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

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If you're new to the suite of Office apps, you'll find two products, including Office 2021 and Office from Microsoft 365. Although these products give you access to the same apps, the difference comes to benefits and costs.

What you need to know about Microsoft 365

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Microsoft 365 (formerly Office 365) is the name for the subscription version of the service that offers the same apps available with Office 2021, but you will also 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 (Word, Excel, PowerPoint, Outlook, Publisher, Access, and others) on all your devices (desktop, laptop, tablet, and phone). However, the service is limited to only five connections 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 same plan in total.

The advantage of this offering is that you never have to think about upgrades ever again. You'll always be in the latest version when you install the Office apps from Microsoft 365. 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 features to improve productivity in school, office, and across devices (Windows, macOS, iOS, and Android). Everyone in the plan will receive 1TB of OneDrive storage (up to 6TB with the Family subscription) and Skype minutes. The subscription also includes phone and chat support from Microsoft to resolve any problems with the apps.

If you have tons 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, only the primary account holder in the Family plan will receive the additional storage.

Who should buy Microsoft 365?

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Microsoft 365 is the best option since you can install the apps on every supported 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 computer running Windows 11 or 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 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.

Whatever the plan you choose, you will access 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 AI creative tools. For example, "PowerPoint Presenter Coach" helps you practice presentations, and "Designer" enables you to create effective slide presentations. "Resume Assistant" is a great tool for writing the best resumes in Word with insights powered by Microsoft LinkedIn. 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, message encryption, and enhanced security. You will also get special offers from many Microsoft partners as a subscriber.

Some services bundled with Microsoft 365 are available without a subscription. However, you will get limited functionalities that can be unlocked only with a 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're 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, so you will need to upgrade to Windows 11 or Windows 10 to install the apps.

What you need to know about Office 2021

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Microsoft Office 2021 refers to the standalone version of the apps, which you can own forever after a 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 device. 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). However, they include only a limited scope of features and do not have the same benefits as a Microsoft 365 subscription. For instance, you won't find cloud and AI-based features or services like the premium version of "Outlook.com" and 1TB of OneDrive cloud storage.

Another advantage of Office 2021 is that you can 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 not ready for a subscription-based service can purchase this offering.

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

For 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, 10, or macOS device with this option, you can also install the apps on your phone with limited functionalities.

Office 2021 comes in three options, including Office Home & Student 2021 (opens in new tab), 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, 10, or the three most recent versions of macOS. If you must install Office on Windows 8.1, you must 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 complete the work. 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

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.