Microsoft 365 vs. Office 2021: What’s the Difference?

Microsoft 365 is a subscription that gives you access to the latest versions of Word, Excel, PowerPoint, and other Office apps on up to five devices. Office 2021 is a single license of Office for one PC or Mac. Microsoft 365 also offers additional features, like 1TB of OneDrive storage and access to Microsoft Editor. You can get a Microsoft 365 Family plan for up to six people, too.

There are two ways you can buy Microsoft Office: You can buy a Microsoft 365 software subscription or buy Office 2021 for Windows or Mac. (Microsoft 365 was formerly known as “Office 365.”) Here’s the difference.

Microsoft 365 vs. Office 2021

Here’s the main difference: Office 2021 is the traditional Microsoft Office product, sold for a one-time, up-front fee. You pay once to buy a version of Office 2021 you can install on a single PC or Mac and use for as long as you like. There’s no expiration date.

Microsoft 365, on the other hand, is the way Microsoft wants most people to buy Office. Rather than paying a hefty up-front price, you pay a monthly or yearly fee and get access to the latest version of Office for as long as you pay the fee.

The Microsoft 365 subscription also includes additional features, such as 1TB of OneDrive cloud storage, as well as access to Office apps like Word, Excel, and PowerPoint for iPhone, Android, and iPad.

You can choose a Microsoft 365 subscription that works for one person or one that can be shared with a family of up to six people. Each person with access to Office apps can install them on up to five devices. So, while an Office 2021 purchase gets you access to Office on a single device, a Microsoft 365 Family subscription gets you access to Office on up to 30 devices.

Office 2021: A Traditional Software Product

Microsoft Office 2021 is the “traditional” software product version of Office. You can think of this as a “boxed copy” of Office, although you can buy it online digitally, too.

Microsoft sells “Office Home & Student 2021” for home users, and there’s also a more expensive “Office Home & Business 2021” edition for business users. The Home & Student edition costs $149.99, while the Home & Business edition costs $249.99. (You can buy Office 2021 for cheaper on Amazon, however.)

After paying the up-front fee, you get an Office 2021 license. You don’t even get a physical disc with Office 2021. Instead, you either buy a physical “key card” with a download code on it, or you buy a digital download that’s emailed to you.

Office Home & Student 2021 includes access to the 2021 editions of Microsoft Word, Excel, and PowerPoint. It supports Windows 11, Windows 10, and macOS. The Home & Student edition doesn’t include Microsoft Outlook—you’ll need the more expensive business edition for that. Microsoft also says the Home & Student edition is not for commercial use.

You can download and use Office 2021 for as long as you want. You own it. You’ll never have to pay for anything else. However, when Microsoft releases a new version of Office, you’ll have to pay to buy the new version of Office, or be stuck with Office 2021 until you pay once again.

However, it won’t get updates forever. Microsoft says it will stop providing security updates for Office 2021 on October 13, 2026.

You can only install Office 2021 on a single Windows PC or Mac at a time. You can deactivate it and move it to another PC, but you’ll need to buy another license key if you want it installed on two computers at a time.

Microsoft 365 Personal: A Subscription for One Person

Microsoft 365, formerly known as Office 365, is Microsoft’s modern method of selling and distributing Office. Microsoft 365 Personal is a subscription plan designed for one person who needs Microsoft Office on up to five different devices.

Microsoft 365 gives you access to download the latest version of Office at any given time. The version of Microsoft Office available through Microsoft 365 is newer than what you get through Office 2021. Microsoft generally adds new features for 365 subscribers but not for boxed-copy purchasers. For example, you can expect Microsoft Office’s Copilot AI features to require Microsoft 365 and not work with Office 2021.

You can either subscribe through your Microsoft account with a credit card or buy it elsewhere, like on Amazon. Microsoft charges $69.99 per year if you pay yearly or $6.99 per month if you pay monthly. You can sometimes find a Microsoft 365 subscription for cheaper on Amazon. (You can also get a one-month free trial of Microsoft 365 to try it out first.)

The Microsoft 365 package includes Word, Excel, and PowerPoint, like Office 2021 Home & Student. However, it also includes 1TB of cloud storage in OneDrive, the Microsoft Outlook email client, and Microsoft Editor (for finding grammatical errors in your writing), and premium features in Microsoft’s Clipchamp video editor. You get access to these applications on up to five devices, which can be a mix of Windows 10 PCs, Windows 11 PCs, Macs, Android phones, iPhones, or iPads. You will also get the classic Microsoft Publisher and Microsoft Access apps for Windows PCs. Check out Microsoft’s comparison website for a full, up-to-date list of features Microsoft 365 has that Office 2021 doesn’t.

You can only download and use Word, Excel, and other Office applications through Microsoft 365 if your subscription is current. If you stop paying for the subscription, you lose access to your Office applications until you start paying again.

