Are You Wasting Money on Microsoft 365? A UK & Ireland SME Guide to Cutting Licence Costs

Most small businesses don’t decide to “overspend on licences.” It just happens. A starter Microsoft 365 setup goes in, someone joins, someone leaves, a few...

Jack Walsh

Published Date: 13/01/2026

Most small businesses don’t decide to “overspend on licences.” It just happens.

A starter Microsoft 365 setup goes in, someone joins, someone leaves, a few people need “the good one,” a supplier asks for an extra mailbox, and suddenly you’re paying for a stack of users and add-ons nobody can properly explain. Meanwhile, day-to-day IT headaches continue: password resets, email storage issues, Teams behaving oddly, and everyone asking “who do we ring for this?”

If you’re an SME in the UK or Ireland, Microsoft 365 can be excellent value — but only if it’s managed properly. When it isn’t, it quietly becomes one of your most avoidable monthly costs.

The Quick Answer: how UK & Ireland SMEs reduce Microsoft 365 costs

Most licence overspending comes from three things: unused accounts still licensed, people on the wrong plan, and duplicate/forgotten add-ons. The fix is straightforward: do a quarterly licence tidy-up, align each role to the right licence, and put a simple joiner/mover/leaver process in place. If you want a fast, no-stress way to identify savings, Yellowcom can run a free IT Health Check and licence audit to highlight exactly where you can cut costs without breaking how the business runs: https://yellowcom.co.uk/free-it-health-check/

Why this happens (even in well-run businesses)

Microsoft 365 is designed to be flexible. That’s good, but it also means it’s easy to drift into waste.

Common reasons SMEs overpay:

Leavers aren’t fully removed (accounts exist “just in case” and keep a paid licence)
Everyone gets the same licence because it’s quicker than working out what people actually need
Licences get added reactively during busy periods and never reviewed
Multiple people manage IT decisions (owner, office manager, outsourced IT, “someone who’s good with computers”) and nobody owns the full picture
Subscriptions and add-ons pile up over time

The result is a Microsoft bill that grows, while your team size stays the same.

The most common Microsoft 365 licence “money leaks”

These are the issues we see repeatedly in SMEs across the UK and Ireland.

1) You’re paying for users who no longer work for you

This is the biggest one.

If a staff member leaves but their account stays active (or even just exists), it often keeps a paid licence. Some businesses keep the mailbox for compliance or customer history — which can be sensible — but you usually don’t need to keep paying for a full user licence to do that.

Simple fix: convert leavers to a cheaper mailbox option or archive approach (done properly), then remove the paid licence.

Plain-English note:
A “licence” is the paid permission for a user to access Microsoft 365 services. If a user doesn’t need to log in, they often don’t need a full licence.

2) People are on the wrong plan for their job

Not everyone needs the top-tier licence.

A director handling sensitive data may need higher security features. A warehouse user might only need email and basic access. Many SMEs put everyone on the same plan to avoid complexity — but that’s exactly how costs creep.

Simple fix: map roles to needs:

Basic email + calendar only
Office apps + Teams
Device security and management
Advanced compliance/security

Then match each person to the right licence level.

Compare Microsoft 365 Business Plans

Common confusion (quick definitions):

Business Basic: web/mobile apps, email, Teams (no desktop Office apps).
Business Standard: includes desktop Office apps.
Business Premium: adds stronger security and device management (often worth it for the right users).
Add-ons: extra bolt-ons like advanced security, audio conferencing, extra storage.

(Exact names can vary slightly depending on what you’re already subscribed to, but the principle remains the same.)

3) You’re paying twice for features you already have

It’s surprisingly common to see businesses paying for:

a third-party security tool and Microsoft security features they’re not using
extra storage add-ons when mailbox/SharePoint settings aren’t optimised
separate tools for meetings/telephony while also paying for Teams capabilities (where appropriate)

This is not about ripping everything out. It’s about checking what you already pay for — and using it properly.

4) Shared mailboxes are incorrectly licensed

Many SMEs create mailboxes like:

accounts@
sales@
support@

If these are set up as full users rather than shared mailboxes, you can end up paying unnecessary licences.

Simple fix: ensure shared addresses are truly set as shared mailboxes and accessed correctly – Here’s how Microsoft says they work.

5) Trial licences and legacy subscriptions are still billing

Microsoft and third-party add-ons often start as trials. If nobody formally reviews renewals, you can end up with “small” monthly charges that add up over a year.

Simple fix: review recurring subscriptions quarterly and cancel what’s no longer needed.

A quick self-check: five questions that usually uncover savings

If you want a fast sense-check before doing anything else, ask:

Do we have any Microsoft 365 users who left in the last 12 months?
Does every user have the same licence “because it’s easier”?
Are shared email addresses set up as proper shared mailboxes?
Do we have add-ons we can’t clearly explain?
When was the last time someone reviewed licences and access as a proper process?

