Why Your Microsoft 365 Licensing Is Probably Costing You More Than It Should

In this blog post Why Your Microsoft 365 Licensing Is Probably Costing You More Than It Should we will walk through the most common licensing “leaks” we see in Australian businesses, and how to fix them without breaking productivity.

If you’re responsible for IT costs, Why Your Microsoft 365 Licensing Is Probably Costing You More Than It Should will feel familiar. Your bill creeps up every renewal, nobody’s 100% sure what you’re paying for, and the business assumes “it’s Microsoft, it is what it is.”

Except it usually isn’t. In 50–500 person organisations, Microsoft 365 overspend is rarely one big mistake.

It’s death by a hundred paper cuts. The good news is you can often cut meaningful cost (and reduce security risk) with a few targeted changes.

High-level first: why licensing gets messy so quickly

Microsoft 365 is not “one product.” It’s a bundle of products and entitlements (email, Office apps, file sharing, meetings, device management, security, compliance, voice calling, and now AI add-ons) packaged into different plans.

The underlying technology is basically a cloud identity and entitlement system. Each user account in Microsoft Entra ID (what most people still call Azure AD) is assigned licences. Those licences turn features on or off across Microsoft’s services like Exchange (email), SharePoint/OneDrive (files), Teams (chat/meetings/voice), and security tools like Microsoft Defender.

That “turn features on/off” model is powerful, but it’s also how you end up paying for features nobody uses, or missing features you thought you had.

The business pain points we see every week

When licensing is wrong, it doesn’t just cost money. It creates operational drag.

• Finance pain: licences keep rising, and no one can clearly explain the bill.
• Security pain: you assume you’re covered, but the protection you need isn’t actually licensed.
• Productivity pain: the “one person who needs X” can’t do their job, so you buy the expensive plan for everyone “just in case.”
• Compliance pain: Essential 8 expectations (the Australian Government’s cybersecurity framework that many organisations are now required to follow) push you toward stronger controls, and licensing choices affect whether you can implement them properly.

Five common ways organisations overpay for Microsoft 365

1) Paying for the “top tier” for everyone because it feels safer

A classic pattern: someone hears “Business Premium is the secure one” or “E5 is the best,” and then the business buys it across the board.

In reality, most organisations have role-based needs:

• A small group needs advanced security and device controls.
• A larger group needs standard Office apps, email, Teams meetings, and file access.
• Some frontline or casual users only need email and basic collaboration.

Business outcome: Aligning licence tiers to roles typically reduces spend without reducing capability. You’re not “downgrading”; you’re right-sizing.

2) The hidden tax of how you pay: monthly flexibility can be expensive

Many businesses choose monthly licensing because it feels safer. But Microsoft’s commercial licensing has evolved so that flexibility often costs more than commitment.

If you’re on a rolling monthly term, you can pay a sizeable premium versus committing annually. And even on annual commitments, paying monthly can be priced higher than paying annually upfront.

Business outcome: If your headcount is relatively stable, switching the right users to annual commitments can cut cost immediately with no change to how people work.

3) Paying twice for security because features overlap

This is where it gets tricky, because “security” is not one thing.

Microsoft 365 plans can include (or partially include) security capabilities like Microsoft Defender (which helps protect identities, endpoints, and email, depending on what you license). Then many businesses also buy third-party tools on top.

Sometimes that makes sense. CloudPro Inc is a Wiz Security Integrator, and we often recommend Wiz where it provides clear visibility and risk reduction in Azure environments.

But we also see businesses paying for overlapping features because nobody mapped what’s already included.

Business outcome: A clear “capability map” reduces duplicate spend and makes your security posture easier to explain to leadership and auditors.

4) Licensing doesn’t match your device reality (and Intune is often the tipping point)

If your business has a mix of laptops, mobiles, tablets, and work-from-home devices, you need consistent rules: who can access company data, what happens when a device is lost, and how you keep software patched.

This is where Microsoft Intune comes in, which manages and secures all your company devices. Intune can enforce screen locks, encryption, app protection, and automatic configuration so devices aren’t managed “by hand.”

We regularly see businesses paying for licences that include device management, but they’re not using it. Or the opposite: they need strong device management for Essential 8 alignment, but they’re on plans that don’t support the controls they’re trying to implement.

Business outcome: Matching licences to your device strategy reduces security incidents and cuts time wasted on manual setup and support.

