Microsoft 365 is often the largest software bill a South Australian small business, not-for-profit or council pays every year, and it is rarely reviewed. Plans were chosen when the organisation was smaller, people who left still hold licences, add-ons were bought to fill gaps that a different plan already covers, and nobody is sure what renews when. A licence review fixes that. This guide explains, in plain words, how to find unused and mismatched licences, match plans to what each role actually needs, time changes around renewal rules, and avoid savings that weaken your security. It is general guidance, not financial or legal advice, and Microsoft’s plans and prices change often, so check current details before you buy.
Where licence money is usually wasted
A first review almost always finds the same patterns. This table is a checklist, not a promise of savings; what you find depends on how your tenancy has been run.
| Pattern | What to look for | Typical fix |
|---|---|---|
| Licences on former staff | Disabled or blocked accounts that still hold a paid licence, sometimes for months. | Keep the data first, then remove the licence. A former staff member’s mailbox can usually become a shared mailbox, which needs no licence within Microsoft’s size limits. |
| Licences on shared and service accounts | Reception, accounts or bookings mailboxes set up as licensed users so several people can sign in with one password. | Convert them to shared mailboxes that named staff open with their own accounts and MFA. Meeting rooms and equipment can be resource mailboxes, which also need no licence. |
| Plans bigger than the role | Staff who only use email, Teams and a browser holding a plan with desktop apps they never install. | Match the plan to the role (see the table below), keeping the security features everyone needs. |
| Plans smaller than the risk | Standalone add-ons bought one at a time for device management, email filtering or Conditional Access. | Compare the add-ons against a plan that already includes them. A bundle is often simpler and sometimes cheaper. |
| Overlapping tools | A separate video meeting tool, file sharing service, backup or antivirus product next to features already in Microsoft 365. | Decide which one you keep. Overlap is fine when it is deliberate, such as backup outside the tenancy; it is waste when it is accidental. |
| Unassigned licences | Licences bought for a hiring plan that did not happen, sitting unassigned in the admin centre. | Reduce the count at the next point the rules allow, and buy in smaller steps. |
| Expensive billing terms | Monthly-term subscriptions kept for years for a stable headcount. | Move the stable baseline to an annual term at renewal, keeping monthly terms for seats that genuinely change. |
Step 1: get the facts from your own tenancy
You do not need a third-party tool to start. An administrator can export most of what you need from the Microsoft 365 admin centre and Microsoft Entra ID:
- Licences you own. Billing, then Licences, shows every product, how many you have bought and how many are assigned.
- Who holds them. Export the active users list with their assigned licences, and flag accounts that are blocked from sign-in.
- Who uses what. The usage reports show each person’s last activity in email, OneDrive, SharePoint, Teams and the Office apps. Microsoft hides user names in these reports by default for privacy; an administrator can change that setting for the review, in line with your own privacy policy.
- When people last signed in. Entra ID sign-in information shows accounts that have not been used for 60 or 90 days.
- What renews when. Your subscriptions page or reseller portal shows each subscription’s term, billing frequency and renewal date. Put those dates in a calendar.
- What else you pay for. List the add-ons and non-Microsoft tools that overlap with Microsoft 365, with their annual cost and owner.
Treat the usage data with care. It is about how a service is used, not a performance measure for individual staff, and it should be seen only by the people running the review.
Step 2: match plans to roles
Most small organisations and many councils can describe their staff with three or four role types. Microsoft’s business plans (Basic, Standard and Premium) suit organisations of up to 300 users per plan; enterprise plans (E3 and E5) suit larger organisations or those that need more advanced compliance tools. Plans can be mixed in one tenancy, so not everyone needs the same one.
| Role type | Usually needs | Plans to compare |
|---|---|---|
| Office and management staff | Desktop Office apps, email, Teams, files, a managed laptop, strong sign-in protection. | Microsoft 365 Business Premium, or E3 for larger organisations. Business Premium includes Intune device management, Entra ID P1 for Conditional Access and Defender for Business. |
| Browser and mobile users | Email, Teams and files, editing documents in the browser or on a phone. | Business Basic, with security features added where needed, or a frontline plan for larger organisations. |
| Field, depot and frontline staff | Rosters, a phone or shared device, occasional email or forms. | Frontline plans (F1 or F3), which cost less and have smaller mailboxes and web and mobile apps only. |
| Volunteers, board members and contractors | Access to a few documents or a Teams channel. | Often a guest account in your tenancy rather than a paid licence, with access reviewed regularly. Check that the guest’s own organisation protects their sign-in. |
| Shared inboxes and rooms | A shared address or a bookable room. | Shared or resource mailboxes, with no licence, opened by named staff. |
Some plans are sold with and without Microsoft Teams. Check which version you hold before buying Teams or a Teams add-on separately.
Do not save money by weakening security
The cheapest plan is not a saving if it removes the controls you rely on. Before downgrading anyone, check that every person who can open work email and files keeps:
- Multi-factor authentication on every account, with administrators on separate admin accounts. Our guide to Zero Trust and Conditional Access explains why sign-in rules matter more than the network.
