Microsoft 365 costs rarely become confusing overnight. A few new employees join, a project needs an extra tool, and someone buys another subscription. Months later, the invoice makes sense to the billing system—but nobody can explain whether the business still needs everything on it.
A licence audit brings those decisions back into view. Its purpose is to match spending to work, security requirements, and contractual obligations.
Start with three different numbers
Record how many seats you have purchased, how many are assigned, and how many are actively needed. These numbers answer different questions.
An unassigned seat might be unnecessary, or it might be reserved for a confirmed new hire. An assigned seat might belong to a departed employee. A low-activity account might support an essential process that runs only occasionally.
Create an inventory with these fields:
- Product and exact subscription variant.
- Purchased and assigned quantities.
- Business owner and intended users.
- Commitment end date and billing frequency.
- Current cost and supplier.
- Proposed action, approval owner, and earliest effective date.
Reconcile this inventory with invoices and your employee list. Include subscriptions bought outside the main procurement process.
Use activity as a starting point
Review usage over a representative period, then ask managers to confirm what their teams need. A quiet holiday month is weak evidence for removing a licence. So is infrequent use of a tool that supports a critical quarterly task.
Look for repeated patterns: departed employees, duplicate purchases, trials that became paid subscriptions, and products retained after a project ended. For each finding, record why the subscription exists before deciding what to change.
Check capabilities before reducing spend
A higher-tier licence can provide controls that matter even when the user rarely opens a desktop application. Review security, device management, retention, and application requirements alongside activity.
Likewise, two products with similar descriptions may serve different workflows. Ask the owner to demonstrate the actual requirement. The question is whether the second subscription provides a needed capability that the first cannot deliver in your environment.
Separate licence assignment from subscription quantity
Removing a licence from a user is not the same as reducing the number of seats being purchased. Billing follows the subscription and its terms.
Microsoft’s new commerce policies include defined cancellation and adjustment windows. Plan changes around the applicable offer and renewal rather than treating unused seats as immediately cancellable. Review Microsoft’s current cancellation policy.
Before removing access, confirm who needs the person’s files and mailbox, how information must be retained, and which applications depend on the account. Have the administrator follow the relevant offboarding process; an audit spreadsheet is not a deletion instruction.
Turn findings into a renewal plan
Consider this illustrative example: a company pays for 40 seats and finds five unassigned. Two are needed for approved hires. The remaining three become candidates for reduction at the next permitted opportunity.
The potential saving is three seats multiplied by the applicable unit price and remaining future billing periods after the change takes effect. It is not five seats, and it is not an automatic refund.
Classify each finding as keep, investigate, reassign, or change at renewal. Schedule the review early enough for managers and procurement to act before deadlines.
Make the next audit easier
Assign one owner to maintain the inventory and review it regularly with finance and IT. Record subscription changes as they happen, and make licence review part of employee onboarding and offboarding.
Cover illustration: Dmitrii Vaccinium / Unsplash.
Guava can help you discuss the products and purchasing options that fit your requirements. Explore Guava’s Microsoft product collection, then bring your renewal dates and current subscription list to the conversation.
