# The licence bill keeps growing, and nobody asks why > Why a Microsoft 365 licence bill almost always contains waste, what the summer 2026 packaging changes and the new Copilot options mean, and where to start the review. - Author: Jami Susijärvi, Oy Wolflake Consulting Ab - Published: 2026-09-29 - Web page: https://wolflake.fi/en/blog/microsoft-365-licence-waste The licence bill has changed over time. Users have been added, a product or two has been bought, the price has gone up along the way. What has not happened is anyone looking at the whole thing at once and asking whether it still matches what the organisation actually needs. That does not happen because it is tedious. In a larger environment there are hundreds of users and licences, and nobody works through them alongside their day job. The good news is that nobody has to: licence data can be exported from the reports automatically, and once it is combined with usage data, the waste stands out. That is exactly why the licence review is part of the [health check](https://wolflake.fi/en/health-check) rather than a separate project. When the review is done, it almost always turns up something that is not needed. That does not mean the purchases were wrong. Most of them were perfectly sensible decisions at the time. They have simply stayed in place while the organisation and Microsoft's packages changed around them. ## Five places where money leaks **Licences nobody uses.** This is the simplest and most common. People leave, projects end, a consultant comes and goes. The licence stays. In a larger environment there can be dozens of these, and they are invisible because they never cause an error. **Too high a tier.** The whole organisation was given the same licence because that was easiest at the time of purchase. Some users need everything. Others read email on their phone twice a day. Both cost the same. **Overlap with the bundle.** A capability was bought separately even though it is already part of the package. This is the most awkward kind of waste, because you pay twice for exactly the same thing. This year created more of it than usual, and I will come back to that in its own section. **Add-ons that were never deployed.** Something was bought that needed a project to roll out, the project never started, and the licence keeps billing. This is the saddest category in licensing, because you paid for something useful and never got it. **Contract model and renewal window.** I will come back to this at the end in its own section, because it is not a single mistake but a structural choice that decides whether the other points can be fixed mid-year at all. ## Why the bundle is often cheaper than the parts Trimming licences does not always mean moving to something cheaper. Just as often the right move is the opposite, because Microsoft prices its bundles so that the whole comes out clearly cheaper than the same pieces bought separately. The clearest example is Microsoft 365 Business Premium. What separates it from Business Standard is not the apps but what comes with it for security and management. That is why I almost never recommend staying on Basic or Standard. Their security relies in practice on security defaults, which are a good starting point but cannot be adjusted: either they are on as they are, or they are not. Business Premium replaces that with Conditional Access and Entra ID P1, device management with Intune, and Defender for email, Teams, SharePoint and endpoints. In practice these are the line after which an environment can be called managed. I have written separately about [why MFA alone is no longer enough](https://wolflake.fi/en/blog/why-mfa-is-not-enough), and nearly everything described there depends on exactly these. If you buy these separately on top of Standard, add up the total and compare it with Business Premium. The usual result is the same functionality, more contracts and a higher bill. The same logic applies to Enterprise licences. Microsoft 365 E3 and E5 are bundles of Office 365, Windows Enterprise and security and identity components. When a piece of E5 is bought separately on top of E3, it is worth counting how many such pieces have already been bought and comparing the total with the price of E5. ## 2026 made overlaps a current issue In summer 2026 Microsoft changed the contents of several packages. [The changes](https://www.microsoft.com/licensing/news/2026-m365-packaging-pricing-updates) were rolled out to tenants in stages from June onwards, and administrators received a Message Center notice at least a month in advance. They landed in several places at once. **Microsoft 365 E3 and Office 365 E3 gained Defender for Office 365 Plan 1.** This is currently the most likely overlap, because many E3 customers had bought it separately precisely because it was not part of the package. Now it is. **Business Basic, Standard and Premium got 50 GB more mailbox space**, bringing it to 100 GB. Previously some Business Premium customers bought an Exchange Online Plan 2 add-on specifically to get a larger mailbox. That reason is now gone, and in practice there are no others: everything else Plan 2 would bring is already included in Business Premium. Exchange Online Plan 2 still has one genuine use case, and it is in shared mailboxes rather than user mailboxes. If a shared mailbox needs to grow beyond 50 GB, be placed on litigation hold or have an archive, it needs its own licence, and Plan 2 is the right answer. Quite often a full Business Premium licence has been put in that slot instead, which solves the same problem at a considerably higher price. **Microsoft 365 E3 also gained Intune Plan 2, Remote Help and Advanced Analytics.