Nobody budgets to waste money on software. And yet, for the vast majority of organisations we work with, that’s exactly what’s happening; quietly, automatically, and at scale.
Microsoft licensing is complex by design. There are hundreds of SKUs, various license programs (EA, SCE, MPSA, CSP), perpetual or subscription licenses, product bundles where half the features go unused, and a renewal cycle engineered to move fast. Most IT and finance teams are managing it on the side of a desk, without dedicated tools, and under time pressure.
The result? Overspend. Consistently. Often significantly.
Here’s where it’s actually happening, and what you can do about it before your next renewal lands.
See our previous article – Your Microsoft Reseller Is Not on Your Side
The licenses nobody’s switched off
This is the most common, and most avoidable source of waste we find.
An employee leaves. HR updates the org chart. IT disables the Active Directory account. But the Microsoft 365 or even Adobe license? It keeps renewing. Nobody owns the process of catching it, so nothing gets removed.
In a 300-person organisation with typical staff turnover, this can mean 20 to 30 licenses paying out every month for people who no longer work there. At £45 per license per month for a M365 E5 plan, that’s potentially £10,000 to £16,000 a year, gone.
We call these ghost licenses. They’re almost universal. And they’re entirely fixable with a proper leaver process and a quarterly license audit.
E5 features your team isn’t using
Microsoft 365 E5 is the premium tier (without Copilot / M365 E7) advanced security, compliance tools, Power BI Pro, audio conferencing, and more. It is a significant cost increase to what the M365 E3 does.
For organisations that fully use those features, E5 is worth it. But in our experience, a significant number of E5 licenses are assigned to users who simply don’t need them or whose E5 features were never switched on in the first place. We’ve seen E5 licenses assigned to generic accounts that only need basic email.
Before your next renewal, it’s worth asking: can you demonstrate that every E5 seat is actually being used at E5 level? If someone is using E5 for email and Teams, they’re an E3 user paying E5 prices.
Downgrading even 20% of your E5 estate to E3 can generate six-figure savings on a large deployment. That’s real money, returned to the business, with no change to how anyone works.
But be careful, some of the E5 features are switched on at the Tenant level. If no policies are in place to restrict who benefits from this, then downgrading to an E3 license could cause a compliance issue. There are some tools that may show this as a potential cost saving, but understanding the license compliance rules is important.
The duplicate license trap
It happens more than you’d think.
A user gets assigned M365 E3 as standard. A project kicks off that requires E5 features. IT upgrades them. The project ends, but nobody removes the E3 so now they’re running E3 and E5 simultaneously.
Or: an admin account gets a full E3 license for convenience, even though it only needs Exchange Online Plan 1. Or a shared mailbox, which technically requires no license under Microsoft’s rules, has been assigned a paid subscription anyway.
These aren’t signs of poor IT teams. They’re signs of a license estate that’s grown faster than the processes around it. It happens to everyone. The fix is visibility, knowing exactly what’s assigned, to whom, and why.
The Microsoft Admin portal doesn’t prevent duplicate licenses being assigned to the end user. It is important to review the license assignments on a regular basis.
Renewals signed in a hurry
Here’s one that costs organisations money every single year, and it’s baked into how the channel works.
Your reseller sends your renewal quote. It arrives close to the deadline, close enough that switching providers, renegotiating terms, or right-sizing the contract feels impossible. So you sign. Maybe you get a small discount that feels like a win. And then the cycle repeats next year.
The problem isn’t the discount. The problem is that the quote was never benchmarked against the market, and the license count was never challenged. You’re renewing on the same numbers as last year, plus or minus a few headcount adjustments, without ever asking whether the underlying mix is right.
The organisations that get the best Microsoft pricing are the ones that start the renewal conversation 6 to 9 months early, with a clear picture of their estate and quotes from multiple reseller channels. That’s not complicated. It just requires someone doing it.
This applies to perpetual licenses as well, especially Windows Server. Have you moved to Azure and still paying for Windows Server Datacenter licenses? If so it is time to reassess what you need and look closely at the options.
Azure: the fastest-growing line nobody’s controlling
For many organisations, Azure spend has overtaken on-premise licensing as the biggest software cost in the business. And unlike a fixed EA contract, Azure bills you for what you use, which means costs can drift upward month by month without anyone noticing until the invoice arrives.
