The default option for Microsoft 365 shops. A strong cost story when the licensing math works out, but with real limitations that pure UCaaS platforms don't have. Here's the honest take.
Teams Phone is genuinely compelling for knowledge-worker organizations already on Microsoft 365. One app, one bill, no retraining. But it's not a one-size-fits-all answer, and we see a lot of companies get oversold on it. If you have a sales team doing heavy call volume, complex IVR, skills-based routing, or a contact center, Teams Phone will fight you. For everyone else on M365, it deserves a serious look.
Teams Phone is never a single line item, which is why quotes for it vary so widely. Every seat that makes and receives outside calls needs three things stacked on top of each other: a base Microsoft Teams or Microsoft 365 license, a Teams Phone license for the PBX features, and a PSTN connection so calls actually reach the phone network. Miss any one of the three and the seat cannot dial out.
Every price on this page is Microsoft's published US list price as of August 2026, on an annual commitment. Microsoft raised most Microsoft 365 suite prices on July 1, 2026, so figures you find in older articles are low. Teams Phone Standard itself moved from $8 to $10 in 2025 and has held there.
All four are annual, auto-renewing subscriptions, and all four still require a separate Teams or Microsoft 365 license underneath.
| License | What you get | List price |
|---|---|---|
| Teams Phone Standard | Cloud PBX with voicemail, auto attendants, call queues, and a 99.999% uptime SLA. No PSTN minutes at all, so you add Operator Connect, Direct Routing, or a Calling Plan separately. | $10/user/mo |
| Teams Phone with pay-as-you-go calling | Teams Phone Standard plus metered outbound minutes billed by Microsoft. Sensible for low-volume or mostly-inbound seats. | $13/user/mo |
| Teams Phone with Calling Plan (Zone 1, US) | Teams Phone Standard plus 3,000 pooled domestic minutes per user in the US, UK, and Canada, or 1,200 minutes elsewhere. | $17/user/mo |
| Teams Phone with domestic and international calling | Teams Phone Standard plus 3,000 domestic or 600 international minutes in Zone 1, or 1,200 domestic and 600 international elsewhere. | $34/user/mo |
The math behind those bundles is worth knowing when you already hold Teams Phone Standard through E5. Microsoft prices the calling half at roughly $3 for pay-as-you-go, $7 for the domestic plan, and $24 for domestic plus international, which is what a standalone Calling Plan add-on effectively costs an E5 tenant.
Teams Phone cannot stand alone. This is the other half of the per-seat number, and it is where the July 2026 increase landed hardest.
| Base plan | Notes | List price |
|---|---|---|
| Microsoft Teams Essentials | Cheapest license that satisfies the Teams Phone prerequisite. No Office apps, no Exchange mailbox. | $4/user/mo |
| Microsoft 365 F1 | Frontline plan. Rose from $2.25 on July 1, 2026. | $3/user/mo |
| Microsoft 365 Business Basic | Web and mobile Office apps. Rose from $6 on July 1, 2026. | $7/user/mo |
| Microsoft Teams Enterprise | Standalone Teams for enterprise agreements that dropped Teams from the suite. | $8.55/user/mo |
| Microsoft 365 F3 | Frontline plan with web and mobile Office apps. Rose from $8 on July 1, 2026. | $10/user/mo |
| Office 365 E1 | Held flat through the July 2026 increase. | $10/user/mo |
| Microsoft 365 Business Standard with Copilot | Copilot became a permanent part of this SKU on July 1, 2026. Capped at 300 seats. | $23.50/user/mo |
| Office 365 E3 | Rose from $23 on July 1, 2026. | $26/user/mo |
| Microsoft 365 Business Premium with Copilot | Adds Intune and Defender. Capped at 300 seats. | $32/user/mo |
| Microsoft 365 E3 | Rose from $36 on July 1, 2026. Teams Phone is not included. | $39/user/mo |
| Microsoft 365 E5 | Rose from $57 on July 1, 2026. Teams Phone Standard is included, but PSTN minutes are still separate. | $60/user/mo |
| Microsoft 365 E7 | New top-tier suite. Also includes Teams Phone Standard. | $99/user/mo |
Microsoft also sells "no Teams" variants of the enterprise suites for customers who license Teams separately or not at all: E3 at $30.45, E5 at $51.45, and E7 at $90.45. Business Basic, Standard, and Premium have matching no-Teams versions at $5.40, $20.30, and $28.80. If you are heading toward Teams Phone, these are the wrong SKUs, because you have to buy Teams back on top.
E5 does not include phone calls. It includes Teams Phone Standard, which is the PBX. You still have to buy PSTN connectivity for every seat, whether that is a Microsoft Calling Plan, Operator Connect through a carrier, or Direct Routing. We have watched budgets get built on the assumption that E5 covers everything, and the correction is usually $7 to $17 per user per month across the whole company.
