Microsoft Teams License Options

Questions are swirling around what it takes to enable your workers to be successful remote. In this post we are breaking down your licensing options to get your users up and running on Teams.

Microsoft Teams License Options

If you have Office 365 (Business Essentials, Business Premium, E1, E3, E5) then you already have Microsoft Teams. But what you can do with Teams depends on your licensing and the add-ons you have.

In a perfect world where everyone has Teams- there would be no need for add-on licenses. Sadly, that's not the case.

Organizations running without Teams add-on licenses can:
  • Communicate both internally and externally (if allowed) with other Teams users both peer-to-peer and in a conference call
  • IM/Chat: one-to-one chat and group
  • Teams only voice calls: one-to-one and group
  • Video sharing capabilities
  • Upload and collaborate on files, set up Teams and channels, and other Teams functions

The add-on licenses come into play when we need to add connectivity to the public switched telephone network (PSTN) and allow communication with people outside of Teams. The 3 Teams-related add-on licenses in play are:

  1. Phone System: $8 user/month
  2. Audio Conferencing: $4 user/ month
  3. Calling Plan Domestic: $12 user/ month, $24 user/month Domestic + International

The add-on licensing options available to you depends on your Office 365 plan. However, these add-on licenses are available for all enterprise level subscriptions. Office 365 E1 is free for non-profits, and Microsoft currently has a six-month free trial for Office 365 E1. Contact your Microsoft Partner or iV4 about these opportunities.


Phone System in Office 365 is $8 user/ month. This is the basic license required for any PSTN connectivity. The Phone System license is the equivalent of the mobile phone: it provides you with functionality such as voicemail, but neither gives you a phone number nor lets you place or receive phone calls to or from the PSTN without a provider.

  • Phone System is required for the purchase of Audio Conferencing and Calling Plans add-ons
  • Phone System is included in Office 365 E5 and is available as an add-on for Office 365 E1 and E3

The Audio Conferencing license is $4 user/ month. You only need to set up Audio Conferencing for people who plan to schedule or lead meetings that require a unique access code for each meeting. Meeting attendees who dial in don't need any licenses assigned to them.

  • Phone System is required for Audio Conferencing.
  • Audio Conferencing is included in Office 365 E5 and is available as an add-on for Office 365 E1 and E3


So, if you've gotten this far, you'll see that we have add-on license totaling $12 user/ month for the Phone System license and Audio-Conferencing license.

On the bright side, the Phone System license and Audio Conferencing license are included with Office 365 E5 (with audio conferencing), which is $35 user/month. (E5 without audio conferencing is the same price. Don't ask me, it's Microsoft). If an organization needs these Teams add-on licenses and they already have Office 365 E3, then it may make sense to upgrade to Office 365 E5 for an additional $15 user/ month rather than buying separately.

The E5 subscription comes with additional benefits that should be evaluated before dismissing it as a viable option. Below is a summary of the features that come with E5 but not with E3 or E1.

  • Office 365 Advanced Threat Protection: 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.


Lastly, Calling Plan Domestic, is $12 user/ month and is always an add-on license no matter the subscription. You can buy and assign different Calling Plans to different users, depending on the needs of your organization. If you need international calling, the Domestic and International Calling Plan is $24 user/month.

A Calling Plan is an add-on telephone service that, when combined with Phone System in Office 365, can become the voice solution for your entire organization. A Calling Plan provides people with a primary phone number and lets them make and receive phone calls.

  • Phone System is required for Calling Plans
  • To use the Microsoft Cloud for PSTN connectivity, a Calling Plan license is required.


With phone services tightly integrated into your cloud experience you can:

  • eliminate on-premises equipment 
  • benefit from built-in security and control
  • reduce or increase the number of lines you need month to month
  • consolidate your conferencing tools
  • give your employees a consistent user experience

When it comes to selecting the right Microsoft Teams license options- every organization is different. iV4's Microsoft license specialists can work with you to develop the right course of action.

iV4 can deploy and configure Microsoft Teams voice functionality including Phone System, Calling Plan, and Audio Conferencing services to provide you with a complete phone system.

iV4 Teams Resources & Services



More helpful resources:



Watch our webinar on-demand now How To Use Microsoft Teams as Your Business Phone to learn what it takes to move to Teams as your phone system.



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