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May 28, 2020

Microsoft 365 License Cost Reduction

In March of 2020, Microsoft 365 (formerly Office 365) active business users passed 258 million. Microsoft 365 solutions offer valuable functionality that is critical to business collaboration, communication, and productivity. Businesses receive great benefits from Microsoft 365. However, many companies that use Microsoft 365 do not understand how Microsoft licensing works. As a result, a significant number of companies are overpaying Microsoft for service they do not use or do not need. Fortunately, there are simple steps that businesses can take to reduce Microsoft 365 license costs.

In this short article, you will learn:

  • The four main Microsoft 365 licensing packages and what they include
  • Tips to reduce Microsoft 365 license cost
  • Additional Microsoft license savings available

Microsoft licensing packages and how they can be used to reduce cost

As of this article, Microsoft has four main plans for Microsoft 365 business services.

Available Plans:

  1. Microsoft 365 Business Basic – $5/user/month – This plan includes hosted email service, one drive, teams, and Microsoft online apps. The plan does not include office desktop applications.
  2. Microsoft 365 Business Standard – $12.50/user/month – This plan includes everything in the basic package plus the full version of Office desktop apps that can be installed on up to 5 PCs / Macs.
  3. Microsoft 365 Business Premium – $20/user/month – This plan includes everything in standard package plus advanced security tools and software to manage mobile devices.
  4. Microsoft 365 Apps for business – $8.25/user/month – This plan only includes Microsoft desktop applications without email or cloud services.

Link to Microsoft package descriptions: https://www.microsoft.com/en-us/microsoft-365/business#compareProductsRegion

Note: There are additional licenses available for office 365 that are not part of this article.

Tips to reduce Microsoft 365 license cost

  • Mix and match – Microsoft allows companies to mix and match licenses. In short, a company can have some users on the basic package and others on the standard package. By only purchasing a license package that is needed, significant cost savings are possible.
  • Annual vs. month-to-month commitment – Microsoft advertises annual commitment prices. However, when a company makes the purchase, sometimes a monthly plan is selected. The cost for a month-to-month service is 25% higher than an annual contract. A company can switch to a yearly agreement and continue to pay monthly to take advantage of cost savings.
  • Shared mailbox – When we perform Microsoft 365 tenant reviews, we often discover mailboxes with names like sales, accounting, conference rooms or printers.  Microsoft 365 has an option for Shared mailboxes. This is a modern method of maintaining department mailboxes that can be accessed by multiple employees. Unlike full user mailboxes, the shared mailboxes are free and do not require a license. Proper identification and setup of shared mailboxes can decrease overall license costs.
  • Mailbox for former employees – Some companies tend to keep the email used by a former employee for an extended period. If the mailbox is active as a regular user, the company continues to pay a full license fee. Microsoft made it easy to convert an old mailbox to a shared mailbox to reduce the cost and only pay for active employee’s user accounts. As a shared mailbox, all emails for the former user are retained and available to an authorized employed user.
  • License reduction review – Microsoft developed a great system that asks you to purchase a new license when you need to add users. Unfortunately, the system is not as friendly when you remove a user or disable a license. By default, when a license is removed, it is returned to a pool of licenses that a company continues to pay for. To reduce a license, a company employee with admin access needs to adjust license counts manually. We recommend a quarterly review of active licenses on the company’s account.
  • Hidden / additional licenses – Microsoft has many legacy Microsoft 365 product that are not easily viewable under account settings. As an example, if your employees only need email without the latest cloud options, you can purchase Exchange Online Plan 1 for $4/user/month. If you need a large volume of licenses, we recommend contacting a Microsoft licensing expert to find out what options are available.

Additional potential Microsoft license savings available

With the vast product options Microsoft offers, a reputable 3rd party company may have access to additional license packages not purchased directly through Microsoft. Additional license packages with possible savings include Microsoft Volume License Agreement, Azure services, and other product licenses.

Consider scheduling a review or an audit to determine which active Microsoft licenses your company has purchased and how we can potentially help cut your cost.

How Expert Computer Solutions can help reduce your license expenses

Expert Computer Solutions is a Microsoft partner with extensive knowledge about the different Microsoft products. We offer IT audits to help identify unnecessary expenses and reduce cost. We also provide alternative licensing models to benefit your company’s needs.

To find out how we can help, please fill out the form below and an ECS Sales Representative will contact you.

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