Exchange Online vs Office 365: Best Option for Email Hosting

• 14 August 2025
• Exchange Online,Office 365
• Written by Justin Greaves

For the uninitiated, Office 365 is the cloud-based SaaS offered by Microsoft that consists of a comprehensive suite of productivity applications, including Microsoft Word, Microsoft PowerPoint, Microsoft Excel, and Outlook for the desktop; and server-based applications such as Exchange and SharePoint.

However, many may be stuck with the dilemma of choosing between Exchange Online and Office 365. The Exchange Online vs Office 365 matchup is confusing because users can either opt for only Microsoft’s email solution, Exchange Online, or they can choose the complete suite of productivity applications by purchasing an Office 365 license. For organizations planning to migrate Exchange 2010 to Office 365, this distinction becomes especially important, as it directly affects the tools and capabilities available post-migration.

Therefore, in this article, we will compare both products, including Exchange Online and Office 365, to help you decide whether the former would be enough for you or if it would make more sense to choose the latter.

Is Office 365 Different from Exchange Online?

Many assume that Microsoft Exchange Online and Office 365 are two different products altogether. However, this is not categorically true. Exchange Online is simply one of the many products that are included in Office 365, which is a collection of tools rather than a single product. You can purchase either product without the other; it is possible to opt in for Microsoft Exchange Online without the Office 365 suite, but you can also purchase the Office 365 Pro Plus edition that doesn’t include Exchange Online.

However, no matter the case, Exchange Online complements Office 365 (and hence doesn’t compete with it). For example, if you choose Exchange Online as a standalone email service now, you can always upgrade to Office 365 later.

Exchange Online Plan 1 vs Office 365 E1

Choosing between Exchange Online Plan 1 vs Office 365 E1 depends on whether your business needs stop at secure email or extend into collaboration and productivity.

When comparing Microsoft Exchange Online vs Office 365, both plans deliver the core essentials: business-class email with a 50 GB mailbox per user, calendar, and contact management. Each supports sending messages up to 150 MB, ensuring smooth communication for most organizations.

The key difference lies in scope. Exchange Online Plan 1 is a standalone service focused purely on email and calendaring. It’s ideal for businesses that only require a reliable hosted email platform without added tools or complexity. On the other hand, Office 365 E1 builds on these email capabilities and adds a complete suite of cloud-based applications designed for teamwork and content sharing.

With Office 365 E1, users gain access to Microsoft Teams for messaging and meetings, SharePoint for document management, and 1 TB of OneDrive storage per user. The plan also includes web-based versions of Word, Excel, PowerPoint, and OneNote, allowing employees to create and collaborate on documents right from the browser.

If your organization is focused strictly on email, Exchange Online Plan 1 is a cost-effective and dependable solution. However, if your team collaborates often or handles shared files and projects, it’s worth considering Office 365 E1 vs Exchange Online Plan 1. The added value of integrated apps makes E1 a smarter long-term investment for growing teams.

Exchange Online Plan 2 vs Office 365 E3

When advanced security and productivity are both high on your business’s priority list, comparing Exchange Online Plan 2 vs Office 365 E3 can help you decide which solution aligns better with your operational needs.

Exchange Online Plan 2 enhances core email services with a 100 GB mailbox per user and introduces features like Data Loss Prevention (DLP), Litigation Hold, and hosted voicemail. These capabilities make it suitable for businesses in regulated industries or those with strict compliance policies.

However, if you’re looking for a more holistic cloud-based productivity solution, Office 365 E3 offers a broader feature set. It includes all the benefits of Exchange Online Plan 2 and then expands further with the full suite of Microsoft Office desktop applications—Word, Excel, PowerPoint, Outlook, and more—on up to five devices per user.

In addition, Office 365 E3 provides access to Microsoft Teams, SharePoint, Yammer, and OneDrive (with at least 1 TB storage), enabling users to collaborate efficiently while maintaining strong security and data governance. Organizations comparing Office 365 E1 vs Exchange Online or moving up the stack to Office 365 E3 will appreciate the unified approach to communication, file sharing, and information protection.

When deciding to compare Exchange Online vs Office 365, consider how much value your business places on seamless collaboration and integrated workflows. Exchange Online Plan 2 works well for businesses that need powerful email features alone, but Office 365 E3 delivers a full enterprise-grade productivity environment suitable for dynamic teams and growing digital operations.

What Does Your Business Need for Email Hosting?

If you are looking only for a cloud-based email service, Exchange Online is more than enough. You can choose between two Exchange Online plans: Plan 1 & Plan 2.

Exchange Online Plan 1 offers up to 50 GB storage per user, along with the web-based and app-based versions of the Outlook client and enterprise-level email security through Exchange Online Protection.

