Is a licensing review a separate service I have to buy?

No, and it is worth saying before you read any further. There is no separate licensing product and no separate fee. Licensing is one of the areas covered by the Microsoft 365 Health Check, which is $599 GST inclusive and covers four other areas as well. Everything above is yours to act on without paying anyone, and plenty of businesses do exactly that.

How much are we likely to be wasting?

It varies enormously and anyone who quotes you a percentage before looking at your tenant is guessing. What is consistent is the shape of it: unassigned seats sitting on a subscription, leavers still licensed, and shared mailboxes carrying seats they never needed. In a business of twenty or thirty people those three together are usually worth finding.

Are you going to tell us to give everyone a cheaper plan?

No. Most of the saving is in accuracy rather than in downgrading: seats nobody is using, mailboxes that never needed a licence, and add-ons already included in a plan you are paying for. Where plans do get matched to roles it is because the roles genuinely differ, and the security controls stay where they are needed. Cutting protection to save a few dollars a month is a bad trade and I will say so.

We are on Business Premium. Is that more than we need?

Usually not. Business Premium includes Microsoft Entra ID P1 and Microsoft Defender for Office 365 Plan 1, which are the controls that let you enforce sign-in rules properly and check links and attachments at the moment someone clicks them. Bought separately as add-ons those normally cost more than the step up from Business Standard. The waste to look for on Business Premium is not the plan, it is paying again for something the plan already covers.

Can we just remove the licences ourselves?

Yes, and there are two traps worth knowing first. Unassigning a licence from a person does not reduce your bill, it returns the seat to your pool where it keeps billing, so you also have to lower the licence count on the subscription itself. And on some billing agreements you can only lower that count within seven days of buying or renewing, which means the time to do this is shortly before your renewal date rather than whenever you happen to think of it.

Does this need access to our tenant?

The list on this page needs nothing from me at all, you can work through it yourself in the admin centre. The Health Check does need access, scoped to reading configuration rather than changing it, and time-boxed. You see what is being looked at and you can revoke it the moment the review is finished.

What if our licensing turns out to be fine?

Then that is what the report says, and the other four areas of the Health Check are still there. Licensing is the part that pays for itself often enough to be worth leading with, but it is rarely the only thing a tenant has going on, and a clean licensing result usually sits alongside something less tidy elsewhere.

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Microsoft 365 licensing review

The Microsoft bill goes up quietly. Seats bought for someone who left, licences sitting unassigned in a pool, mailboxes paying for something they never needed. None of it is dramatic and all of it recurs monthly.

Everything below is yours to use without paying anyone. Work through it and you will know within fifteen minutes whether you have a problem.

Where the money actually goes

Seven categories, and almost every tenant has at least three of them. Each one below has what it looks like, where to find it, and what to do.

Licences still assigned to people who have left

What it looks like: A full seat billing every month for someone who finished up in March. It is the most common single item and nobody notices, because the invoice total moves slowly.
Where to find it: Users, then Active users. Sort by licence and read the list out loud. Anyone you hesitate over is worth checking, and the last sign-in column will usually settle it.
What to do: Convert their mailbox to a shared mailbox first. All the mail and calendar stays, and under 50 GB a shared mailbox needs no licence at all. Then remove the licence. Do not delete the account, the shared mailbox needs it to hang off, and reset the password on the way through, because otherwise the old username and password keep working on the converted mailbox.

Seats bought and never assigned, still billing

What it looks like: You pay for fifteen, eleven people work here, four seats sit in the pool. They bill exactly the same as the ones being used.
Where to find it: Billing, then Your products. Each subscription shows the total licence count against how many are assigned. The gap is the number.
What to do: This is the one with a trap in it. Taking a licence off a person does not reduce your bill, it just returns the seat to your pool where it carries on billing. You have to lower the licence count on the subscription itself, which is a separate step in a different part of the admin centre.

Everyone on the same plan when the work is not the same

What it looks like: The whole business on one plan, because that is how it was set up on day one and nobody revisited it as the team grew.
Where to find it: Nothing to click here. It is a conversation about who does what: a supervisor checking email on a phone between jobs and a finance manager who lives in Excel are not the same licensing question.
What to do: Match the plan to the role rather than to the org chart. This is where most of the real money is, and it is also the part that needs the most care, which is the next section.

Shared mailboxes and meeting rooms carrying seats they never needed

What it looks like: info@, accounts@, reception@ and the boardroom calendar, each quietly holding a paid licence because they were created as ordinary users.
Where to find it: Exchange admin centre, Recipients, Mailboxes, filter to Shared. Then Recipients, Resources for rooms and equipment. Anything in those lists holding a licence deserves a question.
What to do: A shared mailbox stores up to 50 GB without a licence. Room and equipment mailboxes do not need one either. There are real exceptions: going past 50 GB, putting a shared mailbox on litigation hold, or expanding its archive all require licensing, and Teams Rooms devices are their own case. Check before you strip anything.

Add-ons you are already paying for inside the plan

What it looks like: A separate line on the bill for something the main plan includes. On Business Premium the usual candidates are Entra ID P1 and Defender for Office 365 Plan 1, both of which are already in there.
Where to find it: Billing, then Your products, and read every subscription rather than just the big one. Add-ons are easy to skim past because the individual amounts are small.
What to do: Work out what your main plan actually contains before renewing anything sitting next to it. Paying twice for the same control is common and it is entirely invisible until somebody lists the subscriptions side by side.