You do not have to be connected to the internet to use these applications. However, you should connect to the internet regularly: After 31 days of being offline, Office apps installed through Microsoft 365 will go into a “reduced functionality” mode. You’ll be able to view and print documents but you won’t be able to edit them or create new ones until you reconnect to the internet and activate it again.

Microsoft 365 Home: A Subscription for Up to Six People

Microsoft 365 Home, formerly known as Office 365 Home, is a Microsoft Office subscription for families of up to six people.

This subscription includes everything Microsoft 365 does for one person, but you can share it with up to six total people who have their own Microsoft accounts. It costs $99.99 per year if you pay yearly or $9.99 per month if you pay monthly. You can also buy it on Amazon, where it’s sometimes cheaper than on Microsoft’s website. Microsoft offers a free one-month trial of Microsoft 365 Family so you can try it out.

With this pricing, Microsoft 365 Home is a better deal than Microsoft 365 Personal, even if you just have two people who can share the subscription.

Everyone on the subscription gets full access to everything: Their own five Office apps (for a total of 30 apps across six Microsoft accounts), their own 1TB of OneDrive storage (for a total of 6TB of storage), and so on. You also get additional features designed for families, like Microsoft Family Safety, a suite of parental control-style features that Microsoft advertises provides “digital content filtering, screen time limits, and location sharing.”

Microsoft 365 vs. Office 2021: Which Should You Buy?

In the long term, Microsoft clearly wants to phase out the one-time-purchase versions of Office and transition entirely to subscriptions. Microsoft has adjusted the numbers to make an Office 365 subscription look like a better deal for most people. Microsoft 365 is just a great deal.

For example, to get Office on a single PC or Mac for two years, you’d have to pay either $150 for Office 2021 or $140 for Microsoft 365 Home. After two years, you’d save money if you stuck with Office 2021—but if you have to upgrade to a new version of Office in a few years, you’ll be worse off. (Remember that Office 2021 will stop getting security updates on October 13, 2026, after which you’ll want to upgrade for security reasons alone—and the upgrade will cost you.)

In the meantime, you’d also get 1TB of OneDrive Storage, Microsoft Editor, Outlook, Publisher, Access, and the ability to install Office on up to five devices at once.

If you just need a single copy of Office on a single Windows 10 PC, Windows 11 PC, or Mac, buying a new version of Office when it comes out may be an okay deal. Office 2021 debuted on October 5, 2021, which means it will get five years of security updates. If you bought it at release in 2021, it would cost you $30 per year in total before it loses security updates. That’s not bad.

But if you need more than one copy of Office, Microsoft 365 is a much better deal. Even a Microsoft 365 Personal subscription at $70 a year gets you access to Word, Excel, PowerPoint, and other Office applications on up to five devices. To replace that, you’d need to spend $750 for five copies of Office 2021 Home & Student.

If you’re interested, give that one-month free trial a try and see if it works for you.

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Office Online: A Free, Web-based Version of Office

While we’re focusing on the desktop versions of Office for Windows PCs and Macs here, Microsoft also offers Office Online. This is a completely free, web-based version of Office. If you’re happy using Microsoft Office through a web browser, you can use web-based versions of Word, Excel, and PowerPoint for free. All you need is a Microsoft 365 account.

These are simplified Office applications and don’t have all the features you’d get in the desktop applications—you can’t even use them offline, for example—but they’re surprisingly good. They also have excellent compatibility with Office document formats. They may be a good option if you don’t need Office often or just need a few basic features.

Microsoft also offers both desktop and mobile versions of its OneNote note-taking tool for free. You don’t need to pay for Office to get OneNote.

Free Alternatives to Microsoft Office

Of course, you don’t need to spend money for an office suite. You don’t even need to spend money for Microsoft Office, since you can use Office Online free in your browser. Other popular free office suites include:

• Apple’s iWork (Pages, Numbers, and Keynote): Apple’s office applications are free on Macs, iPhones, and iPads. You can also access your iWork documents via the iCloud website in a web browser on Windows PCs and other devices.
• Google Docs: Google’s web-based office suite is free for everyone with a Google account. You can use it in a browser on a Windows PC, Mac, or Chromebook, or use the Google Docs apps on Android, iPhone, or iPad. While it’s web-based, you can enable offline support for Google Docs.
• LibreOffice: A free and open-source alternative to Microsoft Office, you can download a desktop version of LibreOffice for Windows PCs, Macs, and Linux systems. It’s a traditional, offline, local office application that runs on your computer.

If you use Microsoft Office regularly, it’s well worth the price of a Microsoft 365 subscription to get access to the latest features and have apps for all the PCs, Macs, and other devices you use. But that boxed copy is still available, and you also have plenty of alternative office suites to try.

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