Exchange Online Plan 2 offers unlimited storage and unified messaging services, with advanced security features like Data Loss Prevention (DLP), In-Place Hold, and hosted voicemails. Generally required by large companies.

However, Office 365 can be considered if you’re looking for a comprehensive suite of collaboration and productivity tools. Depending on your requirements, you can choose between various Office 365 plans such as Office 365 Business Essentials, Office 365 Business, and Office 365 Business Premium. If you are a larger organization with more than 300 users, you may choose Office 365 Enterprise plans: Enterprise E1, Enterprise E3, and Enterprise E5.

Do note that all those editions (Business and Enterprise) include Exchange Online as part of the product package except Microsoft 365 Apps for enterprise (formerly Office 365 Pro Plus).

Do You Only Need Secure, Large Mailboxes?

If your focus is on secure, reliable email without added tools, Microsoft Exchange Online is a strong fit. Both Plan 1 and Plan 2 offer business-class email with built-in anti-spam and anti-malware protection.

Exchange Online Plan 1 includes 50 GB mailboxes, calendaring, and contact management—ideal for organizations that just need core email services. Plan 2 adds unlimited storage, Data Loss Prevention (DLP), In-Place Hold, and other compliance features, making it suitable for larger companies or those in regulated industries.

When comparing Exchange Online Plan 1 vs Office 365 E1, Plan 1 is the better choice if collaboration isn’t needed. For organizations focused solely on email, the Exchange Online vs Office 365 decision is straightforward.

Do You Also Need Collaboration, Cloud Storage, and Office Apps?

If your business also needs tools for teamwork, content sharing, and productivity, Office 365 (now Microsoft 365) is more comprehensive. It includes Exchange Online plus apps like Teams, SharePoint, and OneDrive.

Office 365 E1 covers everything in Plan 1 and adds web-based Office apps (Word, Excel, PowerPoint), 1 TB of OneDrive storage per user, and collaboration features. Comparing Office 365 E1 vs Exchange Online Plan 1, E1 is better suited for remote teams and dynamic workplaces.

When you compare Exchange Online vs Office 365, the main difference is collaboration. Office 365 includes collaboration tools, while Exchange Online focuses only on email services.

Hybrid Setups and Industry-Specific Compliance Requirements

Some organizations need hybrid deployments that combine on-premises Exchange with cloud services to support gradual migration or meet compliance requirements. Both Exchange Online and Office 365 can accommodate these setups.

Plans such as Exchange Online Plan 2 and Office 365 E3 are built for organizations with strict compliance needs. They offer features like eDiscovery, audit logs, advanced threat protection, and encryption, which are essential for regulations like HIPAA and GDPR.

Deciding between Office 365 E1 vs Exchange Online or Exchange Online Plan 2 vs Office 365 E3 depends on whether your priority is compliance, collaboration, or both.

Also Read: Office 365 Plans Compared: E1 vs E3 vs E5 vs Business Plans

The Size of Your Company Matters

If you are a small enterprise with no more than, say, 50 members or so, it is fine to migrate to Exchange Online only. This is because we anticipate that, as you are a small company, you may not need the advanced collaboration features that Office 365 offers. However, if you have a considerable number of employees and you expect your team size to grow further in the future, consider getting an edition of Office 365. With Office 365, you get not only the email solutions of Exchange Online, but you also get business communication tools such as Microsoft Teams and Skype for Business. Ultimately, as your company grows bigger, you are going to need more than just email, and that is where Office 365’s applications come in handy.

Small Businesses: May Benefit from Standalone Exchange Online Plans

For small businesses focused on secure, reliable email without the need for additional tools, Exchange Online is a practical and cost-effective solution. It delivers business-class email and calendar features without the added complexity of full productivity suites.

Exchange Online plans are easy to manage with minimal setup, making them ideal for businesses with limited IT resources. This simplicity is well-suited for industries like consulting, administration, or small retail operations that primarily rely on email communication.

When comparing Exchange Online Plan 1 vs Office 365 E1, small businesses may lean toward Plan 1 for its lower cost and email-only focus, especially if collaboration tools are not required.

Mid-To-Large Companies: Often Need Teams, SharePoint, etc., Offered in Microsoft 365 Bundles

Larger organizations typically require more than email. Microsoft 365 plans (formerly Office 365) include Exchange Online along with integrated tools like Teams, SharePoint, and OneDrive to support collaboration and remote work.

With features such as real-time document sharing, online meetings, and workflow integration, Microsoft 365 supports hybrid work environments and centralized communication. It also includes advanced security, compliance, and data governance capabilities, essential for companies in regulated industries.