- Device management for laptops that hold work files, with encryption and automatic updates. See managing staff laptops and phones with Intune.
- Email protection against phishing and malicious attachments, alongside correct SPF, DKIM and DMARC records for your domain. See our email security guide.
- Backup of Microsoft 365 data kept outside the tenancy, because retention settings are not the same as a backup you can restore from after an attack.
- The controls your contracts expect. If you work for government or regulated clients, check what they require, such as the Essential Eight, before changing plans.
Often the right result of a review is a mix: fewer licences overall, a cheaper plan for some roles, and a better plan for the people handling sensitive information.
Time changes around the renewal rules
Most Microsoft 365 subscriptions bought through Microsoft or a reseller follow the same commercial rules, and they decide when you can actually save money. At the time of writing:
- Annual terms cost less per licence, but the number of licences can generally only be reduced or cancelled in a short window, about seven days, after purchase or renewal. You can add licences at any time.
- Monthly terms cost noticeably more per licence, but can be reduced at each monthly renewal. They suit seats that genuinely change, such as seasonal or project staff.
- Annual terms paid monthly spread the cost but carry a small premium over paying upfront, and the commitment is still annual.
- Several subscriptions with different renewal dates are normal. Ask your reseller whether they can be aligned, so there is one review point each year.
The practical rule: run the review six to eight weeks before your main renewal, agree the changes, and schedule them so they apply on the renewal date rather than discovering the deadline has passed.
Copilot and other add-ons
New add-ons, particularly the paid Microsoft 365 Copilot licence, are where licence spend is growing fastest. Treat them like any other investment: pilot with a small group, measure, and license only the roles where the value is clear. Our Microsoft 365 Copilot readiness guide explains how to check permissions and oversharing first and how to run a pilot that tells you whether the licences are worth it. Free Copilot Chat may be enough for some staff, under a clear generative AI acceptable use policy.
Not-for-profits, councils and agencies
- Not-for-profits. Eligible not-for-profits can receive Microsoft 365 Business Basic free for up to 300 users, and discounts on many other plans, including Business Standard and Business Premium. The free Business Premium grant was discontinued at renewals from July 2025, so check that former grant licences were moved to a current offer and that staff who need device management and Conditional Access still have it.
- Councils. Licensing is often bought through a reseller or an enterprise agreement, and sometimes alongside a sector purchasing arrangement. Check what your current agreement allows before changing plans, and record licence decisions in your annual business plan so the cost is visible.
- SA Government agencies. Microsoft licensing is commonly bought through whole-of-government arrangements. Talk to your agency’s ICT and procurement teams before buying separately, and focus local reviews on assignment, role fit and add-ons.
Keep it tidy after the review
- Assign licences by group. Group-based licensing, available on plans that include Entra ID P1 or higher such as Business Premium, gives each role the right plan automatically when someone joins the matching group.
- Reclaim licences in offboarding. Make removing licences, after the data is safe, a step in your staff onboarding and offboarding checklist.
- Review quarterly. Export unassigned licences, blocked accounts with licences and inactive accounts every quarter. It takes an hour once the process exists.
- Keep the billing account in your name. The tenancy, billing relationship and administrator access should belong to your organisation, not a supplier. Our domain, DNS and admin account ownership checklist covers this.
- Separate licences from labour on your IT provider’s invoice, so you can see what you pay Microsoft and what you pay for support. See choosing a managed IT provider.
A 30-day review plan
- Week 1: export. Licences owned and assigned, users and their plans, blocked accounts, usage and last sign-in, subscriptions and renewal dates, overlapping tools.
- Week 2: classify. Agree three or four role types with managers, map each person to one, and list shared mailboxes, rooms, guests and service accounts.
- Week 3: decide. Choose the plan for each role, confirm the security baseline is kept, decide which add-ons and overlapping tools to keep, and estimate the annual cost before and after.
- Week 4: schedule and tidy. Remove licences from former staff after keeping their data, convert shared accounts, set up group-based licensing, schedule plan and quantity changes for renewal, and put the quarterly check in the calendar.
Questions to ask your IT provider or reseller
- How many licences do we own, how many are assigned, and how many are on blocked or inactive accounts?
- When does each subscription renew, on what term, and when is the last day we can reduce the count?
- Which add-ons do we pay for that a different plan would include?
- Which staff could move to a smaller plan without losing MFA, device management or email protection?
- Are we paying monthly-term prices for seats that have not changed in a year?
- Who owns our billing account and the global administrator access?
- For not-for-profits: are we using the current Microsoft offers we are eligible for?
This article reflects general practice and Microsoft’s published commercial rules as at October 2026. Plans, features, prices and offers change, so check current Microsoft and reseller terms before relying on a specific detail.
Talk to an Adelaide team
If your Microsoft 365 bill is hard to explain, talk to us about a Microsoft 365 licence review or call 0402 401 584. We can quote a short review that produces a role-by-role licence plan, a list of unused and overlapping licences, the security baseline every plan must keep, and a calendar of renewal dates and changes. Learn more about our managed IT and cyber security and training and consultations services.