Microsoft 365 Business Premium vs. On-Premise Domain Server with Office 365: A Cost Comparison for 10 Users

Choosing between Microsoft 365 Business Premium and implementing an on-premise domain server combined with Office 365 for a small team can be challenging. This post will detail the costs involved, including hardware, software, and ongoing maintenance, and highlight key differences to help you make an informed decision.

Microsoft 365 Business Premium

Overview: Microsoft 365 Business Premium is a cloud-based subscription service that includes Office 365, Windows 10, and Enterprise Mobility + Security. It offers a comprehensive suite of productivity and security tools, including Microsoft Entra and Intune for identity and device management.

Cost Breakdown:

  1. Subscription Costs:
    • Microsoft 365 Business Premium: $22 per user per month
    • Annual Cost for 10 Users: $22 x 10 x 12 = $2,640
  2. Included Features:
    • Office apps (Word, Excel, PowerPoint, Outlook, etc.)
    • Email and calendaring with Exchange Online
    • OneDrive for Business (1TB storage per user)
    • Microsoft Teams for collaboration
    • Advanced security and compliance features
    • Microsoft Entra: Identity and access management solutions for secure sign-ins and user management.
    • Microsoft Intune: Mobile device management and mobile application management to protect company data on employees’ devices.
  3. Maintenance and Upkeep:
    • Managed by Microsoft, reducing the need for in-house IT support
    • Regular updates and security patches included in the subscription
    • High availability and disaster recovery handled by Microsoft

On-Premise Domain Server with Office 365

Overview: An on-premise domain server provides centralized management for user accounts, security, and network resources. Combining this with Office 365 allows users to access cloud-based productivity tools while maintaining control over the local network infrastructure.

Cost Breakdown:

  1. Server Hardware:
    • Entry-Level Server: $1,500 – $2,500
    • Mid-Range Server: $3,000 – $5,000
    • High-End Server: $6,000+
  2. Server Operating System and CALs:
    • Windows Server Standard: $1,069
    • Client Access Licenses (CALs): $39 per user (10 users): $390
  3. Office 365 Subscription:
    • Office 365 Business Premium: $12.50 per user per month
    • Annual Cost for 10 Users: $12.50 x 10 x 12 = $1,500
  4. Additional Software:
    • Backup Solutions: $500 – $1,500
    • Antivirus/Endpoint Protection: $300 – $600 annually
  5. Maintenance and Upkeep:
    • IT Personnel/Consultant: $50 – $150 per hour
    • Estimated Monthly Maintenance: 10 hours x $100 = $1,000
    • Annual Maintenance Cost: $1,000 x 12 = $12,000
  6. Replacement Costs:
    • Server hardware typically needs replacement every 3-5 years
    • Software updates and CAL renewals every few years

Total Cost Comparison for the First Year

Microsoft 365 Business Premium:

  • Annual Subscription: $2,640

On-Premise Domain Server with Office 365:

  • Server Hardware: $3,000 (mid-range estimate)
  • Windows Server OS and CALs: $1,459
  • Office 365 Subscription: $1,500
  • Backup and Antivirus: $1,100
  • Maintenance: $12,000
  • Total First Year Cost: $19,059

Total Cost Comparison for Subsequent Years

Microsoft 365 Business Premium:

  • Annual Subscription: $2,640

On-Premise Domain Server with Office 365:

  • Office 365 Subscription: $1,500
  • Backup and Antivirus: $1,100
  • Maintenance: $12,000
  • Annual Cost (Subsequent Years): $14,600

Key Considerations

  1. Scalability:
    • Microsoft 365 Business Premium scales easily with business growth, adding or removing users as needed.
    • On-premise solutions require additional hardware and software investment as the organization grows.
  2. Security and Compliance:
    • Microsoft 365 Business Premium includes advanced security features, Microsoft Entra for identity management, and Microsoft Intune for device management, all managed by Microsoft.
    • On-premise solutions require in-house expertise to maintain security and compliance.
  3. Disaster Recovery:
    • Microsoft 365 Business Premium offers built-in disaster recovery and high availability.
    • On-premise solutions need custom disaster recovery plans and additional investments in backup infrastructure.
  4. Initial vs. Ongoing Costs:
    • Microsoft 365 Business Premium has a predictable subscription model with no significant upfront costs.
    • On-premise solutions have higher initial investments and ongoing maintenance costs.

Conclusion

Choosing between Microsoft 365 Business Premium and an on-premise domain server with Office 365 depends on your organization’s specific needs and budget. Microsoft 365 Business Premium offers a more straightforward, managed solution with predictable costs, while an on-premise setup provides greater control but requires significant upfront investment and ongoing maintenance.

For small businesses with limited IT resources, Microsoft 365 Business Premium is often the more practical and cost-effective choice. However, larger organizations with specific compliance requirements or those needing greater control over their infrastructure might still prefer an on-premise solution.