License optimization sounds like a big project, but it's really a list of concrete actions. These ten optimizations are ordered by effort, and the first ones deliver measurable savings within an hour.
1. Give Back Unused Seats Right Away
The fastest win with zero risk: reduce the number of purchased seats to the number actually assigned. Unused headroom costs you full price but delivers nothing.
2. Reclaim Licenses From Blocked Accounts
Go through every disabled ("blocked") account that still has a license assigned and remove the license in the Admin Center. These are almost always safe cancellation candidates, since the account is already shut down anyway.
3. Track Down Duplicate Add-ons
Look for standalone licenses (Power BI Pro, Visio, Project) whose functionality is already included in the main plan. Every duplicate can be cut immediately.
4. Flag Inactive Users
Set a threshold (for example, 90 days without activity) and build a candidate list. Don't cancel yet, review first. → Find unused licenses.
5. Downgrade E5 Without E5 Usage
Find users on E5 who don't use a single E5 feature (Defender, Teams Phone, Power BI, Advanced Compliance). They're candidates for a downgrade to E3. → E3 vs. E5.
6. Move Frontline Roles to F Plans
Shift, warehouse, and production staff on full plans belong on affordable Frontline plans (F series), as long as they only need the basics.
7. Match the Plan to Your Company Size
Below 300 users, Business Premium can be cheaper and more secure than Enterprise. Check whether your current mix still fits your actual size. → Business Premium vs. E3.
8. Add Deprovisioning to Offboarding
Build a fixed step into your exit process: remove the license. This prevents new dead accounts from piling up, which is the single most common cause of overspending.
9. Use Shared Mailboxes the Right Way
Convert the mailboxes of departed employees that need to stay live into Shared Mailboxes, which don't require a paid license up to 50 GB. If a mailbox only needs to be retained for compliance purposes, inactive mailboxes are the license-free alternative.
10. Establish a Recurring Audit
The most important optimization is the one that repeats. A fixed cadence (ideally monthly) keeps the other nine points permanently under control. → License audit guide.
The Order That Works
Start at the top. Points 1–3 are pure cleanup with no risk and often already add up to a noticeable chunk. Points 4–7 take a quick review but deliver the biggest volume. Points 8–10 make sure the savings stick instead of creeping back next quarter.
So you don't have to start from scratch: License Lens connects to your tenant in read-only mode and shows in seconds which of these optimizations apply to you and how much each is worth, as a concrete savings figure per license, with no changes made and no employee data stored.
For the big picture, see the complete guide to cutting Microsoft 365 license costs.