Microsoft 365 vs Office 2021: Understanding the Difference

Jun 20, 2024 1:16:44 PM
Microsoft 365 vs Office 2021: Understanding the Difference

The way we purchase and use software has changed drastically as the 21st Century has progressed. The days of programs being sold on floppy disks or even on CD roms are long gone—physical methods of installing software in general have gone the way of the dinosaurs.

But that doesn’t mean that there is only one way to pick up the productivity tools your organization needs to effectively operate in today’s world. In fact, Microsoft offers multiple options to serve the needs of everyone from enterprises to individuals.

Where people can get confused is when they see that Microsoft 365 and Office 2021 are both available options. They each feature many of the same applications, so recognizing the differences between the two and understanding which will best suit your needs can be tough.

Each software suite can be invaluable, but, depending on the number of licenses and the ways in which you need to access your content, they are not interchangeable. So what do you need to know when looking for the right software package to suit your needs?

Making Your Purchase

The primary Office 2021 and Microsoft 365 difference lies in how you secure your license to the software. The way that you want to engage with the tools available in these packages will be a major factor in your choice between the two.

Office 2021 is a one time purchase. There are multiple tiers you can purchase, but no matter which tier you choose, you will only pay for it one time. Once you have paid for your software, you can download it and start using it.

By contrast, Microsoft 365 operates on a software as a service (SaaS) model. You pay for a subscription. You can pay annually or monthly, but you will have recurring payments in order to retain access to the software.

On the surface, you may think that a one-time price is definitely superior to a subscription service. But the benefits you get from a subscription are different from those you get from a single payment.

In order to understand which package is right for you, though, you need to understand the benefits and drawbacks of each. 

What Is Microsoft 365?

Microsoft 365 is a cloud-based suite of applications that includes such notable names as Word, Excel, PowerPoint, SharePoint, Teams, and more. Part of the appeal of Microsoft 365 is the access to a full terabyte of OneDrive storage that comes with each license.

There is some confusion about the name “Microsoft 365,” unfortunately. Many people are familiar with Microsoft’s previous subscription based software offering, Office 365. Which is also easy to confuse with Office 2021.

A few years ago, as of the writing of this piece, the decision was made to rebrand Office 365 as Microsoft 365. This makes it easier for consumers to differentiate between the two differently structured software packages—after all, it’s much easier to tell the difference between the new branding than between Office 365 and Office 2021.

Additionally, since the rebrand, more programs have been added to Microsoft 365 than were ever available for Office 365 licensees. This includes the ability to wrap your Windows operating system license in with your subscription to Microsoft 365.

Having a suite of productivity apps that can be accessed from anywhere and offer secure cloud storage for any work that you do makes Microsoft 365 perfect for corporate users. The ease of access across the breadth of a company is great for collaborating.

This is not to say that Microsoft 365 enterprise level usage is the only option. There are subscription tiers that range from the individual to mid-size organizations to large, corporate level packages.

The common denominator between every tier of subscription is that the user gains the ability to access their tools from anywhere, on any device. Whether you use Windows, iOS, Android, or Apple mobile devices, you can access your Microsoft 365.

What Is Office 2021?

In contrast, Office 2021 is a package of software that you tie to specific devices. With your one-time purchase, you gain access to many of the same applications as you gain with Microsoft 365—apps such as Word, Excel, PowerPoint, and so on.

These programs are downloaded and installed on your device. Which means that you do not need an internet connection to work on any projects or to access previous work. You are not operating in the cloud with Office 2021.

A possible drawback of Office 2021 is that you are purchasing one license for one device. That means that if you want to grant access to multiple devices so every member of your family can utilize the software, you will need to buy separate licenses for each device.

An Office 2021 license is not strictly for home use. Depending on the size and needs of an organization, it may be a prudent option. But as that organization grows, it may be wise to consider making the transition into the more versatile Microsoft 365.

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Understanding the Differences

So how do you choose the suite of productivity tools that’s right for you and/or your organization? The answer comes down to which package gives you the ability to meet your current needs as well as facilitate your projected growth.

We have already looked at the differences in pay structure between Microsoft 365 and Office 2021—the former being a subscription service and the latter being a one-time purchase. But there are more differences that separate the two.

Available Apps

Though each package offers some of the same tools, you gain access to more with Microsoft 365. Some of the tools offered in Microsoft 365 are specifically designed to facilitate work in the cloud, so it stands to reason that they would not be a part of Office 2021.

