How to save money on Microsoft 365 licenses

The typical organization we audit has 15-20% waste in their license spend. It's not because anyone is careless, it's because nobody has time to keep track. Employees start, leave, change roles, and the licenses just follow along.

The first step is brutally simple: find out who actually uses what. Go to Microsoft 365 Admin Center, Reports, Usage. Look for:

• •Users who haven't logged in for 90+ days (former employees, completed projects)
• •Users with E5 licenses who only use Outlook and Teams (they don't need E5)
• •Shared mailboxes that have been assigned a paid license (they don't need one)

A typical audit reveals 5-15% inactive or over-licensed users. For an organization with 200 users at $39/mo (E3), that can mean $4,000-12,000/year in savings, and it takes an afternoon.

I see this all the time: every employee has the same license. The receptionist has E5. The warehouse worker has E3. It makes no sense.

Sit down and divide your users into roles:

• •Knowledge workers (daily use of Office, Teams, SharePoint) → E3 or Business Premium
• •Managers with advanced needs (Power BI, compliance) → E5
• •Frontline workers (retail, warehouse, production) → F1 or F3
• •External access (partners, temps) → F1 or guest access

The difference between E5 ($60/mo) and F3 ($14/mo) is $50/user/mo. For 50 frontline workers currently on E3: savings of $1,450/mo by switching to F3. That's $17,400/year. For clicking a dropdown in Admin Center.

This is the hidden cost nobody thinks about. Double licensing happens quietly, and it's expensive.

The most common offenders we find:

• •A user has both E3 and a standalone Exchange Online plan (Exchange is already in E3)
• •A user has Office 365 E3 + Microsoft 365 E3 (overlapping features)
• •Users assigned a license via group in Entra ID and a direct assignment

How to find it: Admin Center, Users, Active users, filter on "multiple licenses". Or run PowerShell with the Microsoft Graph module: Get-MgUser -All -Property AssignedLicenses | Where-Object { $_.AssignedLicenses.Count -gt 1 }. (The legacy MSOnline module with Get-MsolUser has been deprecated by Microsoft.)

Double licensing is surprisingly common after migrations or organizational mergers. We've seen organizations paying double for over two years without noticing.

Many people don't know this: Microsoft allows you to mix licenses within the same organization. It's perfectly legitimate, and this is where the big savings live.

Let me show you an example:

• •20 managers on E5 ($60/mo) = $1,200/mo
• •80 office workers on E3 ($39/mo) = $3,120/mo
• •50 frontline on F3 ($10/mo) = $500/mo
• •Total: $4,820/mo for 150 users

If all 150 were on E3: $5,850/mo. Savings: $1,030/mo = $12,360/year.

If all 150 were on E5: $9,000/mo. Savings: $4,180/mo = $50,160/year.

The key is defining clear user groups and assigning the right plan to each group. It takes an hour of work. The savings last forever.

Microsoft changes prices and features regularly. July 2026 brings price increases of 5-33% depending on plan. If you're not keeping track, you're just paying more for the same thing.

Three concrete moves:

• •Extend your agreement before the price increase takes effect (if you have an Enterprise Agreement, this can save you an entire year's price increase)
• •Evaluate whether a different plan offers better value after the price change (Business Premium isn't increasing, for example)
• •Consider E7 ($99/mo) if you're already paying E5 + Copilot = $90/mo

Use our change log to stay updated. We track all Microsoft changes so you don't have to read 47 Microsoft blogs every month.

Once you have the overview, you can use our free optimizer to get a concrete recommendation based on your organization: number of users, security requirements, compliance needs and budget.

It takes 2 minutes and requires no personal information. And honestly: most people find savings that pay for a nice lunch, every month.