** On top of these, Microsoft 365 E5 gained Endpoint Privilege Management, Microsoft Cloud PKI and Enterprise Application Management. The Intune Suite was less commonly bought on its own, so this affects a smaller group, but it hits that group all the harder. Then there is what Microsoft does not say. Nowhere does it state that an add-on bought separately is now redundant after these changes. The licensing FAQ says the add-ons remain available for purchase and that customers do not need to do anything. Both statements are true. Commercially it means some organisations are now paying twice for the same capability until the end of their term, and there is no mention of credits or of cancelling mid-term. This is also the point worth saying plainly. Partners do not always have the expertise to track these changes, and not always the interest either, because optimising licences reduces licence sales. I am not suggesting anyone is acting in bad faith. I am only saying there is no built-in incentive to do this check, and that is why it often does not get done. It is worth looking for the same thing elsewhere. The most common are Entra ID P1 bought separately even though it is included in Business Premium and Microsoft 365 E3, Defender for Endpoint, whose first tier is already part of Microsoft 365 E3, and Power BI Pro bought separately alongside E5. ## Copilot changed, the bill did not Over the past couple of years Copilot has gained three different licensing options, and many are still paying the price of the first one. At first only the full Microsoft 365 Copilot was available. It was bought for Business Premium users in small companies too, because there was no alternative. In November 2025 [Microsoft 365 Copilot Business](https://learn.microsoft.com/microsoft-365/copilot/copilot-business-faq) arrived, which is clearly cheaper, requires a Business licence underneath and is limited to a maximum of 300 seats. In July 2026 came the [combined bundles](https://www.microsoft.com/microsoft-365-copilot/business), in which Business Standard or Business Premium and Copilot are a single product. Microsoft itself says Copilot Business offers the same capabilities as full Copilot and that the difference lies in licensing and target audience. The practical limits come from the base licence, not the Copilot licence: Business Basic has no desktop Office apps, so Copilot only works in the browser versions of the apps there, whichever Copilot licence has been bought. And here is the part that costs money. You cannot switch mid-term. Microsoft's own guidance says the current commitment must be fulfilled, and there is no automatic move to the cheaper option at renewal. The switch has to be made deliberately when the commitment ends. If nobody looks at it at renewal, the expensive licence runs for another year, and then another. The practical conclusion: if Copilot is in use or planned, it belongs in the same calculation used to choose the base licence tier, not as a separate purchase. In the combined bundle the Copilot portion is clearly cheaper than buying it separately, so if Business Premium is already in place, the extra cost is smaller than many expect. ## The right licence for the right person Not everyone in an organisation works the same way, and licences do not all have to be the same kind either. Microsoft 365 F1 and F3 are made for work that is not done at a personal desk: in a shop, a factory, healthcare, a warehouse. They are clearly lighter than E licences, and their limits are worth knowing in advance because you run into them quickly. Neither includes desktop Office apps, and the mobile apps only work on screens smaller than 10.9 inches. In F3 the mailbox is two gigabytes and OneDrive the same. F1 has no mailbox rights at all, only a Teams calendar. [Microsoft's own comparison](https://learn.microsoft.com/microsoft-365/frontline/switch-from-enterprise-to-frontline) goes through these line by line, and it is worth reading before deciding to move anyone. In practice the dividing line is not the job title but the way the work is done. If the work is done on a phone, a tablet or a shared computer and the user has no personal computer of their own, an F licence is probably the right one. A factory where ten people take turns on the same shared computer is exactly the situation these were made for. So is a warehouse worker who picks orders with a tablet and has no need for a workstation at all. For an office worker with their own computer who writes documents, they are not. F5 is not a standalone licence but an add-on that requires F1, F3 or Office 365 F3 underneath. It brings E5-level security and compliance capabilities to frontline users, which is worth knowing when factory or care unit staff are just as important from a risk perspective as office staff but do not need the same tools. One warning at the point of purchase: these are sold both as complete bundles and as individual components, and the names look very similar in the catalogue. Make sure you know whether you are buying the whole package or one part of it. There is one limit to know on the Business side too: Business licences have a 300-user cap, and it applies to Business base licences in total within