To help us provide you with free impartial advice, we may earn a commission if you buy through links on our site. Learn more

Office 2016 vs Office 365 vs Office Online: what’s the difference?

Microsoft Office

We compare the many versions of Microsoft Office: perpetual, subscription-based and free

Microsoft provides users of its ubiquitous Office software with a wide range of different packages to choose from, with different pricing structures and features. While this means that there’s a version of Office for almost everyone, it can make working out which one you need something of a challenge.

We’ve taken a look at three different versions of Microsoft Office: Office 2016, Office 365 and Office Online. The latter provides free, cut-down, browser-based versions of the popular Office apps. It’s Microsoft’s answer to Google Docs, and also allows Office 365 subscribers to easily collaborate with users who don’t have a subscription of their own.

Office 365 is subscription-based. This means that, in the case of most of its subscription packages, it guarantees that you and your team will always have the latest desktop version of all the office software you’ve subscribed to. Those desktop versions will stop working if you don’t keep paying your subscription fees though. Finally, a stand-alone copy of Office 2016, whether bought as a single-user license or as part of a volume licencing deal, is yours forever, but lacks the cloud-based features of Office 365, including Skype for Business, real-time collaboration and extra OneDrive storage.

Office 365

– Always have the latest versions of Office

– Accessible online, on mobile and on the desktop 

– Collaborative working and communication

Office 365 is Microsoft’s flagship product for both home and business users. Its subscription model has obvious advantages for Microsoft, but also means that some companies that would normally only upgrade their software every other generation end up spending more on Office than they would otherwise.

However, the deal has potential benefits for your business, too: your staff will always have the latest version of all Office software, everything is securely backed up to the cloud by default, and the monthly fee can be classed as an operating expense, as opposed to the large one-off capital expenditure of buying software licences, which some businesses may prefer to avoid having to budget for.

While perpetual Office 2016 licences are sold on a per-computer basis, Office 365 subscriptions are per user. Each of your users can install Office on up to five PCs, five tablets, and five phones, making it easy for them to work between their office desktop, home PC, laptop, tablet, phone and any other devices they might regularly use. The only exception is the online-only Office 365 Essentials subscription, priced at £3.10 per user, per month, which only gives you access to the online versions of the Office apps plus some extra cloud communication, storage features and a proper business user licence that free Office Online users don’t get.
Side-by-side comparison of Word desktop and Word online editing interfaces

Office 365 has some features that are only possible because it is a cloud-based service, most notable of which are VoIP telephony and video conferencing through Skype for Business, an email server for your domain that gives each user 50GB of inbox storage, 1TB of OneDrive cloud storage per user, and desktop, mobile, and web apps that are all linked to the same user account, making it easy to ensure that your staff don’t lose track of their files between multiple software installations.

For European Office 365 users, Microsoft’s data centres are located in Ireland, the Netherlands, Austria and Finland, which means that you’ll be compliant with EU data protection Directive 95/46/EC if you need to store customers’ personal data. Additionally, for large enterprises with similarly large budgets, bespoke hybrid on-site/remote cloud storage options are available.

The most useful aspect of Office 365 for many businesses is likely to be its collaboration and co-authoring capabilities. Word, PowerPoint and note-jotting app OneNote all support real-time collaboration on the same document, regardless of whether users are accessing it via the web or a desktop application. Sadly, the desktop version of Excel doesn’t yet have this feature, but Excel Online supports multi-user real-time collaboration.

Online collaboration via Office 365 can feel a little sluggish compared to rival Google Apps for Work, but a wider range of features, such as a real-time word count in Word Online and some surprisingly capable charting options in Excel Online, as well as the familiar ribbon interface, mean that the online and mobile versions of the apps provide users with a powerful and approachable set of tools.
Editing Excel workbooks You can invite people to edit your Excel workbooks, but if you have it open in Excel, they won’t be able to editing using Excel Online

Although Access comes as standard with both Home and Personal subscriptions of Office 365, which aren’t licenced for business use, enterprise subscribers only get Microsoft’s database suite if they subscribe at ProPlus level or above.
Word Shared docs Word clearly shows you who’s contibuting which changes to your shared documents

A dizzying array of subscription options are available, but the most useful for a business that wants to move its key services to the cloud is Office 365 Business Premium, priced at £7.80 per user, per month if you opt for an annual commitment (month-to-month contracts cost £9.40 per user).

This gets you all the Office applications, except Access, plus email and plenty of storage. If you need Access, the ProPlus version of Office 365 costs £10.10 per user, per month, while larger enterprises can spend more to get features such as unlimited email storage, archiving services in compliance with finance industry standards and advanced cloud-based IP telephony systems.

Price Office 365 Business Premium, £7.80 per user, per month (annual commitment) 
Office 365 ProPlus, £10.10 per user, per month (annual commitment)


System requirements: Windows 7 SP1/8/8.1/10/Server 2008 R2/Server 2012 R2/Windows 10 Server, 1GHz x86 or x64 processor, 2GB RAM, 3GB disk space, 1,280×800 resolution display. Mac OS X 10.10+, Intel-based Mac, 4GB RAM, 6GB disk space, 1,280×800 resolution display. Internet connection

Pages: 1 2

Read more