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7 Ways to Save on Microsoft Office 365 License Costs

how to save on Microsoft office 365 licenses
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Proven Strategies to Lower Your Microsoft 365 Licensing Expenses

Microsoft 365 with its phenomenal collaboration tools and seamless accessibility provides a profitable ROI. However, with the recent increase in the pricing of Microsoft 365 and “hidden costs” associated with data storage upgrades and add-on tools, the Total Cost of Ownership (TCO) can far exceed the original forecast. In this blog, tailored for admins, CSOs, MSPs, and business owners looking for ways to bring down the cost of Microsoft 365, we detail seven cost saving measures. Implement these proven pointers to reduce your Microsoft Office 365 license costs and increase your ROI..

How to Save on Microsoft (Office) 365 License Costs?

#1 Opt for Annual Billing

Opting for annual billing can be an excellent strategy to cut down on your Microsoft 365 license costs. Microsoft often provides significant discounts for customers who choose annual subscriptions over monthly ones. The cost savings over the year can be substantial, especially for businesses with a larger number of users. Here are the steps to switch to annual billing:

  1. Visit the Microsoft 365 Admin Center: Log in to your Microsoft 365 admin center with your admin account.
  2. Navigate to the Billing Section: On the left-hand navigation pane, click on ‘Billing’, and then on ‘Subscriptions’.
  3. Select Your Subscription: In the subscription list, find the subscription you want to change to annual billing.
  4. Switch to Annual Billing: Click on ‘Billing’, select ‘Change how you pay’, then choose ‘Annual’. Follow the prompts to confirm the changes.

Remember, this change will take effect at the start of your next billing cycle, and the entire annual amount will be charged upfront. Consider your organization’s cash flow and budgeting before making the switch. Plan ahead and opt for annual billing.

#2 Choose the Right Plan to Save on Microsoft 365 License Costs

Choosing the right Microsoft 365 plan for your business is another effective way to manage your license costs. Microsoft offers a variety of plans designed to meet the needs of different business sizes and sectors, each with its own price point and set of features. Understanding your organization’s needs and usage patterns is pivotal to selecting the most cost-effective plan. Here’s how to do it:

  1. Assess Your Needs: The first step is to assess the needs of your organization. Determine which applications and features are essential for your daily operations. Also, bear in mind the growth plans and future needs of your business.
  2. Compare Microsoft 365 Plans: Review the different Microsoft 365 plans available. Compare their features, limitations, and prices. Microsoft provides a detailed comparison chart that you can use for this purpose.
  3. Choose the Right Plan: Based on your needs and comparison, choose the plan that best fits your organization. If you have a small team and do not require advanced features, a basic plan might suffice. On the other hand, larger businesses with complex needs might benefit from a more robust plan.
  4. Periodic Review: Finally, your business needs might change over time. Therefore, it’s essential to periodically review your plan and make any necessary adjustments to ensure that it continues to align with your business needs.

Remember, the goal is not to find the cheapest plan but to find the most cost-effective one that fulfills your needs without incurring unnecessary costs.

#3 Monitor and Manage License Types

Regularly review your Office 365 licenses and usage. In particular, check on Power apps, higher-tier licenses, external users, and flows that require a premium license.

Power Apps

The usage of premium features in Power Apps necessitates a premium license. Always verify your app’s components and their corresponding licensing requirements before deployment. Here’s how to identify the situations in which a premium license would be required:

  1. Premium Connectors: Power Apps comes with over 300 connectors, including commonly used ones like Excel, SharePoint, and Office 365. However, some connectors like Salesforce, Common Data Service, and SQL Server are considered premium and require a premium license to use.
  2. On-Premises Data Gateway: If you’re using the On-Premises Data Gateway to connect your Power App to an on-premises database, this would require a premium license.
  3. Common Data Service: Using Power Apps to create or run apps that are based on the Common Data Service or use premium entities would require a premium license.
  4. Administrative Actions: Activities like creating environments, databases, and other administrative actions in Power Apps demand a premium license.