You need a license for this and a license for that but take a step back which licenses are for apps and programs you don’t need. For example, Microsoft 365 is a powerful platform that helps a business in many ways. It boosts collaboration and streamlines operations, among other benefits. However, many companies waste money on unnecessary licenses and features that are not fully used.
The good news: You can avoid this waste and take your business to the next level by adopting smarter use of M365 security and Copilot add-ons. This article will provide practical insights, help you avoid costly mistakes, and support you in making informed decisions that fit your business objectives.
What type of security does Microsoft 365 Copilot aim to provide?
More good news: You don’t need premium add-ons, because Microsoft 365 offers a solid set of built-in security and AI features without them. You have tools for identity and access management, such as Azure Active Directory (now Entra ID), multi-factor authentication, single sign-on, and conditional access. The basic plans also deliver threat and malware protection, with built-in scanning for emails, phishing protection through Microsoft Defender, and safeguards for attachments and links.
You might also have data loss prevention (DLP) features and tools for auditing and compliance to monitor user activity, support regulatory reporting, and enforce data retention policies, depending on your plan.
That said, before you adopt premium tiers, you should scrutinize your needs. By knowing what is already available, you avoid paying for what you won’t use. Moreover, understanding what is included in every plan also helps you avoid overlapping features.
Areas of Overspending to Look Out For
It’s essential to understand how this waste occurs in the first place before we explore any solutions,. Overspending is often not obvious. It is hidden in scenarios that go unnoticed.
Higher-Tier Plans
As abated above, many organizations quickly upgrade to higher-tier plans like E3 or E5, or add premium features for every user, often paying for tools that remain unused. You should learn what your employees need and use.
Turn Out the ‘License-Light’ When You Leave
This should become a standard part of the employee offboarding process. Licenses that are assigned but no longer in use become another major source of waste. Employees may have shifted roles, gone on leave, moved to part-time, or even left the company, yet their premium licenses remain active. If left unchecked, these idle licenses quietly drain the budget, adding up to significant financial loss over time.
It’s not unusual for organizations to delete user accounts during offboarding without first unassigning licenses. Deleting a user account does not automatically reclaim those licenses in Microsoft 365. Therefore, unless you manually unassign licenses or set up automation, you will continue paying for unused licenses long after the employee has left.
Duplication
Be aware that Microsoft 365’s admin portal does not flag duplicate assignments. This increases the chance that your organization may assign redundant tools or capabilities to a single user. For example, giving someone both an E3 and a standalone Defender license that already comes with E3. This simply means you are paying twice for the same feature.
Tips For Reducing Waste
With just a little attention, much of this waste can be avoided. With discipline, proper tools, and regulation, you can redirect your budget to a smarter use of Microsoft 365. Below are five of the main strategies to adopt.
1: License On An ‘As-Needed’ Basis.
Look at what employees do before you decide what they need. Not all users require an E3 or E5 license. For example, why give your receptionist a complete E5 license with enhanced compliance tools if they’re only emailing and using Teams? By monitoring actual usage, you can downgrade such users to E1 or another lower-tiered plan without affecting productivity. Low-usage discovery utilities enable you to downgrade confidently without speculation.
2: Automate Your Employee Offboarding
You should automate everything you can, but by automating offboarding processes, licenses are unassigned automatically once you mark an employee as departed. Use workflow tools like Power Automate linked to HR systems or forms to revoke access, remove group memberships, convert mailboxes, and unassign licenses in one automated process.
3: Avoid and Consolidate Overlapping Features
Scrutinize your security, compliance, collaboration, and analytics tools to find overlaps. If your plan already offers advanced threat protection or endpoint detection, consider cancelling redundant third-party tools. If Copilot add-ons duplicate other AI or automation tools you already use, streamline them under one system.
4: Not All Group and Shared Mailboxes Merit Premium Licenses
Is your organization mistakenly assigning premium licenses to shared mailboxes, service accounts, or inactive mailboxes? This doesn’t offer any functional benefits. Think about converting them to free shared mailboxes or archiving them to free up license slots. That way, you ensure that your M365 budget is only spent on value-generating users.
5: Enable License Expiration Alerts and Governance Policies
Set up policy checks and notifications and make sure you respond as needed. Note down renewal dates for contracts so you don’t accidentally auto-renew unused licenses. Also, track levels of inactivity and flag for review licenses that have passed the threshold.
Want Help Making Microsoft 365 Work Smarter for You?
Without oversight, Microsoft 365 licenses and add-ons can quietly drain your resources. Take control by reviewing how each license is used. When you match your tools with actual business needs, you save money, simplify management, and improve productivity in your organization.
By optimizing your Microsoft 365 environment you get the most value from what you already own. By using M365 security and Copilot add-ons wisely, your business can operate more efficiently and securely. If you’re looking to better manage licensing and make smarter technology decisions, reach out to our team of experts who have helped organizations do exactly that. Let’s get started today.
Frequently Asked Questions
How to reduce licenses in Office 365?
To reduce Microsoft 365 licenses, navigate to the Microsoft 365 admin center, go to Billing > Your products, then select the subscription, and click Remove Licenses to reduce the total count. Licenses can typically only be removed at the end of a commitment term or billing cycle.
What to use for automated onboarding and offboarding?
Console published their ‘Best Onboarding & Offboarding Software for IT (2026)’ in February. Read about the top software HERE.
How much does a software license typically cost?
This represents a huge range as these costs vary widely based on type and user count, ranging from roughly $20–$500 per user/year for standard, single-user subscriptions to thousands for enterprise software. Small businesses often pay $200–$1,000/year for basic software, while customized or enterprise-level solutions can range from $5,000 to over $50,000, or $50–$500 per user annually.
Is software licensing a capital expense?
Unlike a subscription fee, which is a currently deductible expense, the cost of a perpetual software license is considered a capital expenditure by the IRS. This means the cost must be capitalized and recovered over time.
How secure is your network?
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