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.
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.
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.
Last updated 6 March 2026
