How can you save money on Microsoft 365 licences?

What do Microsoft 365 business plans cost in the UK in 2026?

Microsoft raised prices on its commercial Microsoft 365 suites worldwide from 1 July 2026, applied to existing customers at their next renewal. If your renewal falls later this year, you'll see the new price then. These are Microsoft's UK list prices as shown on its website on 28 September 2026, per user per month, excluding VAT:

Each plan also comes in a version without Teams, which is cheaper (for example £4.20 for Business Basic and £14.40 for Business Premium on annual billing), but only makes sense if you use a different meetings and chat platform. The business plans are capped at 300 users each. Resellers and Microsoft partners buy through Microsoft's Cloud Solution Provider programme, so prices from a partner can differ slightly from the list price.

Where does the money usually leak?

Almost every licence review finds the same five things. Leavers whose licences were never removed, often because nobody wanted to lose their email. Team addresses such as info@, accounts@ or bookings@ set up as full licensed users. Everyone on Business Premium, including staff who only use email and Teams on a phone. Duplicate products: a separate antivirus, device management tool or backup product doing a job Premium already does. And monthly-term subscriptions that were only meant to be temporary.

None of these is dramatic on its own, but they add up. In one licence review we carried out, a client was paying about £350 a month for licences and products they didn't need.

Which email addresses actually need a licence?

Only people who sign in need a licence. Everything else can usually be free.

Microsoft's rules are specific. A shared mailbox needs no licence up to 50 GB, but it needs one (Exchange Online Plan 2, or Plan 1 with the Exchange Online Archiving add-on) if it grows beyond 50 GB, needs an online archive, or has to go on litigation hold (preserved unchanged for legal reasons). Everyone who opens the shared mailbox needs their own licence. Anyone logging directly into a shared mailbox with its own password is a security risk anyway; access should come through each person's own account, with MFA.

How do you run a licence audit?

It takes about an hour in the Microsoft 365 admin centre, and you only need global or billing admin rights.

1. List what you pay for. In Billing, then Your products, note each subscription, the number of licences bought, the number assigned, the renewal date and whether it's annual or monthly.
2. Find unassigned licences. Bought but not assigned is pure waste. Reduce the count at renewal, or immediately on a monthly subscription.
3. Find inactive users. Use Reports, then Usage, to see who hasn't signed in or used email, OneDrive or Teams in 30 to 90 days. Check each one: leaver, long-term absence or a team address.
4. Deal with leavers properly. Convert a leaver's mailbox to a shared mailbox (under 50 GB) so colleagues keep the email, move their OneDrive files to SharePoint, then remove the licence. Once a licence is removed, Microsoft keeps the data only for a limited period before deleting it, so convert first.
5. Right-size each person. Put desk staff who need desktop Office on Standard or Premium, and staff who only use email and Teams on phones or browsers on Basic. You can mix plans in one tenant (your organisation's Microsoft account).
6. Line up renewal dates. Note when each annual subscription renews, so you can reduce quantities and switch billing at the right moment.

Should you pay annually or monthly?

There are three ways to pay, and the difference is now meaningful.

A monthly-term subscription can be cancelled or reduced at any time, but Microsoft's UK prices for it are 20% higher than the annual plan paid yearly (Business Premium is £20.28 against £16.90). An annual commitment paid yearly is the cheapest, but you're committed to the number of licences for the year: you can add licences, but you generally can't reduce the count until renewal (apart from a short cancellation window, seven days on Microsoft's own site). An annual commitment paid monthly spreads the cost, but since 1 April 2025 Microsoft has priced it 5% higher than paying upfront, applying at each new purchase or renewal.

The practical answer for most businesses: put your stable core headcount on annual commitments paid yearly, and keep a small number of monthly-term licences for seasonal staff, contractors or growth you're not sure about.

Example: a 20-person business on Business Premium. Twenty licences on monthly terms cost £405.60 a month; on an annual commitment paid yearly, £338 a month equivalent. That's £811 a year saved on list prices. Move four email-only field staff to Business Basic and remove two leavers, and the bill falls to about £258 a month, or roughly £1,770 a year less than the monthly-term starting point.

What about charities?

Charities should check Microsoft's nonprofit offers before paying commercial prices. Microsoft ended the free Business Premium grant on 1 July 2025, but eligible charities can still get Business Basic free for up to 300 users and discounted paid plans. Our Microsoft 365 for charities chapter covers the detail.

What we see in licence reviews

Indigo is a Microsoft Solutions Partner for Modern Work and has completed more than 100 Microsoft 365 migrations. In our reviews, the saving rarely comes from switching supplier. It comes from housekeeping nobody owned: licences following leavers out the door and shared addresses set up as users. The same review usually finds security settings that were never switched on, which matters more than the saving.

How Indigo does this. A Microsoft 365 licence review is part of every Indigo technology assessment, run from our Glasgow office. We check assigned against used licences, convert leavers and team addresses to shared mailboxes, match people to the right plan and move charities onto nonprofit licences. Our Platinum package includes Microsoft 365 Business Premium. Book a free technology assessment →

What to do next

1. Open Billing in the Microsoft 365 admin centre and write down every subscription, licence count, renewal date and billing type.
2. Run the usage report and list everyone inactive for 30+ days.
3. Convert leavers and team addresses to shared mailboxes before removing their licences.
4. Plan your next renewal: right-size plans and move stable users to annual billing.
5. While you're cutting costs, have your business mobile bill reviewed too, or book a free technology assessment.