Cost of SharePoint On-Premises vs. SharePoint Online – Logic and Assumptions


This page explains the logic behind the Total Solutions Azure Cost Calculator, which you can use for free at


Background:  There are a number of compelling reasons to choose either SharePoint Online or SharePoint On-Premises. Depending on your business requirements, one or the other may be the obvious choice. For many of our clients, however, the choice is less clear and they want to know what the cost differential is between the two options. After several requests to help clients compare the costs of each platform, we decided to create a tool to estimate the cost of each based on a number of inputs. The version of this tool published on our website is simplified and makes some assumptions of which are discussed below.


Based on our experience with hundreds of clients, we assumed the following Farm configurations depending on the number of users:

  • Less than 500 Users
    • o 4 SharePoint Servers
    • o 1 SQL Server
    • 500-2000 Users
    • o 8 SharePoint Servers
    • o 2 SQL Servers
    • Over 2000 Users
    • o 12 SharePoint Servers
    • o 2 SQL Servers


The relationship between users and Farm configuration is not perfected. For example, some companies may have less than 500 users, but have very large amounts of content and heavy customizations that require additional servers, while a larger organization may use SharePoint sparingly and thus may be able to get by with fewer servers.


To calculate maintenance costs for an on-premises  environment our estimating tool takes a simple approach of assuming there are one (1), two (2), or three (3) SharePoint Administrators (or the equivalent in consulting fees) based on the same tiers outlined in the aforementioned Farm configurations. There are also a number of other costs (space for servers, electricity, cost of downtime, etc.) to consider. However, this tool is not intended to provide an exact quote for every cost, but, rather a guideline.


To calculate SharePoint Online costs, we are assuming licenses for all users are E3 licenses. It is important to note that E3 licensing includes Office client applications, Exchange, and other products. In our estimator, we attribute the entire cost of E3 to SharePoint Online, however, there is significant opportunity to realize additional value/savings from the other products and services that are included with an E3 license.


For the reasons outlined above, this calculator is to be used strictly for estimating purposes. It is not intended to provide a definitive or inclusive price comparison between SharePoint On-Premises and SharePoint Online. If you would like further assistance comparing the costs and features of SharePoint Online and SharePoint On-Premises, please contact Total Solutions to discuss which option is best for your organization.


Want to learn more? Check the links below for more information to help you make your decision:

The Top Ten Advantages of SharePoint Online

Technical Diagrams for SharePoint 2013

SharePoint 2016 Core Infrastructure Design

Compare SharePoint Online Plan Options



[AS1]Since previous instances of this are capitalized- should this one be as well? I’m unfamiliar with the rules as far as that type of terminology goes.

[DF2]Should we add references to the end…TechNet article on SP2016 capacity planning, information on the O365 plans, links to my blogs on moving to SharePoint Online?

Share This