Microsoft 365 F1 and F3: The cost of connection after 2025

As mentioned, Microsoft 365 has very strong, dominant penetration in the office productivity suite market of 2025, often competing head-to-head with Google Workspace, holding significant shares (around 30-45%) and powering millions of businesses globally, especially in the enterprise sector. Though its overall share of all businesses is smaller due to many micro-enterprises not using licensed software. Still, Microsoft 365 is the leader in enterprise adoption, with high usage among Fortune 500 companies, and its Teams component boasts over 320 million users, making it a staple for remote/hybrid work.

Which is why, on December 4, 2025, Reuters broke the news that sent ripples through IT departments and boardrooms globally: Microsoft is lifting prices for its productivity suite for businesses and governments.

Microsoft has announced significant price increases across its productivity suite, effective immediately for businesses and public sector organisations. The adjustments are most severe for small businesses and frontline worker plans. According to the Reuter report, these are the changes:

• Business Plans: Microsoft 365 Business Basic will increase by 16.7% to $7 per user per month, whilst Business Standard rises by 12% to $14. Enterprise plans face more modest increases, with Microsoft 365 E3 up 8.3% at $39 and E5 up 5.3% at $60.

• Frontline Worker Plans: Subscriptions for frontline workers will surge by up to 33%, with Microsoft 365 F1 rising from $2.25 to $3 and F3 from $8 to $10. Government suites will experience similar increases, phased in according to local regulations.

The company attributes the changes to over 1,100 new features added across Microsoft 365, including AI-driven productivity tools and enhanced integrated security capabilities. The price hike coincides with Microsoft's deeper push into AI-powered productivity, offering Copilot as a $30-per-month add-on and introducing new bundles tailored for small and medium-sized businesses. This represents Microsoft's first commercial Office price increase since 2022 and follows consumer subscription rate increases announced earlier in 2025.

For many organisations, this proves to be not just another line item adjustment. It was a wake-up call. For years, the strategy has been simple: bundle everything under one vendor. But as costs rise, the question of "value" becomes paramount.

For CIOs and IT Directors managing thousands of frontline workers, a price hike is exponentially expensive. A £1 increase per user for 5,000 factory workers or retail staff is a £60,000 annual hit to the bottom line (without a single added feature, mind you!). This news forces a critical decision: Do we downgrade users to the bare-bones Microsoft 365 F1, stick with the robust but increasingly pricey Microsoft 365 F3, or is it finally time to decouple frontline communication from the office suite entirely?

What are the technical and operational realities of the "F-SKUs" (Frontline Stock Keeping Units) and how could a specialised employee app like Flip prove as the strategic off-ramp for businesses tired of paying premium prices for unnecessary features?

Defining the Frontline Worker in the Digital Age

Before analysing the licences, we must define the user. Frontline workers (often referred to by Microsoft as firstline employees) represent the 80% of the global workforce who do not sit at a desk. They are the nurses, baristas, assembly line technicians, delivery drivers, and retail associates.

Unlike "information workers" (desk-based employees using Excel and Outlook 8 hours a day), the digital needs of the frontline are distinct:

1. Mobile-First: They don't have laptops; they have smartphones (often personal devices, BYOD).

2. Consumption vs. Creation: They consume information (shift plans, safety bulletins) more than they create complex documents.

3. Speed: They have seconds, not minutes, to check a message between customers or tasks.

4. High Turnover: Onboarding must be instant and intuitive; a steep learning curve is an operational failure.

Microsoft addresses this segment with its "F" series. But as we will see, fitting a desktop-legacy suite into a mobile-first reality creates friction.

Deep Dive into Microsoft 365 F1

Microsoft 365 F1 is the entry-level tier. Historically marketed as the "connector" licence, Microsoft 365 F1 is designed for employees who only need the absolute basics of communication tools.

Key Features of 365 F1

The F1 plan is defined more by what it removes than what it includes. It is a stripped-down version of the Office experience intended to keep costs low.

• Microsoft Teams: This is the core value proposition of F1. It includes chat, meetings, and shift management (Walkie Talkie feature). However, it is the essential experience.