5) Teams and voice changes can create surprise costs

Microsoft has shifted packaging around Teams in different markets and plans. The practical outcome is simple: you can get caught paying extra to “add back” Teams or telephony features you assumed were included.

If you use Teams for calling, licensing often includes multiple building blocks (the Teams base capability plus a calling/phone licence, plus calling plans or a connection to your telco). If those pieces aren’t planned together, you either overbuy or end up with users who can’t make calls when they need to.

Business outcome: A clean voice licensing design prevents surprise add-ons and avoids disruptions to customer-facing teams.

A real-world scenario we see in 50–500 seat organisations

Picture a ~200-person professional services firm in Melbourne.

They’d standardised on a premium Microsoft 365 plan “for security,” but only about 40 staff actually used the advanced capabilities day-to-day. A further 30 were contractors who only needed email and Teams meetings. And IT still wasn’t enforcing consistent device policies, because nobody had time to implement Intune properly.

What changed after a review:

• We split users into clear groups based on risk and work style.
• We kept premium licensing where it genuinely reduced risk (executives, finance, anyone with sensitive data).
• We moved light-need users to lower-cost plans that still met productivity needs.
• We implemented Intune baselines (device encryption, patching, app protection) to support Essential 8 expectations in a practical way.

The outcome wasn’t just a lower bill. It was fewer “mystery settings,” fewer support tickets for device setup, and a security posture leadership could actually understand.

Practical steps you can take this month

Step 1: Build a simple “licence-to-role” table

Not a 40-tab spreadsheet. Just a one-page view:

• Role group: Exec, Finance, Standard Knowledge Worker, Frontline, Contractor
• Must-have needs: desktop apps, email size, device management, advanced security, compliance
• Licence choice: your intended plan per group

Step 2: Pull a usage reality check

Look for obvious gaps:

• Users licensed for desktop apps who only use web apps
• Users with advanced security licences who aren’t enrolled in device management
• Accounts for leavers, shared mailboxes, or service accounts consuming paid licences

Step 3: Fix the “leavers and joiners” process

Overspend often comes from process, not pricing.

If leavers aren’t deprovisioned cleanly, you keep paying. If joiners are always given the most expensive plan by default, you lock in waste for years.

Step 4: Plan renewals around known pricing changes

Microsoft has announced commercial pricing changes taking effect on July 1, 2026 for Microsoft 365 suites. If you have renewals coming up before then, it’s worth modelling scenarios now, not the week before the renewal date.

Step 5: Treat AI add-ons like Copilot as a targeted pilot, not a blanket rollout

AI is real value for the right roles, but it’s easy to overspend if you buy it “just to be safe.”

Pick 10–20 users in roles where time is expensive (exec assistants, project managers, sales, finance analysts). Define what “success” means (time saved per week, faster proposals, fewer meeting follow-ups), then scale based on evidence.

// A simple way to think about Microsoft 365 licensing
// (Not code you run — just a model that keeps decisions rational)

For each user:
 What do they do all day?
 What data do they access?
 What risk would a compromise create?
 What controls do we need for Essential 8 alignment?
 What is the cheapest licence that meets those needs?

Where CloudProInc fits (and why this is harder than it looks)

Licensing is a moving target. Packaging changes, Teams options differ, AI add-ons evolve, and security capabilities get re-bundled.

CloudPro Inc is a Melbourne-based Microsoft Partner with 20+ years of enterprise IT experience, and we spend a lot of time in the messy middle where “what Microsoft says is included” meets “what your business actually needs.”

We also approach security holistically. Sometimes the right answer is “use what’s already in Microsoft 365.” Sometimes it’s “add Wiz for better cloud security visibility.” The point is to reduce risk and cost at the same time, not just add tools.

Quick summary

• Most Microsoft 365 overspend comes from small mismatches at scale.
• Right-sizing by role usually saves money without reducing productivity.
• How you pay (monthly vs annual) can materially change the bill.
• Device management (via Intune) is often the difference between “licensed” and “actually secure.”
• Plan now for the July 1, 2026 pricing changes so you’re not forced into last-minute decisions.

If you’re not sure whether your current Microsoft 365 setup is costing you more than it should, we’re happy to take a look and give you a plain-English view of where the waste (and risk) is hiding — no pressure, no strings attached.