Why Office 365 is a better deal than Office 2016

Why Office 365 Is A Better Deal Than Office 2016

At PC Methods, we've found that there are two main objections customers have when considering purchasing Office 365 versus Office 2016.


First is the subscription pricing model. We're all used to buying our software as perpetual licenses and owning the software outright. So, naturally, we're suspicious when Microsoft wants to start charging an annual fee. Doesn't that mean the software will cost more?

The answer is: not really.

For most people and businesses the cost of Office 2016 and Office 365 will be roughly the same. For many others, Office 365 will be more cost effective.

Here's why: Microsoft releases a new version of Office about every three years, the same amount of time most customers stick with each version of Office before upgrading. Office 365 subscriptions also come with higher installation limits. With one 365 subscription you can install Office apps on up to 5 PC or devices versus just one installation for Office 2016.

If you think of an Office 2016 perpetual license as a subscription, multiply its cost by how many installations you need, and average the cost out over three years, Office 2016 is roughly the same cost or far more expensive (depending on your installation needs) than an equivalent Office 365 annual subscription.

Look at it another way: "Do you feel lucky?". If you are lucky, you might get five or six years out of Office 2016 software and still use it in 2022. On the other hand, probably something will change to make that impractical 

Local Application Installations Vs. Cloud Based Apps

The second objection we hear most often goes something like this,

"I don't like the idea of having to use Microsoft's web apps to work in Office applications. I'd feel more comfortable with Office 2016 because the software is actually on my computer, and not on Microsoft's servers in who knows where!"

The thing is Office 365 isn't based purely in the cloud. You can install your office applications on your computer just the same as Office 2016, in addition to being able to access your office apps and files online, from any internet connected device.

At PC Methods we use Office 365, and to be perfectly honest, we love it. We only occasionally use the web apps, and use our locally installed apps the vast majority of the time.

These two objections are what make most people hesitate to purchase Office 365 and we totally understand why. No one wants to pay more for basic office apps if there are less expensive, high-quality alternatives available. And there are certainly concerns with trusting Microsoft's cloud infrastructure. But as we've shown, these concerns come from fundamental misunderstandings.

Now that we know the pricing issue and installation issues are irrelevant it opens us up to explore all the extras Microsoft is piling in to Office 365.

Choose The Best Option For You

Choosing between Office 2016 desktop software and the new Office 365 is a dramatically different decision than in the past.

This time, there is virtually no decision to make. Comparing Office 2016 to Office 365 is an exercise in semantics; Microsoft has significantly stacked the deck to favor one over the other.

There is a clear distinction between the two options. Office 2016 describes only the desktop applications. By contrast, Office 365 is a Web-based platform that pairs the Office applications with cloud storage. In the past, though, the Office 365 versions of the software had limited features and capabilities compared to the full desktop versions, and if you didn't have an Internet connection, you didn't have Office.

With the new releases of the productivity suite, though, Office 2016 vs. Office 365 is a smoke-and-mirrors debate. Office 2016 is more expensive than Office 365, and the license is only good for one machine. If you only need the core applications (Word, Excel, PowerPoint, and OneNote), you can get Office 2016 Home & Student for ~$140. Throw in Outlook, and you get Office 2016 Home & Business for ~$220. Office 2016 Professional adds Access and Publisher, all for $400.

Office 365 comes in two flavors (Click here to compare all available plans): Office 365 Home (formerly Home Premium) and Office 365 Small Business Premium. Both come with the full Office 2016 Professional software for your PC, but there are fundamental differences. Up to five people can use Office 365 Home on up to five PCs or Macs and up to five tablets, with each user getting an Office experience customized to their own Microsoft ID.

Office 365 Small Business Premium also comes with five licenses but billed per user per year. Each user can install and use Office on up to five PCs, but the can't share the licenses. Office 365 Small Business Premium also includes a managed Microsoft Back Office environment including Exchange, SharePoint, and Lync.

Depending on how many computers and devices you want to install Office 2016 on through Office 365, and which version of Office 2016 you’re comparing to, it will take somewhere between one and a half to 20 years ($400 multiplied by five to install Office 2016 Pro on five machines comes to $2000—or 20 years of Office 365) for Office 2016 to become the more affordable choice.

The only scenario that indeed makes sense for Office 2016 is if you only need the software in Office 2016 Home & Student, and only on a single PC. In that case, you can spend the $140 and be done. Once you throw in the second PC, though, or if you need the additional tools like Outlook, Access, or Publisher, the math is heavily skewed in favor of the Office 365 subscription.

Office 365's Extra Benefits

The beauty of Office 365 is that you get more than just Office 2016 for your money—it also comes with benefits that Office 2016 lacks. It comes with an additional 20GB of SkyDrive storage and 60 minutes per month of international Skype calls. Office 365 also has a new feature called Office On Demand that enables you to stream virtualized versions of the full desktop software to any Windows 7 or Windows 8 PC.

But, even for other platforms or mobile devices, there are Web-based versions of the Office applications, and as long as you store your files in SkyDrive, you can access them seamlessly from virtually any Web-connected device. The world doesn't end if your laptop is stolen or destroyed, and you can still edit a crucial client presentation even if you don’t have your PC with you.

Even if you only need the applications in Office 2016 Home & Student, it would cost $700 to put that software on five machines, and it would take seven years to break even on the expense of the Office 365 subscription. By that time, there will be a new version of Office (or two, maybe three). If you buy Office 2016 Home & Student, you’ll still have it in the year 2020. But, if you subscribe to Office 365 you will always have the most current version of Office available.

Microsoft has set things up so that the decision is already made. You are free to purchase Office 2016, but Office 365 has very clear advantages, and it makes more sense financially in almost every scenario.


Have questions? Give our Microsoft Experts a call today at the number in the upper right hand corner of the page. 


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Peter Heinicke

Peter Heinicke

Chicago area ERP consultant with over 40 years of experience in Sage 300, Sage Pro, Quickbooks ERP and other systems

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