SharePoint is a powerful collaboration and document management platform offered by Microsoft. However, choosing the right SharePoint license can be complex due to the different editions and pricing models available. This guide provides a step-by-step explanation of SharePoint licensing options, their features, and the differences between them.
1. SharePoint Licensing Overview
Microsoft offers different licensing models for SharePoint depending on whether it is deployed on-premises or in the cloud. The two main categories are:
- SharePoint Online (Cloud-Based)
- SharePoint Server (On-Premises)
Each model has its own pricing structure, features, and licensing considerations.
2. SharePoint Online Licensing
SharePoint Online is a cloud-based service included in Microsoft 365 (formerly Office 365) plans. It is hosted by Microsoft, eliminating the need for organizations to manage their own infrastructure.
2.1. SharePoint Online Licensing Plans
| Plan | Included Features | Best For |
|---|---|---|
| Microsoft 365 Business Basic | SharePoint Online, OneDrive, Teams, Exchange, limited storage | Small businesses needing basic collaboration |
| Microsoft 365 Business Standard | All Business Basic features, plus Office desktop apps | Organizations needing full Office suite and collaboration tools |
| Microsoft 365 E3 | Advanced security, compliance, and analytics features | Enterprises requiring enhanced security and data governance |
| Microsoft 365 E5 | E3 features plus advanced threat protection and compliance | Large enterprises needing advanced security and analytics |
| SharePoint Online Plan 1 | Core SharePoint features, 1TB storage per organization | Small businesses needing standalone SharePoint |
| SharePoint Online Plan 2 | All Plan 1 features, plus unlimited storage, advanced compliance | Enterprises requiring advanced content management |
2.2. Key Features of SharePoint Online
- Automatic updates and maintenance by Microsoft
- Scalability to accommodate business growth
- Integration with Microsoft 365 apps such as Teams, Outlook, and OneDrive
- Multi-tenant cloud hosting with global accessibility
- Built-in security and compliance controls
3. SharePoint Server Licensing (On-Premises)
Organizations that prefer self-hosted solutions can opt for SharePoint Server, which provides full control over infrastructure, security, and customization.
3.1. SharePoint Server Versions
| Version | Description | Support Lifecycle |
|---|---|---|
| SharePoint Server 2016 | Improved hybrid features, better performance | Extended support until 2026 |
| SharePoint Server 2019 | Modern user experience, integration with OneDrive | Extended support until 2029 |
| SharePoint Server Subscription Edition | Continuous updates, hybrid cloud capabilities | Ongoing |
3.2. SharePoint Server Licensing Models
SharePoint Server licensing follows a Server + Client Access License (CAL) model:
- SharePoint Server License – Required for each SharePoint server instance.
- Client Access License (CAL) – Required for each user or device accessing SharePoint.
- Standard CAL – Basic collaboration features like document management, search, and workflow automation.
- Enterprise CAL – Additional features like business intelligence (Power BI integration), advanced search, and compliance.
3.3. Key Features of SharePoint Server
- Full control over security and infrastructure
- Customization with on-premises deployment
- Hybrid capabilities to integrate with SharePoint Online
- Extended support lifecycle for long-term planning
4. SharePoint Hybrid Licensing
For businesses that want both cloud and on-premises capabilities, a hybrid SharePoint deployment is an option. This allows:
- Seamless integration between SharePoint Online and SharePoint Server
- Hybrid search capabilities to retrieve documents across environments
- Gradual cloud adoption without a full migration
Hybrid deployments require both SharePoint Online licenses and SharePoint Server CALs based on usage.
5. SharePoint External User Licensing
Organizations that need to collaborate with external users (partners, clients, vendors) should understand the licensing policies:
- SharePoint Online allows free external user access without additional licensing.
- SharePoint Server requires additional CALs or licensing agreements for external users.
Microsoft defines an external user as a person outside your organization who does not require a Microsoft 365 account to access shared content.
6. Choosing the Right SharePoint License
6.1. Considerations for SharePoint Online
- Ideal for businesses that prefer cloud-based collaboration
- No infrastructure management required
- Licensing is included in Microsoft 365 subscriptions
- Suitable for organizations with remote teams and global access needs
6.2. Considerations for SharePoint Server
- Best for organizations needing on-premises data control
- Higher upfront costs but can be cost-effective for long-term use
- Requires dedicated IT resources for maintenance
- Supports customization beyond cloud limitations
7. Cost Comparison: SharePoint Online vs. SharePoint Server
| Feature | SharePoint Online | SharePoint Server |
|---|---|---|
| Upfront Cost | Subscription-based (monthly/yearly) | One-time licensing fee |
| Infrastructure | Hosted by Microsoft | Self-hosted (requires hardware & maintenance) |
| Updates & Maintenance | Automatic | Requires manual updates |
| Scalability | Easy to scale | Limited by on-premises infrastructure |
| Security & Compliance | Microsoft-managed | Organization-managed |
| Customization | Limited compared to on-premises | Full control over customization |
8. Common Questions About SharePoint Licensing
8.1. Can I switch from SharePoint Server to SharePoint Online?
Yes, organizations can migrate to SharePoint Online using tools like SharePoint Migration Tool (SPMT), Microsoft FastTrack, or third-party migration tools.
8.2. Do I need a Microsoft 365 subscription for SharePoint Online?
Not necessarily. SharePoint Online is available as a standalone plan (Plan 1 or Plan 2) for businesses that do not require full Microsoft 365 features.
8.3. What happens if my SharePoint Online subscription expires?
Users lose access to SharePoint Online content, but Microsoft retains the data for a limited period before permanent deletion.
8.4. Is SharePoint Online more secure than SharePoint Server?
SharePoint Online follows Microsoft’s enterprise security standards, including data encryption, compliance certifications, and automated backups. SharePoint Server security depends on how well an organization configures and maintains it.
9. Conclusion
Understanding SharePoint licensing is crucial for selecting the right deployment model that aligns with business needs.
- SharePoint Online is best for organizations seeking cloud collaboration, automatic updates, and scalability.
- SharePoint Server is suited for companies needing on-premises control, deeper customization, and compliance requirements.
- Hybrid SharePoint combines both environments for a gradual cloud transition.
Choosing the right license depends on business size, security needs, IT resources, and budget considerations. Carefully evaluating these factors ensures cost-effective SharePoint adoption that enhances productivity and collaboration.