Microsoft 365 Licences No One Uses? A 30-Minute Review

On July 1, 2026, Microsoft raised list prices on several Microsoft 365 business plans. For many Ontario offices, that was the nudge to look closely at their licensing for the first time in years. What most find is simple: they're paying for licences nobody uses.

The cost isn't only the price increase. It's the mailbox of someone who left last spring, the desktop-app plan for staff who only work in a browser, and the add-on trial that quietly converted to paid. Each one renews every year unless someone catches it.

This guide shows you how to find that waste in about 30 minutes, using only the Microsoft 365 admin centre. It also covers when you can actually reduce your licence count, how to keep a former employee's email without paying for it, and why some of the savings should go back into security.

What changed in Microsoft 365 pricing on July 1, 2026

Microsoft raised list prices on its most common small business plans on July 1, 2026, after announcing the change on December 4, 2025 (CNBC). Customers on annual or multi-year terms keep their old price until their first renewal after that date (Microsoft pricing FAQ).

Microsoft says the increases reflect added security, management and AI features, including Copilot Chat (Microsoft pricing FAQ). Because Microsoft sets these prices in U.S. dollars, Canadian invoices also move with the exchange rate. Your reseller's price in Canadian dollars may differ, so check your latest invoice for the number that actually applies to you. (Prices verified September 30, 2026.)

What unused licences actually cost

Five idle licences on Business Standard now cost US$840 a year. That's five people's worth of email, Teams and Office apps that nobody opens, billed every month for the whole term.

Paying month to month makes it worse. Monthly-term subscriptions under Microsoft's current commerce rules cost about 20% more than the same plan on an annual term, according to Microsoft distributor Pax8. That flexibility is worth paying for when headcount really swings. For a stable office, it's often a cost nobody chose on purpose.

The wrong plan can cost more than the idle seats. A 20-person office on Business Standard where half the staff only use email and Teams in a browser could move those ten people to Business Basic. At list price, that saves US$840 a year, as much as getting rid of the five idle seats above. That money can fund upgrades elsewhere.

Where unused Microsoft 365 licences hide

In our experience reviewing tenants for small businesses, waste usually sits in four places. Each one has a simple way to spot it.

• Former staff. When someone leaves, their mailbox is often kept "just in case" with a full licence still attached. Months later, nobody remembers why. Spot it by comparing your active users with payroll.
• Plans that are too rich. Staff who only use email and Teams in a browser don't need the desktop Office apps. Spot it in the usage reports: no desktop app activity over 90 days is a strong hint.
• Duplicate tools. Many offices pay for Microsoft 365 and also pay separately for file sharing, video meetings or backup tools that overlap with it. Spot it on your credit card statement, not in the admin centre.
• Forgotten add-ons. Extra storage, Teams Phone licences and trials that converted to paid often go unnoticed. Spot them under Billing, then Your products.

Before you start the review

You don't need special tools. Have these ready:

• A Global Administrator or Billing Administrator account for your Microsoft 365 tenant
• A current staff list from payroll or HR, including anyone on long leave
• Your renewal date and term length (annual or monthly), from Billing, then Your products
• A spreadsheet to compare the two lists
• Time: about 30 minutes for an office of up to 20 people, closer to an hour for 50. Difficulty: beginner

How to run a 30-minute Microsoft 365 licence review

These are the same seven steps we use for clients. Do them in order: each step narrows the list for the next one.

Step 1: Count what you pay for

In the Microsoft 365 admin centre, go to Billing, then Licenses (the admin centre uses the U.S. spelling). For each plan, note how many licences you've bought and how many are assigned. Any gap between the two is money you're spending on nobody.

Step 2: Export your user list

Go to Users, then Active users, and export the list to a spreadsheet. Keep the display name, username and licence columns. The sign-in status column only shows whether sign-in is blocked, not whether the person uses the account.

Step 3: Compare against payroll

Match the export against your current staff list. Mark anyone who has left, is on long leave or has never signed in. Shared inboxes like info@ or accounts@ sometimes carry a full licence too. Mark those for Step 5.

Step 4: Check who actually uses what

Open Reports, then Usage, to see who uses the desktop apps, OneDrive and Teams over the last 30, 90 or 180 days (Microsoft usage reports guide). Low or browser-only use often means a lighter plan fits.

If you have Business Premium, you can go further. Its Microsoft Entra ID P1 licence lets you add a Last interactive sign-in time column to the user list in the Entra admin centre. Microsoft suggests 90 to 180 days without a sign-in as a reasonable sign that an account is inactive (Microsoft Learn). Check those names against your staff list before acting, since people on leave look inactive too. On Basic or Standard, the usage reports are your best signal.

Step 5: Convert former staff mailboxes to shared mailboxes

A shared mailbox under 50 GB doesn't need a licence. Convert the departed employee's mailbox to a shared mailbox, give the right people access, then remove the licence (Microsoft Learn).

Three cautions before you do:

• Keep the user account. It anchors the shared mailbox. Block sign-in instead of deleting it.
• Move their OneDrive files first. An unlicensed OneDrive goes read-only after 60 days and is archived after 93, and getting archived content back costs extra (Microsoft Learn). Copy anything the business needs before you remove the licence.
• Check holds and archives. A shared mailbox on litigation hold, with an archive, or over 50 GB still needs a licence (Microsoft Learn).