When looking at Office 365 E1 vs Exchange Online Plan 1, the added value of collaboration tools makes E1 the more strategic choice for mid-to-large businesses.

Scalability and IT Management Considerations

Both Exchange Online and Microsoft 365 offer cloud-based flexibility, allowing you to scale users up or down as your business evolves. Exchange Online is simple to deploy and manage, making it ideal for smaller setups with straightforward needs.

As businesses grow, the ability to consolidate collaboration, communication, and security management into one platform becomes critical. Microsoft 365 enables centralized administration and easier IT oversight, especially for organizations with distributed teams.

If you’re evaluating Exchange Online Plan 2 vs Office 365 E3, the choice often comes down to long-term needs. Exchange Online may be enough today, but Microsoft 365 offers a future-ready path for growing businesses that anticipate needing more integrated tools and compliance support.

What Is the Nature of Your Business?

If the nature of your business is such that it requires a lot of collaboration, consider going for Office 365. The software package comes with a host of useful applications such as Microsoft Teams, Skype for Business, SharePoint, OneDrive for Business, and more. If you have a service-based company, you can expect your users to collaborate online a lot; therefore, in such cases, Office 365 is the correct choice for your company. However, if your business is such that your users don’t need to collaborate online, Exchange Online is what you must go for as it only offers email functionality.

So, as you see, it all boils down to your company’s requirements. If you are still confused, you can begin by going for Microsoft Exchange Online and then later migrate to Office 365 full suite as your company’s needs grow.

If you would like expert advice and assistance to help you decide and finalize, get in touch with us today!

Exchange Online vs Office 365: Pricing Overview

Choosing the right plan starts with understanding what you’re paying for. While Exchange Online offers a focused, budget-friendly solution for secure email, Microsoft 365 (formerly Office 365) includes a broader range of tools for collaboration, productivity, and compliance. Below is a breakdown of the key plans, helping you compare Exchange Online vs Office 365 in terms of pricing, features, and overall value.

Plan comparison chart: Plan 1, Plan 2, E1, E3, E5

• Exchange Online Plan 1

  $4/user/month (annual) — 50 GB mailbox, secure email, web-based Outlook. Ideal for businesses focused solely on reliable, professional email.

• Exchange Online Plan 2

  $8/user/month (annual) — Includes all Plan 1 features plus a 100 GB mailbox, Data Loss Prevention (DLP), cloud voicemail, and advanced compliance support.

• Office 365 E1

  ~$10/user/month — Includes Exchange Online Plan 1 features, plus Teams, SharePoint, OneDrive (1 TB), and web-based Office apps. A good starting point for businesses needing collaboration tools.

• Office 365 E3

  ~$23–$36/user/month — Adds full desktop Office apps, advanced compliance and security, and analytics to E1. Includes Exchange Online Plan 2 capabilities.

• Office 365 E5

  ~$38–$57/user/month — Includes everything in E3, plus advanced threat protection, voice services, and business intelligence tools.

When comparing Exchange Online Plan 1 vs Office 365 E1, consider whether your business needs extend beyond secure email into collaboration and cloud productivity.

Cost vs Value Based on Business Features

Exchange Online plans are cost-effective for businesses that only need secure email and basic compliance tools. They’re ideal for companies without collaboration or productivity software needs.

Microsoft 365 (formerly Office 365) plans like E1, E3, and E5 come at a higher price, but provide integrated tools for communication, teamwork, and document management. This justifies the cost for businesses that rely on platforms like Teams and SharePoint.

Higher-tier options like Office 365 E3 or E5 are a better fit for industries requiring stronger compliance, security, and analytics. When evaluating Office 365 E1 vs Exchange Online Plan 1, weigh the cost against the need for collaboration, remote access, and future scalability.

Exchange Online or Office 365: Which Should You Choose?

Making the right choice between Exchange Online and Office 365 ultimately depends on your business’s current needs and future plans. If your priority is secure, reliable email with straightforward management, Exchange Online offers a cost-effective, focused solution. But if your organization values seamless collaboration, cloud storage, and a full productivity suite, Microsoft 365 (formerly Office 365) provides a powerful, integrated platform designed to support growth and teamwork.

Regardless of which path you take, Apps4Rent is here to help. As a trusted Microsoft Solutions Partner, we guide businesses through every step of the cloud migration journey, whether that’s setting up Exchange Online for streamlined email or deploying the full Microsoft 365 suite for enhanced collaboration and productivity. Our experts tailor solutions to your unique IT environment and business goals, ensuring a smooth transition and ongoing support.

Ready to make the switch or explore your options? Contact Apps4Rent today for a personalized consultation. Let us help you find the best fit for your business and maximize your investment in Microsoft cloud technologies.