Microsoft 365 spend has a way of ratcheting upward and never coming back down. Someone leaves, the licence stays assigned. A security incident prompts an add-on purchase that duplicates something already included. A plan gets chosen once, in a hurry, and nobody revisits it for four years.
Licence reviews are unglamorous, but they're reliably the fastest saving available to a small business — and unlike renegotiating a carrier contract, there's nothing to wait for.
Unassigned and orphaned seats
The most common finding, by a wide margin. Departed staff whose licence was never released. Seats bought for a hiring plan that changed. Shared mailboxes given full licences when they don't need one under 50 GB.
This is pure waste with no operational trade-off. Check it first: your admin centre shows assigned versus purchased quantities on one screen.
Everyone on the same plan
Uniform licensing is administratively tidy and frequently expensive. A warehouse team that needs email and Teams on a phone doesn't need the desktop Office suite. Microsoft's frontline worker plans exist for exactly that population and cost a fraction of a full seat.
Conversely, some organisations put everyone on a basic plan and then buy add-ons to compensate, ending up above what a single tier would have cost.
The right shape is usually two or three tiers mapped to how people actually work.
Duplicated security spend
This one costs the most and hides the best. Business Premium already includes Defender for Office 365, Intune device management, Entra ID P1 and Azure Information Protection.
Buy a third-party email security gateway, a separate MDM product and a standalone MFA tool on top, and you're paying twice for capability you already own — often while the included versions sit unconfigured.
The audit question is simple: for every security product on the invoice, is there an equivalent already bundled in the base plan?
Enterprise plans on small tenants
E3 and E5 are priced for organisations with compliance obligations, complex identity requirements and dedicated administrators. Business Premium covers most of what a 25-person company needs at a lower per-seat cost.
There are legitimate reasons to sit on E5 — advanced compliance, certain regulatory regimes, specific analytics. But "the reseller recommended it in 2021" isn't one, and it's the reason we encounter most often.
Note the ceiling: Business plans cap at 300 seats. Above that, enterprise tiers aren't a choice.
Annual versus monthly commitment
Monthly billing carries roughly a twenty percent premium over annual commitment. That flexibility is worth paying for if your headcount genuinely fluctuates. For a stable core team, it's a standing surcharge on predictable seats.
A reasonable structure is annual commitment for permanent staff and monthly for seasonal or contract roles.
Storage bought before cleanup
Additional SharePoint and Exchange storage gets purchased when a tenant approaches its limit. It's often cheaper to run retention policies and clear years of abandoned OneDrive accounts from departed employees first.
How to run the review
Set aside two hours, twice a year:
- Export your assigned licence report from the Microsoft 365 admin centre.
- Reconcile it against your current employee roster. Anyone gone, release.
- Group remaining users by how they actually work — desktop, mobile-only, shared device.
- List every security product you pay for separately and check it against what your base plan includes.
- Confirm your billing term matches your headcount stability.
- Diary your renewal date at least thirty days out.
Where a partner helps
An indirect reseller relationship consolidates billing and gives you a named person who watches your licence position between reviews — flagging the departed-employee seat in month two rather than at renewal.
Moving billing to a partner doesn't change your tenant, migrate anything, or touch a user account. It's a delegation done through Microsoft's own admin portal in about ninety seconds, and it can be reversed.
What it changes is having someone whose job includes noticing.
Written by the team at DelaxCom LLC, an independent IT and telecom consultancy in Johnston, Iowa. Questions about your own setup? Call 515-298-7392 or email contact@delaxcom.com.