Step 6: Right-size plans and remove unassigned licences

Move people to the plan that matches how they work, using what you found in Step 4. Then list every unassigned licence. Those are pure waste, but don't expect to drop them today: see the next section on timing.

Step 7: Book your renewal review

Put your renewal date in the calendar with a 60-day reminder, and a second one for the renewal week itself. The first gives you time to repeat this review. The second is when you can actually act on it.

Before removing anything, confirm your retention needs. Law firms, accountants and clinics may have record-keeping duties that affect how you handle a departed employee's email.

Time your changes to your renewal date

A licence review only saves money if you act in the right week. You can remove licences from an annual subscription only within seven days of buying or renewing it. That applies whether you buy directly from Microsoft in the admin centre (Microsoft Learn) or through a reseller (Microsoft Partner Center). After that, you pay for the full term even if the seats sit empty.

This is the step most offices miss. They find ten unused licences in March, ask to remove them, and learn that the annual term runs until November. The fix is simple:

• Unassign idle licences now. That stops the security risk of open accounts, even though the bill stays the same.
• Reduce the count in the renewal window. If you buy directly, remove the licences under Billing, then Your products, in the seven days after renewal. If you buy through a reseller, ask them to schedule the lower quantity before the renewal date.
• Use them for new hires. Until then, give unassigned licences to new staff before buying more.

If this sounds like the kind of planning nobody in your office has time for, it's part of what a virtual CIO handles.

Don't cut security to save money

The goal is to redirect money, not just cut it. Many small businesses run Business Basic or Standard when Business Premium would give them the protection they now need. Premium adds device management with Intune, stronger identity protection with Entra ID P1 and Microsoft Defender for Business (Microsoft Learn). And unlike Basic and Standard, its price didn't rise in July.

The gap is real. In an Insurance Bureau of Canada survey of 308 business owners, conducted by Angus Reid in August 2025, only 47% said their business was prepared for a cyber attack. Just 22% carried cyber insurance.

Identity-related attacks are part of the reason. Statistics Canada found that 16% of Canadian businesses were affected by a cyber security incident in 2023, and 31% of those affected reported identity theft (Statistics Canada). The Canadian Centre for Cyber Security lists multi-factor authentication among its baseline controls for small and medium organizations (Cyber Centre). Insurers now ask about MFA and device protection before they quote, as we covered in the new realities of cyber insurance in 2026.

The two moves fit together. In the 20-person example above, moving ten browser-only staff to Basic saves US$840 a year. Upgrading the other ten from Standard to Premium costs US$960 a year. The office gets device management and Defender on every account that handles real data, for about US$120 more a year in total.

Clean up licences before you roll out Copilot

If you're thinking about Microsoft 365 Copilot, a licence clean-up is the right first step. Microsoft 365 Copilot Business, launched December 1, 2025, costs US$21 per user per month for organizations with up to 300 users, down from US$30 for the standard Copilot licence (Computerworld). That makes it easier to try, and easier to roll out before you're ready.

Copilot can surface any file a user already has permission to open (Microsoft Learn). Old accounts, "anyone with the link" sharing and over-broad Teams membership become a bigger risk once an AI assistant can search across them. Clean up licences and permissions first, apply least-privilege access, then pilot Copilot with a small group.

Microsoft 365 licence review checklist

• Assigned licences match current staff
• No licences on former staff mailboxes that could be shared mailboxes
• Each person is on the plan that fits how they work
• No overlapping tools you pay for twice
• No forgotten add-ons or converted trials
• Multi-factor authentication is on for every account
• Renewal date is in the calendar, with reminders at 60 days and in renewal week

For the wider set of controls insurers and attackers look at, see our 2026 small business cyber survival guide.

Frequently asked questions about Microsoft 365 licensing

How often should we review our Microsoft 365 licences?

At least twice a year, and every time someone joins or leaves. The most important review is 60 days before your annual renewal, because the renewal week is usually your only chance to lower the licence count.

Can we keep a former employee's email without paying for a licence?

Often, yes. Converting the mailbox to a shared mailbox under 50 GB removes the need for a licence. If the mailbox is on litigation hold, has an archive or is over 50 GB, it still needs one, so talk to your IT provider about retention options first.

Can we reduce our licence count in the middle of the year?

Usually not. On annual subscriptions, Microsoft only allows licence removals within seven days of a purchase or renewal, whether you buy directly or through a reseller. You can unassign licences at any time, but you keep paying for them until the term ends.

Is Business Premium worth it for a small Ontario business?

For most businesses that handle client or financial data, yes. It adds device management and advanced threat protection that cyber insurers increasingly expect, and its price didn't change on July 1, 2026. Our cyber insurance evaluation can show which controls your insurer will ask about.

Did Microsoft 365 prices go up for Canadian customers?

Yes. Microsoft sets these list prices in U.S. dollars, so Canadian businesses pay the higher rate from their first renewal after July 1, 2026, adjusted for the exchange rate and their reseller's pricing.