Microsoft Teams Pricing: A Human-First Guide to Cost Complexity

Why Teams Pricing Is Confusing

Microsoft Teams is included in all Microsoft 365 business subscriptions — but Teams for meetings and chat is not the same as Teams for phone calls. Making and receiving calls from external phone numbers requires an additional layer of licensing called Teams Phone, plus either a Microsoft Calling Plan or a third-party SIP trunk arrangement called Direct Routing.

This distinction catches many businesses by surprise. They buy Microsoft 365, start using Teams for internal chat and meetings, and then discover that routing external calls through Teams requires a separate purchase. Understanding the layers makes the pricing tractable.

The Microsoft 365 Subscription Layer

Microsoft 365 business plans include Teams for meetings, messaging, and file sharing. The core plans most SMEs use are:

• Microsoft 365 Business Basic: from £5.10 per user/month. Includes Teams meetings and chat, SharePoint, 1TB OneDrive. Web and mobile Office apps only.
• Microsoft 365 Business Standard: from £10.30 per user/month. Adds desktop Office applications and Teams webinars.
• Microsoft 365 Business Premium: from £18.60 per user/month. Adds advanced security features including Microsoft Defender for Business, Intune device management, and Azure AD P1.

These prices are per user per month on an annual subscription and are correct as of early 2025. Microsoft adjusts pricing periodically, so confirm current rates directly or through a Microsoft partner.

Teams Phone: The Calling Add-On

To make and receive calls from external phone numbers through Teams, you need the Teams Phone add-on (previously called Phone System). This costs from £7.20 per user/month and enables the PBX functionality that routes external calls through Teams.

Teams Phone alone is not enough — you also need a way to connect to the public telephone network. This is where the choice between Calling Plans and Direct Routing comes in.

Microsoft Calling Plans

Microsoft Calling Plans are the simplest option. Microsoft acts as your phone carrier: you pay per user per month and calls are billed per minute, with domestic plan bundles available.

• Teams Domestic Calling Plan: from £8 per user/month. Includes a set number of outbound domestic call minutes.
• Teams International Calling Plan: higher monthly cost, adds international minutes.

Calling Plans are available in most major countries including the UK. They suit businesses with moderate call volumes and a preference for a single Microsoft bill covering licensing and calls. For high call volumes, per-minute costs can add up quickly, making Direct Routing more economical.

Direct Routing: Lower Costs for Higher Volumes

Direct Routing connects Teams Phone to the public phone network through a third-party SIP trunk provider instead of Microsoft's own Calling Plans. You bring your own phone numbers and carrier. Call costs are typically lower than Microsoft's Calling Plans — particularly for high-volume outbound calling or international calls.

Direct Routing requires a Session Border Controller (SBC) — either a hardware device or a cloud-based SBC service — to act as the bridge between Teams and your SIP trunk. Cloud SBC services remove the hardware requirement and can be configured by an IT partner without on-premises infrastructure.

For businesses making more than a few hundred minutes of calls per month, Direct Routing typically reduces telephony costs by 30–50% compared to Microsoft Calling Plans.

Teams Essentials: The Standalone Option

Microsoft also offers Teams Essentials at around £3.50 per user/month for organisations that want Teams meetings and chat without a full Microsoft 365 subscription. This is suitable for businesses already using Google Workspace or another productivity suite who want Teams for external video meetings. It does not include calling functionality.

Practical Guidance: What Do Most SMEs Need?

For a typical UK SME using Microsoft 365 as its primary productivity platform and wanting to replace a traditional phone system with Teams:

• Microsoft 365 Business Standard (£10.30/user/month) covers daily productivity
• Teams Phone add-on (£7.20/user/month) enables PBX functionality
• A Direct Routing SIP trunk provider for call costs, or Microsoft Calling Plans if simplicity is preferred

AMVIA advises SME clients on Microsoft 365 licensing and handles Teams Phone configuration and Direct Routing setup as part of broader managed IT engagements. Getting the licensing right from the start avoids the common problem of over-buying features nobody uses or under-buying and discovering gaps after go-live.