Microsoft 365 Explained: Which App Does What, Free vs Paid
Updated · By Robert Breen
The problem
Dana runs the office for an 11-person architecture firm. The project budget lives in an Excel file that gets emailed around. This month there were three copies with different totals, and nobody could say which one the client had seen.
What you’ll be able to do
By the end you will know which Microsoft 365 app fits each everyday job, where a shared file should be saved so there is only ever one copy, and whether the free web apps are enough for you.
Microsoft 365 in one sentence
Microsoft 365 is Microsoft’s subscription bundle of office apps plus cloud storage and team chat. The apps you know (Word, Excel, PowerPoint, Outlook) are only half of it. The other half is where files live and how people work on them together, and that half is what fixes Dana’s three-budgets problem.
Which app for which job
| Job | App | Why this one |
|---|---|---|
| Numbers, lists, budgets, trackers | Excel | Formulas recalculate when numbers change; tables sort and filter |
| Letters, proposals, contracts | Word | Page layout, tracked changes and comments for review |
| Presentations | PowerPoint | Slides with speaker notes |
| Email and calendar | Outlook | Mail, meetings and shared calendars in one place |
| Team chat, calls, meetings | Teams | Conversations grouped by topic in channels |
| Your own files | OneDrive | Private cloud storage that you can share from |
| Team and company files | SharePoint | Shared libraries that belong to the team, not one person |
Where files should live
The single biggest win in Microsoft 365 is to stop attaching files. Save the file once in the cloud and share a link instead. A draft only you are working on goes in OneDrive. A file the whole team owns, like Dana’s project budget, goes in SharePoint, usually through the Files tab of a Teams channel, which is a SharePoint folder underneath.
Once the budget lives in one place, everyone opens the same workbook. With co-authoring, two people can edit it at the same moment and see each other’s changes within seconds. There is no "latest version" to hunt for, because there is only one.
Free web apps vs a paid plan
With a free Microsoft account you get Word, Excel and PowerPoint in the browser, plus 5 GB of OneDrive storage. That is plenty to learn on and to run a small personal budget. Paid plans add the desktop apps, more storage and, for businesses, company email on your own domain, Teams with admin controls and SharePoint. Microsoft keeps a side-by-side comparison on its support site.
Copilot, Microsoft’s AI assistant inside the apps, depends on your plan too. Lesson 3, Copilot for beginners, covers which plans include it.
Dana’s fix, step by step
Dana moves the budget into the project’s Teams channel, deletes the emailed copies and posts the link in the channel. Partners open it from there. Changes save as they type, and version history shows who changed which number. The next client review takes ten minutes instead of an afternoon of comparing copies.
Check your understanding
A budget the whole team edits should be saved in…
Show the answer
A SharePoint library or Teams channel. Team files belong in a shared library that the team owns, so there is one copy and everyone links to it.
What do you get with a free Microsoft account?
Show the answer
Word, Excel and PowerPoint in the browser and 5 GB of OneDrive. The free tier is the web versions of Word, Excel and PowerPoint with 5 GB of storage. Desktop apps and more storage come with a paid plan.
Why does co-authoring end the "which version is right?" problem?
Show the answer
Everyone edits the same single file. Co-authoring means one file in the cloud that several people edit at once, so there are no copies to compare.
Sources
Written from these official help pages. Menus change, so if a button has moved, the help page has the current wording.
- Microsoft Support: What’s the difference between a paid Microsoft 365 subscription and the free web apps?
- Microsoft Support: Collaborating with Teams, SharePoint and OneDrive
- Microsoft Support: Collaborate on Excel workbooks at the same time with co-authoring