Collaboration Governance Cloud Management & Strategy

How to save a fortune on M365 storage

Matthias Einig 18 September 2024 4 min read

Microsoft 365 storage is a bill that grows on its own: your people create content every day, nobody deletes it, and the overage charge arrives whether or not anyone can say what is in it or who owns it. The lifecycle discipline that brings that bill down, knowing what exists, who owns it, and what can go, is the same discipline that makes the rest of your Microsoft investment pay: Forrester’s Total Economic Impact study puts the ROI of Microsoft 365 Copilot at 116% once the program is adopted and governed.

We are collaborating faster and collecting and storing vast amounts of data at an incredible rate, cloud computing offers us that luxury. For organizations, data handling comes with many well-publicized costs. All processes since 2018 are under GDPR scrutiny, with potential breaches carrying cost penalties that could sink any business. I cannot imagine any business professional who hasn’t heard of it.

But what about the more incremental hard costs like storage, which stack up daily and can end up costing your organization a fortune month after month. Where does the accountability lie? You may be reading this article thinking, “Oh goodness, this article is for me!” Or you know of a colleague who has this exact problem. Well, this article will provide a solution.

The Great M365 Storage Cost Challenge

Enterprises face several challenges due to high Microsoft 365 storage costs, particularly when their storage needs exceed the default allocations in their subscription plans. In this all too common case, the company is incurring significant expenses due to the following factors:

Base Subscription Costs

The company has 100 E3 licenses at $19 per month each, totaling $1,900 per month. E3 licenses include certain features and a set amount of storage, but as the company’s storage needs grow, these base costs can quickly be overshadowed by additional storage fees.

Extra Storage Costs

Once the initial SharePoint storage provided with the E3 licenses was exceeded, the company had to purchase additional storage. At $0.20 per Gigabyte (GB) per month, the cost for 5000 GB of extra storage amounts to $1000 per month.

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Enterprise Mobility + Security E5 Costs

The company also subscribes to Enterprise Mobility + Security E5 for 100 licenses at $14.80 each per month, adding another $1,480 to the monthly bill. This service provides advanced security features, which are essential for a financial company but add to the overall cost.

Data Growth and Compliance

The company’s employees create new content daily, requiring access to both new and archived data. Features like versioning, retention, and legal hold for compliance purposes contribute to data growth, which in turn increases the need for more storage.

Total Costs

The combined costs of E3 licenses, extra storage, and Enterprise Mobility + Security E5 licenses result in a monthly bill of approximately $4,280, or over $51,000 annually. This equates to more than $500 per user per year, which can be a substantial expense for any organization. Total costs in this case are based on 100 users.

How do you solve the problem?

To address these high storage costs, enterprises can explore alternative solutions such as:

Data Cleanup: Regularly review and clean up unnecessary files to free up space.

Archiving Solutions: Use alternative archiving solutions that may be more cost-effective.

License Use: Identify and rectify overlicensed users and unused licenses, and redistribute correctly.

By considering these alternatives and managing data more efficiently, enterprises can potentially reduce their Microsoft 365 storage costs. However, you may consider an alternative solution to save a substantial amount, especially if you have tens of thousands of users and Terabytes of extra data piling up on top each month.

How M365 Governance helps save money

If you are experiencing out-of-control storage and costs at scale, I strongly recommend adopting a no-code, easy-to-use cloud collaboration governance tool capable of handling extremely high M365 storage usage. Rencore Governance is the only solution meeting this specification.

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Specifically, the Rencore Governance SharePoint and OneDrive file scan add-on, combined with the deep service inventory engine, the compliance centre, and automated policies, shows you what every site and library actually holds, who owns it, and what can go. That is the Digital Workplace module doing the work your storage bill has been paying for, and it complements and extends Microsoft Purview and the Microsoft 365 admin centre rather than replacing them, so what reaches your CFO is a cost line you can attribute and defend. Automate collection, reporting, and actions to rectify storage costs today and potentially save millions.

As an extra resource to get you started on your cost-saving journey, download and share our FREE M365 cost-saving checklist and make someone’s day a lot easier.

Get free cost checklist

Common questions on this

What does extra Microsoft 365 storage actually cost?

Additional SharePoint storage is sold per gigabyte per month, at a list rate around 0.20 US dollars per GB. That sounds small until it is the only line growing every month: 5,000 GB of overage is roughly 1,000 US dollars a month, or 12,000 a year, for content nobody has looked at. Your included pool also grows with the number of licences you hold, which is why a licensing change and a storage bill are never separate conversations.

What is actually filling our tenant storage?

Rarely the files people remember creating. The usual order is version history on frequently edited documents, retained and legally held content that cannot be deleted, first and second stage recycle bins, Teams meeting recordings, and the OneDrive accounts of people who have left. None of that shows up as a user complaint, which is exactly why it compounds. Measure by site and by library before you decide anything, because the intuition about where the volume sits is usually wrong.

If we delete files, does the space come back straight away?

No, and that surprises most cleanup projects. Deleted content sits in the site recycle bin and then the second stage bin for up to 93 days in total and keeps consuming your quota the whole time. Anything covered by a retention policy or a legal hold is preserved regardless of deletion, so it never leaves at all. Plan a cleanup on a quarter, not on a weekend, and check what is on hold before you promise a number to finance.

What happens to the OneDrive of someone who leaves the company?

It is retained after the account is deleted, 30 days by default and far longer if your policy says so, and it keeps consuming tenant storage throughout. Access is normally handed to the manager, who in practice rarely looks at it. The question worth asking at offboarding is not whether the data is safe, it usually is, but who now owns it and what should happen to it. Without a named owner it becomes storage you pay for permanently because nobody is allowed to decide.

Does Microsoft Purview already solve this?

It solves part of it. Purview retention and lifecycle policies delete content on schedule, preserve what regulation requires, and give you the compliance record for both. What Purview does not tell you is who owns a given site, whether anyone has opened it in two years, which department the storage bill belongs to, or which of your largest libraries are safe to archive. Those are ownership and cost questions. Rencore Governance answers them alongside Purview and the Microsoft 365 admin center rather than replacing either, so the number that reaches your CFO can be attributed to a team.

Is archiving cheaper than buying more storage?

Usually yes for content you have to keep but nobody reads, since archived data bills at a lower per-gigabyte rate than active storage. Two conditions decide whether it pays. Reactivating archived content carries its own charge, so archiving something a team still uses weekly can cost more than leaving it. And archiving what should have been deleted just moves the problem to a cheaper shelf. Decide what can go first, then archive the remainder.

Last updated 6 March 2026

About the author

Matthias Einig

Matthias is a former 10-year Microsoft MVP, co-founder, and CEO at Rencore. His mission is to help enterprises stay in control of their Microsoft collaboration technology. Matthias and his team achieve this by providing insights, advice, and actionable ways to manage platform growth. Matthias is speaking at many conferences and community events all over the world and is one of the organizers of the European Collaboration Summit.