The renewal date you have never put in a calendar

What it looks like: A headcount that shrank in August and a subscription that renewed in July with the old number on it.
Where to find it: Billing, then Your products, and open the subscription. The renewal date is on the details page.
What to do: On some billing agreements you can only lower a licence count within seven days of buying or renewing. Miss that and the seats ride through to the next renewal whether anyone is using them or not. So the time to do the headcount check is the fortnight before your renewal, not whenever it occurs to you. Put a reminder in the calendar now, it is the highest-value two minutes on this page.

Paying someone else for something Microsoft already provides

What it looks like: A separate spam filter, a separate file sharing subscription, a separate video meeting tool, a separate device management product, all bought at different times for good reasons that may no longer apply.
Where to find it: Not in the admin centre. Get the last twelve months of card statements and list every software subscription against what your Microsoft plan covers.
What to do: Sometimes the third-party tool is genuinely better and worth keeping, and this is not an argument for using Microsoft for everything. It should just be a decision somebody made on purpose rather than a thing that accumulated.

Why the cheapest plan is often not the cheapest outcome

The same headcount can cost noticeably different amounts depending on which plan it sits on, and the comparison people make first, price per seat, is the one that misleads them.

The reason is that the security controls are either included in the plan or bought separately afterwards. Microsoft 365 Business Premium includes Entra ID P1, which is what lets you write real sign-in rules rather than switching multi-factor authentication on and hoping, and Defender for Office 365 Plan 1, which checks links and attachments at the moment somebody clicks them rather than when the mail arrived. Add those to a cheaper plan afterwards and you usually end up paying more than the step up would have cost, for the same result.

One structural thing worth knowing if you are growing: the Business family of plans, Basic, Standard and Premium, is capped at 300 seats in total across all three. Past that the conversation becomes the enterprise plans, and it is much better to see that coming than to hit it.

Before stripping a licence off a mailbox, it is worth being sure the mailbox is the right kind of object in the first place. A shared mailbox, a distribution list and a Microsoft 365 Group have very different licensing consequences, and this comparison of all three covers which is which and where the 50 GB line actually falls.

The same reasoning is set out at more length, with the three plans compared side by side, on the Google Workspace to Microsoft 365 page, where it comes up as a decision about what to land on. It is the same decision whether you are arriving or already here.

Right-sizing is not the same as downgrading

This is the part where advice usually goes wrong, so it is worth being clear about it. Nobody wants to be the business owner who saved a few dollars a month by giving their staff worse tools, and nobody should be.

The question is not how cheap can each person be. It is whether the plan each person is on matches the work they actually do. Some of your team genuinely need everything: the desktop apps, the full mailbox, the device management. Some have a company email address, check it on a phone, and have not opened Excel since they were hired. Putting both on the same plan means one of them is either under-equipped or over-licensed, and it is usually the second.

Framed properly, this is an accuracy exercise, not a cost-cutting one, and the accuracy happens to save money. Where it would mean taking a security control away from somebody who needs it, the answer is no, and I will say so rather than book the saving.

Worth doing

Matching plans to roles. Removing seats nobody holds. Unlicensing mailboxes that never needed a licence. Cancelling an add-on your plan already includes.

Not worth doing

Stripping security controls off people who need them. Moving everyone to the cheapest plan on principle. Removing a licence from a mailbox that is on legal hold.

Check this yourself, today

Fifteen minutes in the admin centre, no tools and nobody's help. You need to be a Global Administrator or have the billing role. Work down the list in order.

Billing, then Your products. For each subscription, write down the total licence count and how many are assigned. The gap is what you are paying for and nobody is using.
Users, then Active users. Sort by licence and read the names. Anyone who has left is a seat.
Same page, add the last sign-in column. An account with no sign-in for ninety days is a leaver, a service account, or somebody who does not need the plan they are on.
Exchange admin centre, Recipients, Mailboxes, filter to Shared. Any shared mailbox holding a licence needs a reason, and under 50 GB it usually does not have one.
Recipients, then Resources. Meeting rooms and equipment should not be carrying licences.
Back to Billing, Your products, and read every subscription in the list rather than just the largest. Add-ons hide in the small numbers.
Open your main subscription and find the renewal date. Put a calendar reminder two weeks before it, and repeat this list then.

If that turns up nothing, your licensing is in better shape than most and you have lost a quarter of an hour. If it turns up four unassigned seats and two leavers, you have just found something that recurs every month until somebody fixes it.

If leavers are what it turned up, the order that stops it recurring is on the Microsoft 365 offboarding page. Most licensing waste starts as a departure handled in the wrong sequence.

When you want your own numbers

The list above tells you whether you have a problem. It will not tell you what yours costs, because that needs somebody inside your tenant reading the actual assignments against the actual people.

That is part of the Microsoft 365 Health Check, which is $599 GST inclusive and fixed. Licensing is one of the five areas it covers, alongside multi-factor authentication and access, email authentication, external sharing, and the security baseline. You get a written report, prioritised, and a walkthrough of it.

The licensing finding on its own covers the fee often enough to be worth mentioning, and not often enough to promise. Some tenants are tidy. What is more consistent is that a business paying for seats nobody uses usually has something else going on as well, and the licensing number is just the one that is easiest to put a figure against.

Questions about licensing

Ask about the Health Check

Or just tell me what the checklist turned up. If it is a five-minute answer you will get a five-minute answer, not a proposal.

Prefer to talk it through? Call 0403 401 250 or email jamie@hamilton365.com.au