• SharePoint & Yammer (Viva Engage): Read access to intranets and corporate social networks.

• Web-Only Office Apps: Users can view Word, Excel, and PowerPoint files via a browser or inside Teams, but they cannot use the standalone mobile apps for editing in the same robust way as higher tiers.

• Exchange Kiosk (Limited): This is a critical distinction. F1 often includes "Teams-based" email experiences or Kiosk modes where the user does not get a full 50GB mailbox. It is designed for checking updates, not managing a heavy inbox.

The "Read-Only" Trap

For many organisations, F1 feels like a trap. While it checks the box for "giving an employee a login," it frustrates users who try to open a file and are told they lack permissions to edit it, or who try to sync their calendar and find their licence doesn't support the native Outlook mobile app. It forces the user to stay inside the "walled garden" of the Teams app, which can be clunky on older mobile devices.

Deep Dive into Microsoft 365 F3

Microsoft 365 F3 (formerly F1, confusingly, before a rebranding years ago) is the "empowerment" licence. It assumes the frontline worker is a knowledge worker in disguise who happens to stand up while working.

Key Features of 365 F3

F3 unlocks the full potential of the Microsoft ecosystem for mobile users.

• Full Mobile Office Apps: Users can install and edit documents in the Word, Excel, and PowerPoint mobile apps.

• 2GB Exchange Mailbox: A dedicated, though small, mailbox that supports POP/IMAP and full Outlook connectivity.

• Power Platform: F3 users can run custom apps built on Power Apps and trigger workflows with Power Automate. This is huge for digitising paper processes (e.g., a digitised safety inspection form).

• Windows 10/11 Enterprise E3 (Virtualisation): It includes rights for virtual desktop usage, which is rare for frontline but useful for shared kiosk PCs in breakrooms.

The Security Posture Advantage

The biggest differentiator for F3 is Security Posture. F3 includes Enterprise Mobility + Security (EMS) E3. This brings:

• Microsoft Intune: Essential for managing corporate data security on personal phones (MAM/MDM).

• Azure Active Directory Premium P1: Enables conditional access policies (e.g., "You can only login if you are in this country") and self-service password reset.

For a CISO (Chief Information Security Officer), F1 is a headache because it lacks these granular controls, whereas F3 offers the "Z

F1 vs F3 – The Comparative Analysis

When choosing the right plan, organisations often fall into the so-called "Goldilocks" dilemma. F1 is too simple; F3 is too expensive (especially after the 2025 price hikes).

Data Security and Device Management

• Microsoft 365 F1: Offers basic security. You can enforce a PIN on the Teams app, but you cannot manage the device itself effectively. If a user leaves the company, wiping corporate data from their personal phone is harder to guarantee without the Intune features found in higher tiers.

• Microsoft 365 F3: Includes Intune. This allows IT to containerise corporate apps. A user can have their personal photos and corporate email on the same phone, but they cannot copy-paste text from corporate email to personal WhatsApp. This data security capability is often the sole reason companies upgrade to F3.

The Microsoft Teams Experience

While both use Microsoft Teams, the experience differs. F3 users can often host meetings and have full audio conferencing capabilities, whereas F1 is typically a "participant" licence. If your store managers need to run regional calls, F1 will fail them.

The "Firstline Employees" Reality Check

Ask yourself: Does a warehouse packer need Power Automate? Does a part-time cashier need a 2GB Outlook mailbox?

• The F3 Upsell: Microsoft pushes F3 by arguing that "every worker is a developer" who needs low-code tools.

• The F1 Reality: Most workers just need to know when they work next and what the CEO said in the town hall.

• The Gap: F1 is often too restrictive (no editing), while F3 is bloated with features (Windows virtualisation) that go unused, yet are paid for monthly.

The Breaking Point – Why M365 is Failing the Frontline

The Reuters article about the 2025 price hike highlights a critical friction point. Companies are paying for "Productivity Suites" for workers whose productivity is measured in pallets moved or patients seen, not emails sent.

1. The Complexity Barrier

Microsoft 365 is an office tool ported to mobile. It is heavy. The Teams mobile app is notorious for consuming battery and storage. Logging in requires multiple authentications. For a frontline worker, this friction means they simply don't use it. They stick to WhatsApp groups (Shadow IT), leaving the company with a secure but unused platform.

