Microsoft 365 is a monthly or yearly subscription that gives you access to Office apps, cloud storage, and email

Microsoft 365 (formerly called Office 365) bundles Word, Excel, PowerPoint, Outlook, and other Office applications into a single subscription you pay for regularly instead of buying once. You get the desktop versions of these programs on your computer, plus online versions you can use in a web browser, plus 1 TB of cloud storage through OneDrive. The subscription renews automatically each month or year depending on which plan you choose.

The main reason people choose Microsoft 365 over buying Office outright is that you always have the newest version of the software and the subscription is often cheaper over time than a one-time purchase. The trade-off is that you lose access to the apps if you stop paying, whereas a one-time purchase stays on your computer forever.

Key Takeaways

  • Microsoft 365 subscriptions range from about $7 per month for personal use to $20 per month for household plans, with annual payment options that cost less per month.
  • You get the full desktop versions of Word, Excel, PowerPoint, Outlook, and other Office apps, not limited online-only versions.
  • All plans include 1 TB of OneDrive cloud storage, which you can use to save and share files from any device.
  • Your subscription covers one person or up to six people depending on the plan, and each person can install the apps on multiple devices.
  • If you cancel your subscription, you lose access to the apps and editing features, though you can still view files you saved to OneDrive.

The three main subscription tiers and what each costs

Microsoft offers three personal and household plans. Microsoft 365 Personal costs about $7 per month or $70 per year and covers one person. You can install the apps on up to five devices at the same time — for example, a desktop computer, laptop, and phone. Microsoft 365 Family costs about $10 per month or $100 per year and covers up to six people in your household. Each person gets their own 1 TB of storage and can install the apps on up to five devices.

Microsoft 365 Business Basic is designed for small businesses and costs about $7 per month per user. It includes the Office apps plus Teams (for video calls and chat), Outlook email with a custom domain, and 1 TB of OneDrive storage. There are also Business Standard and Business Premium plans at higher price points that add more features like advanced security and scheduling tools.

Prices vary slightly by country and change periodically, so check Microsoft's website for the current rates in your area. Many retailers like Best Buy and Amazon also sell Microsoft 365 gift cards at a discount, which you can redeem for a subscription.

What apps and features come with your subscription

Every Microsoft 365 subscription includes the core Office applications: Word for documents, Excel for spreadsheets, PowerPoint for presentations, and Outlook for email and calendar. You also get Access (a database program), Publisher (for newsletters and flyers), and OneNote (for note-taking). On a phone or tablet, you get mobile versions of Word, Excel, and PowerPoint that let you edit documents on the go.

All plans include online versions of these apps that run in your web browser, so you can work on a document from any computer without installing anything. You can also share documents with others and collaborate in real time — multiple people can edit the same spreadsheet at once and see changes as they happen.

Family and Business plans also include Microsoft Teams, which lets you make video calls, send messages, and share files with coworkers or family members. Personal plans do not include Teams.

How cloud storage works with your subscription

Every Microsoft 365 plan includes 1 TB of OneDrive cloud storage. OneDrive is Microsoft's version of Google Drive or Dropbox — you save files to the cloud instead of only on your computer, and you can access them from any device with an internet connection. If your computer breaks or you lose your phone, your files are still safe in OneDrive.

When you save a Word document or Excel spreadsheet to OneDrive, you can share a link with other people and let them view or edit it. You control whether they can only read the file or make changes. This is how Microsoft 365 handles collaboration — instead of emailing a file back and forth, everyone works on the same version in the cloud.

If you run out of 1 TB of storage, you can buy more storage separately, or you can delete old files to free up space. Family plans give each of the six people their own 1 TB, so a family of four gets 4 TB total.

How to set up and manage your subscription

To start a Microsoft 365 subscription, go to Microsoft's website, choose the plan you want, and enter your payment method. Microsoft will charge your card on the renewal date each month or year. You can read the Office apps to your computer right away, or use the online versions in your browser without downloading anything.

If you have a Family plan, you can add up to five other people by sending them an invite through your Microsoft account settings. Each person signs in with their own Microsoft account (a free email address like name@outlook.com) and gets their own storage and settings.

You can cancel your subscription at any time through your account settings. When your subscription ends, you lose the ability to edit documents in Word, Excel, and PowerPoint, but you can still open and read files you saved to OneDrive. If you resubscribe later, you regain full editing access.

Microsoft 365 versus buying Office once

Microsoft also sells Microsoft Office 2024 as a one-time purchase for about $160. This is a single payment that gives you Word, Excel, PowerPoint, and Outlook forever — no monthly fees. However, you get only one version of the software and do not receive updates with new features. If Microsoft releases Office 2025, you would have to buy it separately.

Microsoft 365 is cheaper if you plan to use Office for more than two years, because the subscription costs less over time and you always have the latest version. A one-time purchase makes sense if you use Office rarely or want to avoid recurring charges. The subscription also includes cloud storage and online versions, which the one-time purchase does not.

Common reasons subscriptions get charged unexpectedly

Microsoft 365 renews automatically on your billing date. If you signed up for a monthly plan, you are charged every month. If you signed up for a yearly plan, you are charged once a year. Many people forget about the renewal date and are surprised by the charge on their credit card statement.

To avoid unexpected charges, check your renewal date in your Microsoft account settings and set a calendar reminder a few days before. If you no longer use Microsoft 365, cancel the subscription before the renewal date. You can also change your payment method or turn off auto-renewal if you want to be asked before each charge.

If you were charged and did not authorize it, or if you cancelled but were still charged, contact Microsoft Support through your account settings. They can review the charge and issue a refund if there was an error.

Frequently Asked Questions

Can I use Microsoft 365 on a Mac?

Yes. Word, Excel, PowerPoint, Outlook, and other Office apps work on both Windows and Mac computers. You can install them on up to five devices, so you could have the apps on a Windows desktop and a Mac laptop at the same time.

What happens to my files if I cancel my subscription?

Files you saved to OneDrive stay in your OneDrive account and you can still view them in a web browser. Files saved only on your computer are not affected. However, you lose the ability to edit documents in Word, Excel, and PowerPoint — you can only open and read them.

Do I need a Microsoft account to use Microsoft 365?

Yes. You sign in with a Microsoft account (usually an Outlook email address) to set up your subscription and access OneDrive. If you do not have one, you can create it for free during setup.

Can I share a Family plan subscription with people who do not live with me?

Technically yes — Microsoft does not verify that people live in the same household. However, the Family plan is intended for family members, and sharing with unrelated people may violate Microsoft's terms of service. Personal plans are cheaper per person if you want to share with friends or coworkers.

Is Microsoft 365 the same as Microsoft Office?

No. Microsoft Office is the name for the individual apps (Word, Excel, PowerPoint). Microsoft 365 is a subscription service that includes those apps plus cloud storage, online versions, and automatic updates. You can buy Office as a one-time purchase, or get it through a Microsoft 365 subscription.