What you get with a Microsoft 365 subscription

A Microsoft 365 subscription is a monthly or yearly payment that gives you access to Microsoft's office software — Word, Excel, PowerPoint, Outlook, and others — plus cloud storage and other services. You do not own the software; you rent the right to use it as long as you keep paying. When your subscription ends, you lose access to the programs and your files unless you save them in a format Microsoft 365 is not required to open.

Microsoft 365 comes in several versions aimed at different people. Home plans are for personal use. Business plans are for companies and self-employed people. Student plans cost less and are only for people currently enrolled in school. Each plan includes a different set of programs and a different amount of cloud storage.

The main alternative is to buy Microsoft Office once, pay a single price, and own it forever — but that version does not get new features, does not include cloud storage, and Microsoft will eventually stop supporting it. Microsoft 365 gets updates automatically and includes OneDrive storage, which is why most people choose it.

Key Takeaways

  • Microsoft 365 Home costs around $100 per year or $10 per month and covers up to six people in one household, each with their own account and storage.
  • Microsoft 365 Personal costs around $70 per year or $7 per month and is for one person only, but works on unlimited devices.
  • Business plans start around $6 per month per person for basic email and cloud storage, and go up to $22 per month per person for the full suite plus advanced security.
  • All plans include the desktop versions of Word, Excel, and PowerPoint, plus the web versions you can use in any browser without downloading anything.
  • Your files stay in OneDrive cloud storage, so you can open them from any device — but if you stop paying, you have 60 days to read them before Microsoft deletes them.

Microsoft 365 Home versus Personal

The two main personal plans are Home and Personal. Microsoft 365 Home is the better deal if you live with other people. It covers up to six people in one household. Each person gets their own Microsoft account, their own OneDrive storage (usually 1 TB per person), and their own copy of the software. You pay one price and split it among everyone. The catch is that everyone has to live at the same address — you cannot buy one Home plan and give a copy to a friend in another city.

Microsoft 365 Personal is for one person only. It costs less than Home per year, but it works on unlimited devices. If you use a laptop, a tablet, and a phone, you can install Personal on all three and sign in with the same account. Home limits you to five simultaneous sign-ins across all six accounts combined, which rarely matters in practice but can if multiple people are working at the same time.

If you live alone or want to keep your files completely separate from family members, Personal makes sense. If you share a household and want to split the cost, Home is cheaper per person.

Business plans and what they include

Microsoft sells business subscriptions under the name Microsoft 365 Business. These are meant for companies with employees, but self-employed people and sole proprietors can buy them too. Business plans include the same desktop software as personal plans, but they add email hosting (your own domain name email address), more cloud storage, and security features like data loss prevention and device management.

The entry-level business plan is Microsoft 365 Business Basic, which includes Outlook email, OneDrive storage, and access to the web versions of Word, Excel, PowerPoint, and other programs. You do not get the desktop versions — the programs you read and install on your computer. The next step up is Microsoft 365 Business Standard, which adds the desktop versions. Microsoft 365 Business Premium adds advanced security tools and device management, useful if you have employees and want to control what they can do with company data.

Business plans are priced per person per month. The cost varies depending on which plan you choose and whether you pay monthly or yearly. If you pay yearly, you usually get a small discount. You need at least one person to buy a business plan, but most businesses buy multiple licenses — one per employee.

How much storage you get and what happens when you run out

Every Microsoft 365 subscription includes OneDrive cloud storage. Personal and Home plans usually include 1 TB (1,000 gigabytes) per account. Business plans vary — Basic includes 1 TB, Standard and Premium include 1 TB as well, but you can buy more storage separately if you need it.

One terabyte is enough for most people. A typical photo is 3 to 5 megabytes. A typical Word document is less than 1 megabyte. You would need to store thousands of photos or videos to fill 1 TB. If you do run out of space, you cannot upload new files until you delete old ones or buy more storage. Microsoft will not automatically charge you or delete your files — you straightforward cannot add anything new.