Depending on the subscription tier you order, Microsoft 365 will come with such apps as Word, Excel, PowerPoint, SharePoint, Teams, Yammer, Outlook, Publisher, Access, and so forth. Office 2021 has a more limited slate of available applications.


This is a major difference between the two software suites we are comparing. One reason using Microsoft 365 for business is such a wise move is the access each user gets to a full TB of OneDrive storage.

By contrast, Office 2021 does not come with an external, cloud-based storage option. If you want access to OneDrive, you will need to pick up a separate license. The reason for this is that Office 2021 is designed for use on one device only—so including cloud storage in the package doesn’t really make sense.

Software Updates

Because Office 2021 is a one-time purchase, it will give you the latest versions of all of the applications included in the suite. But when it comes to updates… you don’t get them automatically. The version you buy is the version you keep until you purchase a new version at a later date.

The cost of a subscription to Microsoft 365 includes automatic updates to include new features and fixes. So as the software improves, your work can benefit from those improvements as they happen.

Mobile Access

When you log in to the mobile apps that correspond to programs you can access via your Microsoft 365 license, you get expanded functionality within those apps compared to the basic features available to people using the free versions of those apps.

With Office 2021, you can’t sign into a mobile app with your license because your license is tied to your primary device. So if you are away from your computer and you need to edit a word document, you may not have access to the necessary features to do what needs to be done remotely because all you have access to is the stripped-down, free version of Word for mobile devices.

Versatility of Your Payment Structure

Not only do Microsoft 365 and Office 2021 differ in that one is a subscription service and the other is a one-time purchase, they also differ in how you can structure your payments. To start, Office 2021 is purchased by paying the stated cost and then you don’t have to pay any more until you want to upgrade.

Microsoft 365 licenses can be paid for in a few different ways. You can pay monthly for a set cost each month. You can also pay on a yearly basis—which gives a discount that amounts to roughly two free months per year.

For example, a Microsoft 365 Family plan for two to six people will cost $9.99 per month or $99.99 for the full year. A Microsoft 365 Personal plan for one user will cost $6.99 per month or $69.99 per year. And each other licensing package has similar pricing structures that reward yearly commitments.

It should be noted that both software suites technically operate on a per user structure. Office 2021 licenses are for one device, while Microsoft 365 licenses vary in price depending on how many apps are covered in the subscription and how many users will be creating accounts to access those programs.

Which Is Right for You?

Ultimately, the choice of which suite of software is right for you and your organization depends on your unique needs. But in general, Microsoft 365 is the better supported software with more options to cover the wide range of needs your company will encounter as it grows.

Microsoft 365 for business allows for remote, secure access to your apps and to your cloud storage—an absolute must with the frequency of hybrid or fully remote workspaces in the wake of the 2020 pandemic.

The automatic upgrades that are part of your Microsoft 365 licenses include security updates to keep your content safe from unauthorized eyes. Office 2021 does not get the same frequent security support.

And though some Microsoft 365 enterprise tiers require annual commitments even when you choose a monthly pay structure, you can still easily adjust the number of licenses you pay for to align with team members moving on to other opportunities or coming onboard with you.

And if you choose to end your subscription, Microsoft gives a grace period to allow you time to move your content to your new system. This isn’t as much of an issue for Office 2021 users because their content is kept to the device tied to their account.

There are people for whom Office 2021 is the right choice. They may not need every app that comes as part of a Microsoft 365 subscription or access to their content on multiple devices. But for the most part, the added benefits of Microsoft 365 justify the recurring payments of a subscription.

Transitioning to Microsoft 365 or Office 2021

Once you have decided to upgrade your software to one of the two products we have examined here, you will need to plan out an implementation strategy. You want your transition to go as smoothly as possible so that there is minimal disruption to your organization’s daily operations.

This is where working with TEAM IM proves invaluable. Our experts are experienced in all things content management—including preserving data and uploading it into secure cloud storage.

TEAM IM is a long-term, Gold level partner with Microsoft. We know Microsoft 365 inside and out and can make your transition as painless as possible. And if you need to loop industry specific software into your technology stack, we can help with that, too.

Creating custom APIs to help our clients optimize their use of their content management and productivity software is a specialty of ours. 

Upgrade Your Operations Today

Whether Microsoft 365 or Office 2021 is the best choice for you, the sooner you make the switch to your new suite of software, the sooner you can use the available features and functionalities to improve your daily business operations.

By reaching out to us at TEAM IM, you can be sure that you will get all your questions answered and all of your software needs met quickly and efficiently. So don’t wait. Contact us today to see how you can improve your organization with the right software suite for you.

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