Can I remove a licence from a former employee straight away?

Preferably not without preparation. Once the licence is gone, the mailbox and OneDrive are deleted after a retention period. First convert the mailbox to a shared mailbox and move the files that are still needed to SharePoint. Then the licence can safely go.

Does a shared mailbox need a licence?

Usually not. A shared mailbox such as info@ works without a licence as long as it stays under the storage limit and nobody signs in to it directly with their own password. A larger archive or certain retention features do require a licence.

Why can I not reduce the number of licences immediately?

That depends on the term of your subscription. With an annual subscription you can generally only reduce the number of licences shortly after purchase or at renewal. A monthly subscription is more flexible but often more expensive per licence. So plan your review before the renewal date.

Is switching to a cheaper plan always sensible?

Not always. A lighter plan saves money but sometimes lacks security such as device management or Conditional Access. Look at what each group of colleagues does and which data they work with, then choose the plan that fits.

Unused Microsoft 365 licences: how an SME should check its licences and save money

Microsoft 365 charges per user, and that amount comes back every month or every year. Amid people joining and leaving, a licence easily stays attached to someone who left long ago, an intern gets the same heavy plan as the managing director, or you pay for a separate subscription that has long been part of your bundle. Nobody does anything wrong, but together it adds up.

Where the money usually leaks away

A licence review in a small organisation almost always turns up the same things:

Licences of former staff: the account has been blocked or the password changed, but the licence is still assigned and still billed.
Unused spare licences: ten licences were once bought for eight people, or someone left without the count being reduced.
Plans that are heavier than needed: everyone has Business Premium, while some colleagues only do email and work in the browser. Read more about the differences in which Microsoft 365 licence an SME should choose.
Duplicate subscriptions: a separate Exchange, Teams or Visio licence alongside a bundle that already includes it, or a trial that quietly turned into a paid subscription.
Licences on role accounts: a full licence for info@ or invoices@, while a shared mailbox does not need a licence as long as it stays under the storage limit and nobody signs in to it directly.

Step 1: see what you have and what you pay

In the Microsoft 365 admin center, under Billing, you can see which subscriptions you have, how many licences they contain and how many are assigned. The gap between purchased and assigned is often the first saving. If you buy through an IT partner or distributor, the subscriptions may appear on that party’s invoice rather than on a Microsoft invoice. Ask them for an overview per subscription and quantity, so you can compare it with the admin center.

Step 2: check who really uses the licences

Under Reports and Usage you can see per user when they were last active in email, OneDrive, SharePoint and Teams. An account that has done nothing for months is a candidate for clean-up. That is not only cheaper but also safer: forgotten accounts are a well-known way in for attackers. Read in inactive Microsoft 365 accounts when to disable an account and what to check first.

Step 3: clean up without losing data

Do not simply remove a licence from a former employee. Once the licence is gone, the mailbox and OneDrive are deleted after a retention period. So first decide what should happen to the data:

Email: convert the mailbox to a shared mailbox and give a colleague access. The mail stays available without a licence, as long as the mailbox stays under the storage limit.
OneDrive: have a colleague or manager move the files that are still needed to the team’s SharePoint site.
Retention obligations: if you must keep data for longer, arrange that with a retention policy or a backup before the licence goes.

Make this a fixed part of your leaver procedure, as described in the joiner and leaver IT checklist. Then you do not have to go looking afterwards.

Step 4: match the plan and mind the term

Look at which plan suits each group of colleagues. Someone who does not use the Office desktop apps can manage with a lighter plan; someone with sensitive data on a laptop actually needs the extra security of a heavier plan. So do not cut security blindly. When reducing, mind the term of your subscription: with an annual subscription you can generally only reduce the number of licences shortly after purchase or at renewal, while a monthly subscription is more flexible but often more expensive per licence. Put the renewal date in your calendar so you can adjust a month in advance.

How often to do this

A quick check whenever someone joins or leaves prevents most leaks. On top of that, do a full review twice a year, and certainly before an annual subscription renews. Agree who may decide on new licences and subscriptions, so nothing gets added unnoticed.

How Floor ICT handles this

Floor ICT includes the licence review in its regular management. Whenever someone leaves, we convert the mailbox, secure the files and remove the licence. Periodically we compare purchased and assigned licences with actual usage, flag duplicate subscriptions and advise per group of colleagues which plan fits, without weakening security. Before the renewal date you get a short overview of what can be reduced.

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