For most organizations, Microsoft 365 is the single largest software line item – and one of the least transparent. Licenses get assigned when someone starts, but they're rarely reclaimed when things change. After a few years, almost every company is paying for seats that nobody uses.
The good news: a large share of that spend can be recovered without a project, without consultant days, and without risk. This guide shows you where the money leaks away and how to cut it systematically.
Why Microsoft 365 costs are almost always too high
License costs grow quietly. There's no single moment when someone decides "we're now overspending by 20%" – it happens step by step:
- Departures without deprovisioning. An employee leaves, the account is disabled, but the license stays assigned and keeps getting billed.
- Oversized plans. Everyone gets E5, even though half of them never touch an E5 feature.
- Duplicate assignments. Standalone licenses (e.g. Power BI Pro, Visio, Project) that are already included in a larger plan.
- "Safety buffers." Unused seats bought "just in case" that never get assigned.
- External and test accounts that occupy productive licenses.
None of these is any one person's mistake. It's the natural entropy of a tenant that grows over years.
The four levers that actually save money
1. Reclaim unused seats
This is the fastest win. Any assigned license whose user hasn't signed in for months or isn't using any services is an immediate candidate. Through the usage reports in the Microsoft 365 admin center, Microsoft provides per-service activity signals (Exchange, Teams, SharePoint, OneDrive) – from which you can tell whether a seat is actually working. In these reports, Microsoft itself points out that they help you identify which users barely use a service and may not need their Microsoft 365 license.
Important: "last signed in 200 days ago" doesn't automatically mean "cancel." But it does mean "review." → More on this in the guide Finding and Removing Unused Microsoft 365 Licenses.
2. Match plans to actual needs (right-sizing)
Not everyone needs the most expensive tier. People who only use mail, Office apps, and Teams are often just as well served by a cheaper plan as by E5. The difference between tiers can run into the hundreds of euros per user per year – and across hundreds of users, that adds up fast.
An honest comparison between the tiers determines whether a downgrade pays off. → Microsoft 365 E3 vs. E5: Which License Is Really Worth It?
3. Cut redundant add-on licenses
Many add-ons are already included in the larger plans. Power BI Pro is already part of (Office 365) E5 – Microsoft confirms this in its Power BI licensing docs. If you have E5 and also buy Power BI Pro as a standalone, you're paying twice. Systematically check which add-on products are running in parallel with a comprehensive plan.
4. Automate deprovisioning
The best way to get rid of unused licenses is to never let them arise in the first place. A clear offboarding process (block the account → back up data → remove the license) prevents dormant accounts from being billed indefinitely. The removal itself takes just a few clicks in the admin center.
What this actually saves
As a rule of thumb, license audits in mature tenants regularly reveal 10–30% savings potential – depending on how disciplined provisioning has been so far. The lion's share usually comes from two sources: licenses of departed employees that were never reclaimed, and plans set too high across the board.
Worked example: 500 users, 60 of them on an inactive or oversized license. At a conservative average of €15/month per seat, that's €10,800 per year – without anyone working worse off.
Prices and plan details vary by contract, region, and Microsoft price list (as of early 2026). The figures here are illustrative benchmarks, not quotes.
The pragmatic approach: measure first, then act
The classic mistake is to drown in spreadsheets right away. A smarter order is:
- Pull the inventory – which licenses are purchased, which are assigned, which are free?
- Overlay activity – which seat is actually being used?
- Flag candidates – inactive, oversized, or redundant.
- Decide – per license, transparently, with a clear owner.
This is exactly the sequence License Lens handles for you: connect your tenant in read-only mode, get a reliable savings figure in seconds, then decide license by license. No changes are made and no employee data is stored – the data is loaded live with each analysis and shown only within your session.
Frequently asked questions
How often should I review licenses? At least quarterly, ideally monthly after every onboarding/offboarding cycle. Costs grow continuously – an annual review leaves too much on the table.
Is removing licenses risky? Removing a license doesn't delete the account. According to Microsoft, when a license is removed, Exchange data is retained for 30 days and OneDrive files aren't deleted as long as the account remains. Even so, the rule holds: review first, then cut – especially for mailboxes meant to live on as a Shared Mailbox.
Do I need a tool for this? For a small tenant, the Microsoft usage reports are enough. Beyond a few hundred seats, manual analysis becomes error-prone – at that point a dedicated audit tool saves more than it costs.
The most important step is the first one: know the number. Once the savings potential is on the table, the decisions almost make themselves.