the same tenant. So not 300 Business Standard plus another 300 Business Premium. Add-ons are a different matter, and Business and Enterprise licences can coexist in the same tenant. Mixed licensing should still be done with care, because it brings its own complications: settings and policies have to be designed to work on both sides, and not everything can be targeted as straightforwardly as with a single licence tier. It also easily leads to unnoticed licence violations, when a feature has been enabled across the whole tenant but not everyone has a licence that entitles them to it. ## Offers and four questions Microsoft and distributors regularly run campaigns: discounted prices for a limited time, free trials, benefits for longer commitments. They are genuine offers. They are just priced so that something comes in return. Four questions before accepting an offer. **Is the discount on the right product?** A ten per cent discount on something you do not need is a hundred per cent extra cost. It sounds obvious and is still the most common way a licence estate grows. **What is the price after renewal?** The campaign price usually holds for the whole commitment term, because the commitment binds both parties. At renewal, however, the price returns to the standard price of the day. So calculate the total with the second term's price too, not just the first. **What are you committing to?** A discount usually requires a certain number of licences or a commitment of a certain length. If the discount requires three hundred licences and you need two hundred, the offer is usually not a discount. **Does it renew automatically?** This is where the bill surprises people. A free trial typically renews automatically into a paid subscription unless it is cancelled or the renewal setting is changed. A trial is a good way to test, but put the cancellation date in the calendar on the same day the trial starts. ## The contract model decides whether a mistake can be fixed I left this until the end because it sits behind everything above. With a licence bought on an annual commitment, the quantity can be reduced [within seven days of purchase](https://learn.microsoft.com/partner-center/customers/new-commerce-cancellation-policy). After that the window does not reopen until the term renews. If headcount drops in the third month, the licences are still paid for until the end of the term. Moving up is much easier. Upgrading to a higher licence mid-term usually works, for example from E3 to E5. Moving down does not. That is why the model should be chosen according to where the company is heading. In a growing company an annual commitment for the full quantity makes sense, because more licences will be needed, not fewer. If headcount fluctuates with the seasons or with projects, the most sensible model is a split: a permanent base on an annual commitment and a flexible portion on a monthly model. You pay more for the flexible portion, but you can get out of it when the need is gone. There are also two choices that show up directly in the price. The commitment length is in practice one year or three, and a three-year term rarely pays off, because it locks both the quantity and the product choice for a period in which Microsoft has time to change its packages more than once. The exception is when a longer commitment locks in a good campaign price for a product whose need is certain: then the discount holds for the full three years. Billing frequency is a separate question: a year paid up front is cheapest, an annual commitment billed monthly costs a little more, and a pure monthly model clearly more. The difference is not huge for a single licence, but across the whole estate it is real, and it can often be captured by a decision alone without anything in the environment changing. ## Checklist - **Compare licences with sign-in data.** Who has a licence even though the account has not signed in for months. - **Check separately bought add-ons against the summer 2026 changes.** The most likely findings are Defender for Office 365 Plan 1 for E3 customers and Exchange Online Plan 2 for Business Premium customers. - **Match the licence tier to the work, not to the organisation.** Not everyone needs the same, and not everyone needs less. - **Check the tier and renewal date of your Copilot licences.** If full Copilot was bought for a small Business environment, switching to the cheaper option only works when the commitment ends and only if it is done deliberately. - **License shared mailboxes with Exchange Online Plan 2,** not with a full Business Premium. - **Check the 300-user cap on Business licences in good time** if the company is growing. - **Put renewal dates in the calendar and choose the commitment model deliberately.** Renewal is in practice the only moment the quantity can be reduced, and commitment length and billing frequency affect the price without anything in the environment changing. - **Record an owner and a justification for every add-on.** Without that, nobody will remember in two years why it was bought. Licensing is not a separate topic from security. The same bill that contains waste almost always also contains capabilities that have been paid for but never deployed. Both are found at the same time, and that is exactly what the [health check](https://wolflake.fi/en/health-check) does: it looks at what you pay for, what you have actually put to use, and what the gap between the two is in euros.