If your subscription ends, Microsoft gives you 60 days to read your files before the account is deleted. After 60 days, your files are gone and cannot be recovered. This is why it matters whether you own the software or rent it — if you stop paying for a subscription, you lose access to everything.

How to know which plan fits your situation

Start by counting how many people need the software. If it is just you, choose Personal. If you live with others and want to share the cost, choose Home. If you run a business or are self-employed and need a business email address, choose a business plan.

Next, decide whether you need the desktop versions of the programs or whether the web versions are enough. The web versions work in any browser — Chrome, Edge, Firefox — and you do not have to read anything. They have fewer features than the desktop versions, but they are free with any Microsoft 365 subscription and they work on any device, including phones and tablets. If you do heavy work in Excel or Word — complex formulas, mail merges, advanced formatting — the desktop version is worth it. If you mostly read, edit, and share documents, the web version is usually fine.

Finally, check whether you are a student. Microsoft offers discounted plans for people with a valid school email address. The discount is usually significant — sometimes 50 percent off the regular price. You will need to verify your student status when you sign up, usually by entering your school email address.

Month-to-month versus yearly payment

Microsoft 365 subscriptions can be paid monthly or yearly. Monthly payments are smaller but add up to more over a year. Yearly payments are larger upfront but cost less overall. The difference is usually 15 to 20 percent — paying yearly saves you that much compared to paying month by month.

If you are not sure whether you will use Microsoft 365 for a full year, monthly makes sense. If you know you will use it for at least a year, yearly is cheaper. You can also switch between monthly and yearly — if you start with monthly and decide to commit, you can change to yearly the next time your subscription renews.

Microsoft sometimes offers discounts or trials. A trial usually gives you a month free or a discount on your first payment. These offers change frequently and vary by region, so check the Microsoft website for current offers when you are ready to buy.

What happens when your subscription ends

When your Microsoft 365 subscription expires, you have 60 days to read your files from OneDrive before they are deleted. During those 60 days, you can still sign in and read everything, but you cannot use the programs themselves. After 60 days, your account is closed and your files are permanently deleted.

If you want to keep using Microsoft Office after your subscription ends, you have two choices. You can buy a one-time license for an older version of Microsoft Office — Office 2021 or Office 2019 — which you own forever but does not get updates. Or you can start a new Microsoft 365 subscription. Most people choose to renew the subscription because the cost is low and you get new features automatically.

If you stop paying by accident — your credit card expired, for example — Microsoft usually sends you a reminder email before your subscription ends. If you see that email, you can update your payment method and your subscription will continue without interruption.

Frequently Asked Questions

Can I use Microsoft 365 on a Mac?

Yes. Microsoft 365 works on Mac, Windows, iPad, iPhone, and Android. You can install the desktop versions on a Mac the same way you would on a Windows computer. The web versions work in any browser on any device.

What is the difference between Microsoft 365 and Microsoft Office?

Microsoft Office is a one-time purchase — you pay once and own it forever, but you never get new features. Microsoft 365 is a subscription — you pay monthly or yearly and get updates automatically. Microsoft 365 also includes cloud storage and other services that Office does not.

Do I need Microsoft 365 if I only use Word and Excel?

You can buy just Word and Excel through Microsoft 365, but you pay for the whole subscription. If you only need one or two programs, you might save money by buying them separately through Microsoft's app store, though the per-program cost is usually higher than the subscription cost.

Can multiple people use the same Microsoft 365 account?

Home plans are designed for multiple people, but each person needs their own Microsoft account. Business plans are licensed per person, so each employee needs their own account. You cannot share a single account across multiple people — that violates the terms of service.

What if I travel or move to another country?

Microsoft 365 works anywhere you have an internet connection. You can sign in from any country and use your subscription the same way. Your files stay in OneDrive and sync across all your devices automatically.