A growing company expects its Microsoft bill to rise as it hires. What catches finance teams off guard is when the bill rises faster than headcount. Per-user prices may not have changed. Usually the company has added licenses, upgraded plans and bought add-ons over time, and no one has checked whether they still match what people use.
This guide covers the most common causes, how to find them in your own tenant, and a quarterly review that keeps licensing in line with the business.
The common causes
1. Licenses that outlive the people using them
When someone leaves, their account is often blocked but their license stays assigned, sometimes so the mailbox and files can be kept. Over months, those licenses add up. Contractors, interns and seasonal staff make this worse, because accounts are created quickly and removed slowly.
How to spot it: compare assigned licenses against active staff, and look for licensed accounts with no sign-in activity in the last 30 to 90 days.
2. Upgrading everyone for a feature a few people need
A security or compliance requirement comes up, the feature is only in a higher plan, and every user is moved up to get it. A common example is moving the whole company from an E3-level plan to E5 for a capability that only a group of users or the security team needs.
How to spot it: for each premium plan, list the features that justified the purchase and who actually needs them. Microsoft sells many of these capabilities as add-ons for specific users.
3. Add-ons bought for everyone
Add-ons for telephony, audio conferencing, advanced security, compliance and Copilot are typically bought per user. They are often purchased for whole departments when only some people need them.
How to spot it: list every add-on, its quantity, and the number of people who used the capability in the last quarter.
4. Copilot seats bought ahead of adoption
Microsoft 365 Copilot is a significant per-user cost. Companies often buy seats for a broad group before training and use cases are in place, and usage stays low. Our Copilot ROI guide covers how to measure whether those seats are paying off.
How to spot it: use the Copilot usage reports in the Microsoft 365 admin center to see who is using it and how often, then reassign seats from inactive users to people who are waiting for one.
5. Crossing plan limits as you grow
Microsoft 365 Business plans have a user limit. As a company grows past it, it has to move to Enterprise plans, which are priced and packaged differently. That jump can raise the per-user cost noticeably if it isn’t planned. Check the current limit with Microsoft or your licensing partner, because plan rules change.
How to spot it: if you are approaching the limit, model the Enterprise plan cost before hiring takes you past it, rather than after.
6. Commitment terms that don’t fit your hiring pattern
Microsoft’s licensing terms let you choose between monthly and longer commitments, and the price and flexibility differ. An annual commitment can be cheaper but harder to reduce. A monthly term costs more but can be reduced when people leave. Companies with seasonal or project-based staff often end up on the wrong mix.
How to spot it: check the term and renewal date for each subscription, and compare it with how your headcount changes during the year.
7. Duplicate tools
After an acquisition, or after departments buy their own tools, companies often pay for overlapping products: a separate video meeting tool alongside Teams, a third-party backup tool next to a second backup add-on, or two security products covering the same devices. Licensing reviews tend to look only at Microsoft and miss the overlap.
How to spot it: list the tools that do the same job as something already included in your Microsoft plans, and decide whether you still need both.
A quarterly licensing review
Licensing drifts out of line gradually, so a short quarterly review catches problems before they become a large annual cost. A practical review covers:
- Assigned versus active. Remove or reassign licenses from people who have left or have not signed in.
- Plan fit. Check whether each group is on the plan its work requires, and whether a premium plan can be replaced with add-ons for the people who need them.
- Add-on usage. Compare add-on quantities with actual use.
- Copilot usage. Reassign inactive seats.
- Upcoming renewals. Review any subscription renewing in the next 90 days, while there is still time to change quantities or terms.
- Hiring plan. Check whether planned growth will cross a plan limit or require new licenses for a new team or location.
Assign an owner for the review, usually someone in IT working with finance, and record the decisions so the next review starts from them.
How Virteva helps
Virteva provides Microsoft licensing through the Cloud Solution Provider program and reviews licensing as part of managing Microsoft 365 environments for mid-market organizations. That includes matching plans and add-ons to how people work and planning licensing changes ahead of hiring and renewals. Read more about Microsoft licensing through Virteva.
Frequently asked questions
How often should we review Microsoft licensing? Quarterly works for most growing companies, with an extra review before any large renewal, acquisition, or hiring push.
Is E5 worth it? It depends on whether enough of your users need the security, compliance and analytics features it includes. For some companies, a lower plan plus add-ons for specific users costs less. Base the decision on which features you will use and who needs them.
Can we reduce licenses mid-term? That depends on the commitment term of each subscription. Monthly terms are more flexible; longer terms usually are not. Check the terms before you buy, especially if your headcount changes during the year.
Next step
If your Microsoft bill has grown faster than your team, talk to Virteva about a licensing review before your next renewal.
