Paying for Microsoft 365 Licences Nobody Uses? A Clean-Up Guide

Where Microsoft 365 money is usually wasted

Microsoft raised Business Basic to US$7 and Business Standard to US$14 per user per month from 1 July 2026, while Business Premium stayed at US$22, according to its licensing update. Our guide to the 2026 Microsoft 365 price increase covers the change. With higher prices, unused seats cost more.

Step 1: find inactive and unassigned licences

Everything you need is in the Microsoft 365 admin center. Set aside 30 minutes.

1. 1

   Check Billing > Licenses

   This page shows how many licences of each product you own and how many are assigned. Any gap is money spent on nothing.

2. 2

   Export Users > Active users

   Download the list with assigned licences and compare it with your current staff list. Mark leavers, shared logins and test accounts.

3. 3

   Look at last activity

   Under Reports > Usage, the active users and email activity reports show the last activity date per user. Anyone with no activity for 30 to 60 days needs a reason.

4. 4

   Note who uses desktop Office

   The Microsoft 365 Apps usage report shows who actually runs desktop Word, Excel and Outlook. People who only use the web and phone apps may fit Business Basic.

5. 5

   Record your renewal date

   Under Billing > Your products, note when each subscription renews and whether it is annual or monthly. This decides when you can cut seats.

For a recurring version of this check, our quarterly access review adds managers' sign-off on who should have what.

Step 2: convert leavers and team inboxes to shared mailboxes

Microsoft says a shared mailbox can hold up to 50 GB without a licence. Staff with permission open it from their own Outlook, so nobody signs in to it directly. That makes it the right home for info@, sales@, bookings@ and a leaver's mailbox that colleagues still need.

• Convert before you remove the licence. Microsoft's former employee guide says a user's mailbox data is held for 30 days after the licence is removed, then permanently deleted.
• Check the size first. Over 50 GB, or with an archive mailbox or litigation hold, a shared mailbox still needs a licence, such as Exchange Online Plan 2.
• OneDrive is separate. Files in the leaver's OneDrive are not part of the mailbox. Move what you need to SharePoint or a colleague's OneDrive before deleting the account.
• Block sign-in on the converted mailbox and reset its password so the old login cannot be used.

Our comparison of shared mailboxes, groups and helpdesk tools explains when a shared mailbox stops being the right tool.

Step 3: mix plans instead of one plan for everyone

You do not need the same plan for every person. Microsoft's business plans can be combined in one tenant, each up to 300 users.

• Business Basic (US$7): email, Teams, web and mobile Office apps, 1 TB OneDrive. Fits staff who mainly use email and a browser.
• Business Standard (US$14): adds desktop Office apps. Fits people who build spreadsheets and documents all day.
• Business Premium (US$22): adds Intune device management, Defender for Business and Entra ID P1 features such as Conditional Access. Fits anyone handling sensitive data or using company laptops you need to wipe if lost.

A common pattern is Premium for directors, finance and anyone with admin rights, Standard for heavy document users and Basic for front-line or part-time staff. Our guide on whether Business Premium is worth it helps decide who needs the security features.

Step 4: time the change to your annual commitment

Most Microsoft 365 business subscriptions are annual commitments, even when you pay monthly. Microsoft's cancellation page says that for MCA billing accounts and partner purchases you can cancel for a prorated refund only within seven days after the start or renewal of the subscription.

• Adding seats is possible any time.
• Reducing seats on an annual plan generally takes effect at renewal. Put a reminder two weeks before the date so you can clean up first.
• Monthly-term plans can be reduced at the end of any month but cost more per seat. Microsoft also charges 5% more to pay an annual plan monthly instead of upfront.
• Buying through a reseller? Ask them for each subscription's renewal date and their own cancellation rules in writing.

A useful approach is to keep most seats on an annual plan and a small number on a monthly-term subscription for roles that change often, such as interns or seasonal staff.

What you lose when you downgrade

Check what depends on a plan's features before moving people down. Microsoft's business plan comparison lists what each includes.

If you remove Premium from users who have Intune-managed laptops or Conditional Access policies, those protections stop applying to them. Replace them first, for example with security defaults and another antivirus, or keep Premium for those people.

Do it yourself or get help?

A careful admin can do this clean-up in an afternoon, two weeks before renewal.

If you want help, our Microsoft 365 / Google Security Lockdown (S$590) includes cleaning up admin roles and a leaver checklist alongside MFA and anti-phishing settings. For a business with frequent staff changes, the Access Review & Leaver Tool (from S$1,200) lists who has which licence and runs the leaver steps in one click.