teams as their phone system, which has been a big game changer for organizations that couldn’t justify the current price bump to E3 or E5.
If the organization would like to use Office 365 E3 as the base plan to license their users for voice, here’s what the lineup looks like:
- Office 365 Enterprise E3 Plan: $23/user/month (contains the following subscription)
- Exchange Online (Plan 2)
- Teams Phone with Calling Plan Bundle: $15/user/month
- Includes Phone System License
- Includes Domestic Calling Plan
- Audio Conferencing: Free
Total Cost per user = $38/user/month with the domestic Calling Plan
This simple licensing strategy, where you only need the base suite license and the the Microsoft Teams Phone with Calling Plan Add-On, also works for the Microsoft 365 for business plans:
- Microsoft 365 Business Basic ($6/user/month) + Teams Phone Bundle ($15/user/month) = $21/user/month
- Microsoft 365 Business Standard ($12.50/user/month) + Teams Phone Bundle ($15/user/month) = $27.50/user/month
- Microsoft 365 Business Premium ($22/user/month) + Teams Phone Bundle ($15/user/month) = $37/user/month
All of the Microsoft and Office 365 plans include different entitlements, and there’s much more at stake aside from the price. You can learn more about the key inclusions in each license and the reasons you might choose a certain plan configuration in our Office 365 licensing optimization guide.
Option #3: Office 365 E5 Approach
In this scenario, the organization would like to use Office 365 E5 as the base plan to license their users for voice.
- Office 365 Enterprise E5 Plan: $38/user/month (contains all of the following subscriptions)
- Exchange Online (Plan 2)
- Phone System License
- Audio Conferencing
- Calling Plan
- Domestic: $12/user/month
- Domestic & International: $24/user/month
Total Cost per user = $50/user/month with the domestic Calling Plan.
The E5 subscription comes with additional benefits that should be evaluated before dismissing this as a viable option. Below is a summary of the features that come with E5 that do not come with E3 or E1.
- Office 365 Advanced Threat Protection: provides protection across Office 365 workloads including Exchange Online, SharePoint Online, OneDrive, and Teams.
- Power BI Pro: Unify data from many sources to create interactive, immersive dashboards and reports that provide actionable insights and drive business results.
- Advanced eDiscovery: provides an end-to-end workflow to preserve, collect, review, analyze, and export content that is responsive to your organization’s internal and external investigations.
Licensing Microsoft Teams with Microsoft 365 Enterprise Plans Instead of Office 365
With the Microsoft 365 bundles available today, the complexity does not increase greatly from the scenarios above. Below are the impacts for organizations needing to leverage the full voice capabilities of Microsoft Teams:
- Microsoft 365 Enterprise E3: Need to purchase the Microsoft Teams Phone with Calling Plan Bundle for complete voice functionality
- Microsoft 365 Enterprise E5: Need to purchase the Calling Plan for complete voice functionality
Direct Routing
Microsoft Direct Routing allows you to connect a supported, customer-provided Session Border Controller (SBC) to Microsoft Phone System. This architecture has several use cases, and below are a few examples that would lead a company to implement Direct Routing.
- Customer has a long-term SIP contract in place that company wishes to leverage instead of Microsoft Calling Plans
- Customer has found a more cost-effective SIP provider given a company’s calling trends and cost of Microsoft Calling Plans
- An organization needs call recording, which isn’t supported on Microsoft Teams without Direct Routing and a call recording solution implemented
- Configuring interoperability between customer-owned telephony equipment, such as 3rd party PBX, analog devices, and Microsoft Phone System
- Customer needs to have Overhead Paging or Call Centers configured with the phone system
- Microsoft Calling Plans are not available in your Country
With Direct Routing, the customer can leverage a different SIP provider, and in this instance they would NOT need the Microsoft calling plan and could leverage their own SIP provider. They would still need the Microsoft Phone System plan (either $8/user/month as a standalone or included with E5).
Depending on their conferencing needs, they could leverage the SIP provider for the conference bridges or use the Audio Conferencing plan from Microsoft. Direct Routing customers certainly can leverage the Microsoft Calling Plans too if they did not want to use their own SIP provider. The Audio Conferencing licensing can be tricky with Direct Routing, and more information can be found here.
Common Area Phones and Meeting Rooms
There are two different licensing options for Teams devices that are not tied to a user, and they are the Common Area Phone License and the Meeting Room License. The features included in each are outlined below.
- Common Area Phone: $8/device/month
- Includes the Phone System Plan
- Still requires a calling plan for dialing out
- Meeting Room: $15/device/month
- Includes the Teams application license, Phone System Plan, Audio Conferencing Plan, and Intune for device management
- Still requires a calling plan for dialing out
The Common Area Phone license is best suited for devices such as kitchen phones, copy room phones, warehouse phones, etc. The Meeting Room license is best suited for conference rooms where the room may initiate an ad-hoc meeting and need to leverage the collaborative features of Teams.
Communication Credits
Communications Credits are a convenient way to pay for Audio Conferencing and Calling Plan minutes. I advise all clients to setup communication credits as they almost always are used in some fashion to ensure users have full functionality. A few use cases of Communication Credits are outlined below.
- Add toll-free numbers to use with Audio Conferencing meetings, auto attendants, or call queues. Toll-free calls are billed per minute and require a positive Communications Credits balance.
- Dialing out from an Audio Conference meeting to add someone else from anywhere in the world.
- Dialing out from an Audio Conference meeting to your mobile phone without the Microsoft Teams app installed and to destinations that aren’t already included in your subscription.
- Dial any international phone number when you have Domestic Calling Plan
- Dial international phone numbers beyond what is included in a Domestic and International Calling Plan
- Dial out and pay per minute once you have exhausted your monthly minute allotment.
Keep in mind, Communication Credits are NOT a replacement for a calling plan. They are intended for the use cases above in addition to providing calling plans to users.
If you would like to discuss the licensing options further, I would be happy to discuss what I know. Just shoot an email to info@pei.com, and I’ll reach out to you directly.
Martin Feehan, Director of Client Relations
This blog was updated to reflect license price changes that Microsoft implemented on March 1, 2022.