2. The "Tax" on Non-Desk Work

The F3 licence includes Windows entitlements and advanced PC management rights. Why is a retail company paying for Windows licences for employees who never touch a PC? The 2025 price increase effectively raises the tax on these unused features.

3. Low Adoption ROI

If you pay for 5,000 F3 licences but only 30% of your frontline staff logs in weekly, your effective cost per active user is triple the licence fee. Microsoft relies on "bundled value," but for the frontline, bundling often equals bloat.

The Best Alternative to Microsoft 365 F1 and F3: 10 Reasons to Choose Flip

In light of the price hikes and the complexity mismatch, Flip has emerged not just as a competitor, but as a specialised replacement for the "F-SKU" ecosystem. Here is why the shift to Flip is the strategic move away from Microsoft 365 F1 and F3 for 2025:

1. Built for the Frontline, Not Adapted from the Desk

Unlike Microsoft Teams, which is a desktop collaboration tool shrunk down to a phone screen, Flip was engineered as a mobile-first app. Its interface mimics the social media apps employees use daily (like Instagram or WhatsApp).

• Zero Training Required: New hires open Flip and know how to use it immediately. There is no need for a "SharePoint training session."

• High Adoption: Flip consistently reports adoption rates of 80-90% among frontline workforces, compared to the industry average of 30-50% for Teams on the frontline.

2. Decoupling from the "Price Hike" Cycle

The Reuters report serves as a warning: if you stay in the Microsoft ecosystem, you are subject to their monolithic pricing power.

• Cost Control: Flip offers a specialised pricing model that isn't tied to the soaring costs of Windows or Office desktop development. You aren't paying for "Power Automate" development rights for a forklift driver.

• BYOD Friendly: Flip’s lightweight architecture runs smoothly on older Androids and iPhones, removing the hardware barrier that heavy M365 apps often hit.

3. Purpose-Built Features vs. Generalist Tools

Microsoft offers "generic" tools. Flip offers "operational" tools.

• Newsfeed vs. Channels: Teams channels can become noisy and disorganised. Flip uses a curated newsfeed algorithm ensuring critical safety updates aren't buried by "Happy Birthday" gifs.

• Shift Planning & Time Tracking: While Teams has "Shifts," Flip often integrates more deeply with workforce management systems (like SAP, Kronos) to present shift data in a user-friendly, consumer-grade UI.

• HR Self-Service: Flip acts as a portal. Employees can request leave, view payslips, and update personal data without needing a VPN or a complex O365 login chain.

4. Data Security Without the Complexity

Critics might argue, "But we need Microsoft for security." Flip counters this with GDPR-compliant, ISO-27001 certified infrastructure.

• Secure Chat: It replaces insecure WhatsApp groups with a corporate-controlled chat that has the feel of WhatsApp but the security of enterprise software.

• Containerisation: Like Intune, Flip ensures corporate data stays within the app. However, it does so without requiring the invasive "Device Management" profiles that employees hate installing on their personal phones. This respect for user privacy drives higher install rates.

5. The "Better Together" Integration

Switching to Flip doesn't mean deleting Microsoft for everyone. It means Right-Sizing.

• The Hybrid Model: Keep your office staff (HQs) on Microsoft 365 E3/E5. Move your frontline to Flip and away from the expensive and needless Microsoft 365 F1 and F3 licenses.

• Integration: Flip integrates with SharePoint and Teams. If HR posts a policy document in SharePoint, it can automatically appear in the Flip newsfeed. You get the backend power of Microsoft for admin, but the superior frontend user experience of Flip for the worker.

6. Superior Mobile UX vs. "Read-Only" Frustrations

F1's "Read-Only" Trap: The F1 licence often blocks frontline workers from editing documents or fully interacting with content, creating a frustrating "glass wall" experience. Flip avoids this entirely by offering a fully interactive mobile app where permissions are set by role, not by licence tier limitations.