Four ways to connect Teams Phone to the PSTN. This is the line item with real negotiating room, and it is where most of the savings live.
| Option | How it works | Typical cost |
|---|---|---|
| Microsoft Calling Plan | Microsoft is your carrier. Simplest to buy, least flexible, and priced at list with no negotiation. | $7–$24/user/mo |
| Pay-as-you-go calling | Microsoft bills metered minutes through Communications Credits instead of a bundle. Good for inbound-heavy or occasional-use seats. | ~$3/user/mo plus usage |
| Operator Connect | A certified carrier provides numbers and minutes, provisioned inside the Teams admin center. No SBC to buy or manage. | $8–$15/user/mo |
| Direct Routing | You connect your own session border controller and carrier. Lowest per-minute rates, highest setup and administration burden. Generally worth it above roughly 200 users, or through a partner running a multi-tenant SBC. | Carrier rates plus SBC |
| Teams Phone Mobile | One business number across the mobile dialer and Teams, delivered on a carrier SIM or eSIM. Requires a qualifying mobile rate plan from the operator. | Carrier mobile plan |
| Add-on | What it covers | List price |
|---|---|---|
| Teams Phone Resource Account | Required for every auto attendant and call queue, with or without a phone number. One free license is granted for every 10 Teams Phone user licenses. Past that allocation you buy more. | $0 within allocation |
| Audio Conferencing | Included with Teams licenses in the US and Canada, with unlimited toll dial-in and 60 dial-out minutes per user per month pooled at the tenant level. Dial-out beyond that runs on Communications Credits. | Included, then metered |
| Teams Shared Devices | The license for common area phones in lobbies, warehouses, and break rooms. Recently renamed from Common Area Phone. | $8/device/mo |
| Teams Premium | Advanced meeting protection, intelligent recap, virtual appointments, and advanced webinars. Not required for calling. | $10/user/mo |
| Teams Rooms Basic | Free for up to 25 rooms per tenant. | $0 |
| Teams Rooms Pro | Managed meeting rooms with full device management and analytics. | $40/room/mo |
| Microsoft 365 Copilot | Enterprise Copilot across the suite, including Teams. | $30/user/mo |
| Microsoft 365 Copilot Business | SMB version for tenants up to 300 seats. Promotional pricing of $18 runs through December 31, 2026. | $21/user/mo |
| Communications Credits | Prepaid balance that funds pay-as-you-go minutes, international dial-out, and Calling Plan overages. Rates vary by destination. | Usage-based |
| Contact center | Teams has no native contact center. Certified third-party platforms are a separate purchase and usually the largest add-on in the stack. | $30–$150/agent/mo |
Stacking the pieces at list price, before any negotiation:
| Scenario | Stack | Per user/mo |
|---|---|---|
| Cheapest working phone | Teams Essentials $4 plus Teams Phone with Calling Plan $17 | $21 |
| Small business | Business Basic $7 plus Teams Phone with Calling Plan $17 | $24 |
| Small business, full Office | Business Premium with Copilot $32 plus Teams Phone with Calling Plan $17 | $49 |
| Enterprise on E3 | Microsoft 365 E3 $39 plus Teams Phone with Calling Plan $17 | $56 |
| Enterprise on E3, Operator Connect | Microsoft 365 E3 $39 plus Teams Phone Standard $10 plus Operator Connect at roughly $10 | ~$59 |
| Enterprise on E5 | Microsoft 365 E5 $60, Teams Phone Standard included, plus a domestic Calling Plan at about $7 | $67 |
| Frontline or shared device | Teams Shared Devices $8 plus Teams Phone with Calling Plan $17 | $25/device |
The honest read on those numbers: if you were buying the Microsoft 365 suite anyway, the phone system is the $17 to $27 delta, which is competitive with dedicated UCaaS. If you are pricing the whole stack from zero to replace a phone system, Teams Phone is not the cheap option it is reputed to be. If you are still deciding how to connect calls, our Microsoft Teams calling options guide compares Calling Plan, Operator Connect, and Direct Routing on cost and management overhead.
Don’t pay list price. Microsoft license pricing is fixed, but the calling side is not. Quoting Operator Connect through us typically lands 30%+ below Microsoft Calling Plan list rates.
We'll run the licensing math and compare Teams Phone to the 2–3 UCaaS alternatives that fit your use case, at wholesale rates, with a straight recommendation.
Teams Phone Standard is $10 per user per month on an annual subscription, and it is included in Microsoft 365 E5 and E7. Teams Phone with Calling Plan is $17 per user per month and adds 3,000 pooled domestic minutes. Pay-as-you-go calling is $13 and the domestic plus international plan is $34. All of them still require a separate Microsoft Teams or Microsoft 365 license underneath, so a working seat lands between about $21 and $67 per month at list price.
No. Microsoft 365 E5 includes Teams Phone Standard, which is the cloud PBX, but it does not include PSTN connectivity. Every E5 seat that needs to call outside numbers still needs a Microsoft Calling Plan, Operator Connect through a carrier, or Direct Routing. Budget roughly $7 to $17 per user per month on top of E5.
Any Microsoft Teams or Microsoft 365 license satisfies the prerequisite. The cheapest is Microsoft Teams Essentials at $4 per user per month. Common choices are Microsoft 365 Business Basic at $7, Business Premium with Copilot at $32, Microsoft 365 E3 at $39, and Microsoft 365 E5 at $60. Microsoft raised most of these prices on July 1, 2026.
Yes, unless you add Teams Phone. Standard Microsoft Teams only includes chat and video meetings. To make and receive external phone calls, you need a Teams Phone license plus a calling plan or Direct Routing provider.
Calling Plans are Microsoft's built-in PSTN service, simple but limited in routing flexibility. Direct Routing lets you connect your own SBC and carrier, giving more control over call flows, cost, and number management.