Most businesses running Microsoft 365 are likely paying for more accounts than they use. Not through any big fault of their own, it just happens quietly: someone leaves and their licence stays assigned, a hiring round gets two extra seats bought too early, or a team trials an add-on and never cancels it. A Microsoft 365 licence audit brings all of that back into view, and for most businesses it only takes a few hours.
What you’ll be checking, in short:
- Purchased licences versus assigned licences
- Inactive users still holding a paid seat
- Orphaned accounts from staff who have left
- Staff on a higher plan than they need
- Add-ons that duplicate what your Microsoft 365 plan already includes
Why a Microsoft 365 licence audit is worth doing
Licences are sometimes bought in a hurry, during onboarding, a restructure, or a rushed renewal, and rarely reviewed again until the bill goes up. A proper audit does two things at once:
- Cuts cost: it helps you identify where you may be able to reduce Microsoft 365 costs.
- Cleans up access: it gives you an accurate picture of who has access to what, which matters for security as much as spend.
Before you start, check your access: you’ll need Global Administrator or Billing Administrator permissions to see these screens. If you’re not sure whether you have this, ask whoever set up your Microsoft 365 subscription to check or grant you temporary access.
Step 1: Compare purchased licences against assigned licences
Where to look: Microsoft 365 admin centre, under Billing, then Licences.
This screen shows how many of each licence type you own and how many are assigned to a user. Any gap between the two is a seat you’re paying for and not using.
- Note the purchased total and the assigned total for each licence type
- Any unassigned seats are pure waste, and the fastest win in the whole audit
- Usually takes minutes to spot
Step 2: Find inactive users
Where to look: Reports, then Usage.
This report shows sign-in and activity data for each licenced user over the last 7, 30, 90 or 180 days.
- Flag anyone with no recent Outlook, Teams, or SharePoint activity
- Cross-check flagged names against your HR records before making changes
- An odd quiet month doesn’t always mean the account is redundant, so confirm before removing anything
Step 3: Spot orphaned accounts from departed employees
Where to look: Users, then Active Users, sorted by last sign-in date.
Offboarding checklists rarely include a licence removal step, so accounts belonging to staff who left months or years ago often stay licensed.
- Each orphaned account is a full monthly cost for nobody
- If the account holds files or a mailbox someone still needs, convert it to a free shared mailbox first
- Remove the licence once the mailbox or files are secured
Step 4: Check for over-licensed staff
Not every user needs every available add-on.
- Compare each person’s licence against their role, not just how they happen to use their computer on a given day
- For most organisations, Business Premium is the right baseline recommendation for anyone working on a computer, with F3 or F1 reserved for staff whose role doesn’t require one
- Check for Project, Copilot, or similar add-on licences still assigned to people who’ve stopped using them
Step 5: Look for duplicate add-ons
Standalone security, backup or email filtering tools bought separately sometimes duplicate capability already included in your Microsoft 365 plan.
- List any third-party security, backup or filtering subscriptions due for renewal
- Check what your current Microsoft 365 plan already includes before renewing them
How long does a Microsoft 365 licence audit take?
For a small business, this can take only a few hours of admin work. Larger or more complex environments will take longer, particularly if usage data needs cross-checking against HR records.
Get a Microsoft 365 licence review from Revolution IT
If you’d rather have someone else run the numbers, our Microsoft 365 consulting team can assist with a licence review. We’ll check your licensing, security settings, and plan mix, and give you some practical advice before your next renewal.
Get in touch with Revolution IT to book your review.
Auditing Your M365 Licences FAQs
It’s a review of every Microsoft 365 licence your business pays for, checking who it’s assigned to, whether it’s being used, and whether the plan level still matches what that person needs.
It depends on how long it’s been since your last review, but unassigned seats, orphaned accounts, and over-licensed staff are common findings for most businesses that haven’t audited before.
Reviewing once a year is good housekeeping, plus a quick check whenever staff numbers change significantly.
Most of the audit, like spotting unused and unassigned seats, can be DIY if you have admin access. In practice, many businesses don’t hold this admin access themselves, since it’s usually kept with their IT provider as part of keeping the tenant secure. Where that’s the case, steps like reassigning mailboxes for departed staff or confirming which advanced features are in use are best handled by your IT support.