Simplicity for BYOD: Flip is designed for "Bring Your Own Device" (BYOD) scenarios with a lightweight app size that consumes less data than Teams. This is critical for workers with older phones or limited data plans, a common barrier for heavy Microsoft apps.

No "App Switching" Fatigue: Microsoft's F-plans often force users to jump between Teams (chat), SharePoint (files), and Viva (community). Flip consolidates all these functions—chat, news, and operational tools—into one seamless app interface, reducing friction and app fatigue.

7. Operational Efficiency & Task Management

Native Task Management: Unlike the basic "Tasks" in Teams (which often requires Planner integration), Flip has native task management built directly into the chat flow. Managers can assign tasks to individuals or groups instantly without leaving the conversation, speeding up response times for operational needs.

Customisable "Flip Flows": Flip offers a "no-code" workflow builder called Flip Flows that lets operations teams create custom interactive journeys (e.g., onboarding, surveys, safety checks) directly within the chat. Microsoft F1/F3 would require Power Platform development (often an extra cost or skill set) to achieve similar functionality.

Offline Capability: A critical differentiator for frontline work (e.g., basements, warehouses, rural areas) is that Flip works offline. Users can draft messages, view cached content, and complete forms without a signal. Microsoft Teams often struggles or becomes unusable without a stable internet connection.

8. HR & Frontline-Specific Integrations

HR "Mini Apps": Flip does not only offer communication tools, but also features modular "HR Mini Apps" that provide native, mobile-friendly self-service for payroll, absence requests, and shift planning. These are designed for the small screen, unlike SharePoint intranet pages which can be clunky and hard to navigate on mobile.

Biometric Authentication: Flip supports biometric login (FaceID/Fingerprint) similar to banking apps, which is faster and more user-friendly for frontline workers than the complex multi-factor authentication (MFA) often mandated by Microsoft's enterprise security protocols.

Emotional Connection & Branding: Flip allows for full white-labelling (custom app icon, name, and colours) in the app store. This builds a stronger emotional connection and sense of belonging ("Our Company App" vs. "Microsoft Teams"), which is proven to drive higher adoption and engagement.

9. Cost & Licensing Transparency

Hidden Costs of Microsoft: To match Flip's functionality, Microsoft often requires expensive add-ons like Viva Suite (for advanced comms/community), Copilot (for AI), or Power Platform (for workflows). Flip bundles these features (including its own AI suite, Flip Intelligence) into its core price, offering better cost predictability.

IT Independence: Flip empowers Communications and HR teams to manage the platform with communication rules (users, content, groups) without constant IT support. Microsoft F1/F3 administration is heavily dependent on IT for Azure AD, permission groups, and SharePoint site management, creating bottlenecks.

10. AI Built for Operations, Not Just Content

Operational AI: Whilst Microsoft's Copilot is largely focused on content creation (writing emails/docs), Flip's AI (Flip Intelligence) is tuned for operational support: summarising shifts, predicting reach for communications, and optimising messages for frontline engagement. It also includes AI chat assistants for operational workflows (e.g., "How do I fix machine X?") without requiring a separate, expensive Copilot licence.

The right plan: Why you should replace Microsoft 365 F1 and F3 with Flip

The 2025 price increase for Microsoft 365 is the tipping point. For years, companies have defaulted to Microsoft 365 F1 or F3 out of habit. But when the cost of that habit rises while adoption remains stagnant, the strategy fails.

Microsoft 365 F1 is too limited to be truly useful. Microsoft 365 F3 is too expensive and complex for the average task-worker.

Flip offers the third path: a platform with more advanced features that employees actually want to use, at a price point that makes sense, with features designed specifically for the reality of standing, moving, and working on the frontline. In the era of the "connected workforce," the best tool isn't the one with the most features on a spec sheet. It's the one that your employees actually open, thus making it one of the cost effective and essential tools with advanced security for your business needs.

Our Recommendation: Use the 2025 contract renewal window to audit your F-SKU usage. If you see low adoption or high frustration, pilot Flip as one of your new communication and collaboration tools. The savings on licence fees alone may justify the switch, but the gain in operational alignment will be the true ROI.

Read here the Reuters report about the rising costs for Microsoft 365 F1 and F3.