The most common sources of avoidable Azure spend we see:
**Dev/test environments running at production pricing.** Non-production workloads qualify for significantly reduced Azure pricing, but only if the correct subscription is used which can’t be purchased via a CSP.
**Zombie resources.** Virtual machines spun up for a project, never decommissioned. Storage accounts nobody’s using. Public IP addresses assigned to nothing. These cost money every day they sit there.
**No Reserved Instances.** If you’re running consistent workloads, paying on-demand pricing is the most expensive option. Reserved Instances and Savings Plans can cut those costs by 30–50%, in exchange for a one or three-year commitment. Many organisations never make that switch because nobody’s had the conversation.
**Azure Hybrid Benefit unclaimed.** If you have on-premise Windows Server or SQL Server licenses with Software Assurance, you’re entitled to run equivalent workloads in Azure at reduced cost. This is one of the most consistently overlooked benefits in Microsoft licensing, and one of the most valuable. It is important to complete an internal check to validate you have the right number of licenses for your Hybrid Benefit VMs, remembering each VM must be licensed for a minimum of 8 cores with all cores covered.
The second-hand market: a legitimate option most resellers won’t mention
Here’s something worth knowing: within the EU and EEA, it is completely legal to purchase second-hand Microsoft licenses. The Court of Justice of the European Union confirmed this in the landmark UsedSoft v Oracle case in 2012 — software vendors lose exclusive distribution rights once a license has been sold, allowing for resale even for downloadable software.
Why don’t resellers talk about it? Because they make margin on new licenses, not pre-owned ones.
Second-hand licenses work exactly like new ones, no degradation, no restrictions, no expiry on the license itself. The main consideration is due diligence: requesting transfer statements, original invoices, and serial-number logs to confirm the chain of ownership. Done properly, this is a legitimate route to significant cost reduction, particularly for perpetual licenses.
What about those Microsoft perpetual licenses that are no longer required? The on-premise infrastructure that has gone that was licensed with Windows Server Datacenter. These licenses may have a value that you could recover.
What a proper license review actually looks like
A Microsoft license review isn’t a procurement exercise. It’s a forensic look at your software estate, what you’re paying for, what you’re using, and what the gap between those two numbers costs you.
At The SAM Club, we approach it in four stages:
**Discovery.** Using tools like Licenseware, we map your actual software deployment, devices, users, assigned licenses, active features — against your contractual entitlements.
**Optimisation.** We identify where you’re over-licensed, where you could downgrade, where ghost licenses are sitting, and where bundled features are going unused.
**Benchmarking.** We go to market with your renewal requirements and get competitive quotes from multiple channels, including options your current reseller may never have offered.
**Ongoing management.** For clients who want it, we provide continuous license management: tracking renewals, managing the leaver process, monitoring Azure spend, and making sure the savings we find don’t quietly creep back in.
How The SAM Club has successfully saved our clients’ money:
- How The SAM Club Saved law firm £200K on Microsoft Licensing
- How We Helped a Law Firm Save £160k on Microsoft Licensing
The July 2026 price increase makes this urgent
Microsoft has confirmed a broad commercial price increase for Microsoft 365 and Office 365 subscriptions, effective 1st July 2026. It will affect virtually all business plans, SMBs through to large enterprises.
If your renewal falls anywhere near that date, the window to right-size your estate, negotiate terms, and explore alternatives is closing. The organisations that act now will renew on accurate, optimised license counts. The ones that wait will renew at higher prices on numbers they haven’t questioned.
This doesn’t have to be complicated, but there is a deadline.
The SAM Club: independent since 2014
We’ve been working with organisations across the UK to manage their software assets since 2014. We’re not a reseller. We don’t sell licenses. We don’t have quotas to hit or vendor targets to meet.
What we do is give you an honest, expert view of your software estate and then help you do something about it.
Whether you need a one-off Microsoft license review before a renewal, an ongoing managed SAM service, or help navigating an unexpected audit, we build the service around what you actually need.
If your next renewal is coming up, or you’re simply not sure whether your software estate is as well-managed as it should be, it costs nothing to find out where you stand.
Get in touch at thesamclub.co.uk, connect with us on LinkedIn or email us at info@thesamclub.co.uk
The SAM Club Limited has been providing independent software asset management services since 2014. We work with organisations across accountants, finance management, legal, insurance and property consultancy.