Skip to main content

Office 2021 vs. Microsoft 365: Which should you buy?

If you're new to the suite of Office apps, you will find two products, including Office 2021 and Office from Microsoft 365, that can complicate the decision. Although these products give you access to the same set of apps, the difference comes down to the list of benefits and costs.

What you need to know about Microsoft 365

(Image credit: Source: Excel)

Microsoft 365 (formerly Office 365) is the name for the subscription version of the service that offers the same apps available with Office 2021. In addition to the benefits of the previous marketing name, the only difference is that you will get some extras.

Microsoft 365 is the new brand for the paid service that replaces Office 365.

Since this is a subscription-based service, you will be making monthly or yearly payments to use the apps (such as Word, Excel, PowerPoint, Outlook, Publisher, Access, and others) on all your devices (desktop, laptop, tablet, and phone). However, this is true as long as only five devices are accessing the account at one time.

Also, if you opt for the Family subscription plan, you can share the account with up to five additional users for six people using the plan in total.

The most significant advantage of this offering is that you never have to think about upgrades ever again. When you install the Office apps from Microsoft 365, you'll always be in the latest version. Once the apps are installed, they'll automatically receive security and maintenance updates, improvements, and new features throughout the subscription lifetime.

The service gives you access to cloud-based features to improve your productivity in school, office, and across devices (Windows, macOS, iOS, and Android). Everyone in the plan will get 1TB of OneDrive storage (up to 6TB in total with the Family subscription) and Skype minutes. The subscription also includes phone and chat support from Microsoft to help you resolve any problems with the apps.

If you have a lot of photos and videos, in addition to the existing 1TB of cloud storage, you can purchase up to 1TB of additional OneDrive storage in 200GB increments for an extra $1.99 per month, doubling the total storage capacity to 2TB (1TB already included with the plan and 1TB with the additional plan) for $9.99 per month. The option is available for Microsoft 365 Personal and Family members. However, there's a caveat. In the Family plan, only the primary account holder will receive the additional storage.

Who should buy Microsoft 365?

(Image credit: Source: Windows Central)

Microsoft 365 is the best option since you can install the apps on every device (Windows 11, 10, 8.1, and macOS). It is also the only option that provides continuous updates at a low cost of ownership. In contrast, Office 2021 only allows you to install the apps on one device running Windows 11 (or Windows 10), and you have to pay again for future upgrades.

If you need access to the suite of apps, Microsoft 365 is perhaps your best choice.

The cloud service option comes in two offerings. If you would be the only one using the apps and services, the "Microsoft 365 Personal" plan is for you. It costs $70 a year (or $7 per month), and it gives you access to all the apps, alongside 1TB of OneDrive storage.

On the other hand, if you want to share the subscription with family or friends, the "Microsoft 365 Family" plan is for you. It costs $100 per year ($10 per month), you can share (using the "Services & subscriptions" tab in your Microsoft account online) the benefits with up to six family members and friends, and everyone gets their own 1TB of OneDrive storage. Also, they can access the services on up to five devices at the same time.

Regardless of which plan you choose, you will have access to the additional services, including the Microsoft Family Safety experience to manage screen time, app, and game usage, share location, monitor driving behavior for young drivers, and more.

Other premium features include Microsoft Editor for grammar checking and other AI-based creative tools. For instance, "PowerPoint Presenter Coach" helps you practice presentations, and "Designer" enables you to create effective slide presentations. "Resume Assistant" is a great tool to write the best resumes in Word with insights powered by Microsoft LinkedIn. Also, there's "Money in Excel" to view, track, and organize your finances. You will also receive creative content like icons, fonts, stock photos, and premium templates that you can use in Word, Excel, and PowerPoint.

The subscription also comes with access to the premium version of Outlook online, which includes everything on the free version, plus 50GB of storage, no ads, and message encryption and enhanced security. As a subscriber, you will also get special offers from many Microsoft partners.

Some services bundled with Microsoft 365 are available without a subscription using a Microsoft account. However, you will only get limited functionalities that can be unlocked only with the paid subscription.

When you choose one of the subscriptions, you should get the yearly plan to save money, plus you do not have to worry about payments throughout the year.

The company also offers the service at no extra cost using a valid school email address if you are a student or teacher. This plan lets you install Word, Excel, OneNote, PowerPoint, Microsoft Teams, and other school tools for free.

Windows 7 is no longer supported, which means that you will need to upgrade to Windows 11 or at least upgrade to Windows 10 to install the apps.

What you need to know about Office 2021

(Image credit: Source: Windows Central)

Microsoft Office 2021 refers to the standalone version of the apps that you can own forever after the one-time purchase.

The standalone version of Office (also referred to as the "on-premises" or "perpetual" version) allows you to install and update the apps on one computer. However, you cannot upgrade to the next version. In other words, it's possible to continue using the apps through their lifecycle (usually five years) and beyond (without updates). When the time comes to upgrade, you will have to purchase a new product license again.

Office 2021 comes with Word, Excel, PowerPoint, and Outlook (only on the business version), but it includes only a limited scope of features, and it does not have the same benefits available with a Microsoft 365 subscription. For instance, you won't find cloud and AI-based features or other services like the premium version of "Outlook.com" and 1TB of OneDrive cloud storage.

Another advantage of Office 2021 is that you continue to use the apps without an internet connection. Although you can also use the apps with a Microsoft 365 subscription without a connection, you will need to get online every 31 days to reactivate. Otherwise, the apps will switch to the reduced functionality mode, which only gives you view and print access to the documents.

Who should buy Office 2021?

The standalone suite of apps was designed for commercial customers with volume licenses who aren't ready for cloud apps and have specific requirements to use the apps on-premise. However, anyone who is not prepared for a subscription-based service can purchase this offering.

Anyone can purchase Office 2021, but this version has been designed for certain commercial customers.

In the case of home users, this option makes sense only if you do not mind the upfront cost and want a more traditional experience. It may also be a good choice if you plan to use the apps on one computer, don't need additional features, or are not ready for the Microsoft 365 subscription.

Although you're getting one license for one Windows 11, Windows 10, or macOS device with this option, you can also install the apps on your phone, but with limited functionalities.

Office 2021 comes in three options, including Office Home & Student 2021, Office Home & Business 2021 (opens in new tab), and Office Professional 2021 (opens in new tab), and they're usually priced at $150, $250, and $440, respectively. Office Home & Student 2021 comes with Word, Excel, and PowerPoint, while Office Home & Business 2021 includes Word, Excel, PowerPoint, and Outlook. Office Professional 2021 comes with all the apps, including Word, Excel, PowerPoint, Outlook, Publisher, and Access.

Unlike previous versions, Office 2021 is only supported on Windows 11, Windows 10, or the three most recent versions of macOS. If you must install Office on Windows 8.1, you have to use a Microsoft 365 subscription.

Microsoft 365 vs. Office 2021: Which should you buy?

Ultimately, the decision comes down to the apps and services you need to get the work done. If you plan to use Office for years to come, Microsoft 365 is hands-down your best option. The reason is that with the subscription, you will get full access to the apps and benefits at a low cost of ownership.

Mauro Huculak is technical writer for WindowsCentral.com. His primary focus is to write comprehensive how-tos to help users get the most out of Windows 10 and its many related technologies. He has an IT background with professional certifications from Microsoft, Cisco, and CompTIA, and he's a recognized member of the Microsoft MVP community.