Exchange Online
Plan 1 vs Plan 2

Exchange Online Plan 1

Plan 1 provides a mailbox of around 50 GB per user plus standard email features. It's the everyday email plan — reliable, secure and enough for most people who tidy up as they go. It does not include the auto-expanding in-place archive or Litigation Hold out of the box, though you can add archive space separately (more on that below).

Exchange Online Plan 2

Plan 2 steps up on three fronts. The primary mailbox roughly doubles to about 100 GB. You get an auto-expanding in-place Archive — a secondary "online archive" that grows in the background as it fills, giving heavy email users effectively very large long-term storage. And you get Litigation Hold, which preserves a user's email (including deleted and edited items) so it can't be permanently lost while a hold is in place — the feature businesses lean on for legal, HR or regulatory matters. Plan 2 also brings data loss prevention (DLP) into the mix.

1. Mailbox sizePlan 1 is roughly 50 GB per user; Plan 2 is roughly 100 GB. If people constantly hit "mailbox full", size alone can justify Plan 2.
2. In-place ArchivePlan 2 includes an auto-expanding online archive that keeps growing as needed. On Plan 1 there's no built-in expanding archive — you'd add it separately.
3. Litigation HoldOnly Plan 2 includes Litigation Hold, which preserves email so it can't be permanently deleted while a legal or compliance hold is active. Plan 1 doesn't offer it natively.
4. Data loss preventionPlan 2 adds DLP, which can spot and stop sensitive data (tax file numbers, card numbers) leaving via email. This isn't part of Plan 1.
5. Shared mailboxes on holdA shared mailbox you want to place on Litigation Hold generally needs a Plan 2 licence (or a Plan 1 with the Archiving add-on) — a detail that catches a lot of businesses out.

1. Business plans carry Plan 1Microsoft 365 Business Basic, Standard and Premium all include Exchange Online Plan 1-level mailboxes (around 50 GB). Great everyday email, but no built-in expanding archive or Litigation Hold.
2. Enterprise E3/E5 carry Plan 2The Enterprise plans (E3 and E5) include Exchange Online Plan 2 — the 100 GB mailbox, auto-expanding archive and Litigation Hold — as part of the bundle.
3. You can buy Plan 2 standaloneIf you're on a Business plan but a few users genuinely need Plan 2 features, you can license Exchange Online Plan 2 on its own for just those people rather than upgrading everyone to Enterprise.

1. What it doesIt gives a mailbox the same expanding online archive you'd get with Plan 2, without moving the whole mailbox to Plan 2.
2. Add it to Plan 1You can attach it to an Exchange Online Plan 1 mailbox to solve a "running out of space" problem when the larger Plan 2 primary mailbox and Litigation Hold aren't needed.
3. Add it to on-premises mailboxesIt can also provide cloud archiving for mailboxes still hosted on an on-premises Exchange server — a common step for businesses part-way through moving to the cloud.
4. When to skip itIf you need the bigger primary mailbox, Litigation Hold and DLP together, moving to full Plan 2 is usually cleaner than stacking add-ons.

1. You have legal or compliance obligationsIf you may need to preserve email for disputes, HR matters, audits or regulatory requirements, Litigation Hold (Plan 2) is the reason to upgrade.
2. People keep everything, foreverHeavy email users who never delete anything will fill a 50 GB mailbox — the larger mailbox plus expanding archive in Plan 2 solves it long-term.
3. You're in a regulated industryAccounting, legal, finance and real estate firms often have record-keeping duties that make Plan 2 (or the archiving add-on) the sensible default.
4. Otherwise, Plan 1 is plentyFor most small teams doing everyday email with sensible housekeeping, Plan 1 is the right and cheaper choice — don't over-buy.