If any of those are a “not sure,” there’s a strong chance you’re overpaying.

Check out Microsoft’s official guidance to Assigning and Removing Licences.

How to fix it without causing disruption

The biggest fear business owners have is: “If we change licences, will it break email or Teams?”

It doesn’t have to — if you do it methodically.

Step 1: Get a clean list of real users

You want one list showing:

Active staff
Leavers
Shared mailboxes
Guest accounts (external collaborators)

Then confirm who actually needs to sign in.

Step 2: Match each role to what they genuinely use

Don’t start with licences. Start with work patterns:

Who needs desktop Office apps?
Who uses multiple devices?
Who handles sensitive files?
Who needs stronger security controls?

Then assign the right licence level per role.

Step 3: Fix leavers the right way

You can usually preserve email history and reduce cost at the same time — but it needs to be done properly (especially if you have compliance requirements).

Microsoft’s Steps for Removing a Former Employee

Step 4: Remove duplicate tools and unused add-ons

This is where the “invisible spend” lives.

Step 5: Put a simple ongoing process in place

Licence waste is rarely a one-time problem. It’s a process problem.

A simple quarterly check plus a proper joiner/mover/leaver checklist prevents the drift coming back.

Where Managed IT Services fit in (and why it often saves money)

This is the part many SMEs miss: licence waste is often a symptom of “ad-hoc IT.”

When IT is handled by different people at different times, you get:

inconsistent decisions
no single owner for security and access
reactive fixes rather than planned control
subscriptions added “for now” that become “forever”

With Managed IT Services, you typically get:

regular user and licence reviews
proper onboarding/offboarding so you don’t keep paying for leavers
tighter security settings that reduce risk without slowing staff down
a clear point of contact instead of chasing multiple providers

If you’re weighing up whether monthly support is “worth it,” it can help to compare the real costs (time, disruption, duplicated tools, and waste). This download is useful for that:
Managed IT vs In-House Support Comparison Download:

Download the Managed vs. In-House Comparison

And if you want a clearer picture of what good ongoing support should include (in plain English), this brochure lays it out:

Download the Brochure

The easiest next step: get a licence audit (and stop guessing)

You do not need a massive project to fix this. Most businesses just need someone to:

review what you pay for
identify unused or misaligned licences
confirm what can be removed safely
show the savings clearly

Yellowcom offers a free IT Health Check that includes a Microsoft 365 licence audit, so you can see where you can cut costs without losing what your team needs:
Free IT Health Check: https://yellowcom.co.uk/free-it-health-check/

If you want, we can also flag wider “quick win” fixes we regularly see alongside licence waste — like leaver access risks, weak password setups, and backup gaps — the kind of issues that cause the next headache.

How do I know if we’re overpaying for Microsoft 365?

If your Microsoft 365 bill has crept up over time, or nobody can confidently answer “who has what licence and why,” there’s a good chance you’re overpaying. The biggest red flags are: leavers still listed as users, everyone on the same plan “for simplicity,” and add-ons that were turned on years ago and never reviewed.

What are the most common ways SMEs waste licences?

The usual culprits are:
Paying for accounts for staff who have left
Putting every user on a higher plan than they need
Licensing shared mailboxes (like accounts@) as full users
Duplicate subscriptions (paying for features you already have)
Trial add-ons that quietly rolled into paid plans

If we change licences, will everything break?

Not if it’s done properly. The key is to match what each person actually uses to the right plan. Most problems happen when licences are downgraded without checking whether someone needs desktop Office apps, certain security features, or a specific mailbox setup.

Can we keep a leaver’s email without paying for the full licence?

In most cases, yes. Many businesses keep email access for customer history, compliance, or handover reasons. The usual approach is to preserve the mailbox and access appropriately while removing unnecessary paid licences. The exact method depends on how your Microsoft 365 is configured and what you need to keep.

Do Shared Mailboxes require a licence?

Often, no — shared mailboxes like accounts@ or sales@ commonly don’t require a licence if they’re set up correctly and used within Microsoft’s standard limits. Problems arise when they’re created as a normal user mailbox or when usage grows beyond what’s appropriate for a shared mailbox.

Can Managed IT Services actually reduce our Microsoft 365 costs?

Yes — because cost waste usually comes from a lack of ownership and process. With Managed IT Services, licence checks, joiner/mover/leaver changes, and subscription reviews are handled routinely, so overspend doesn’t quietly build up again.

What’s the easiest next step?

If you’d rather not guess, Yellowcom offers a free IT Health Check that includes a Microsoft 365 licence audit to identify where you can cut costs safely: https://yellowcom.co.uk/free-it-health-check/