UNDERSTANDING MICROSOFT LICENSING
While bundled minutes are included with many plans, once those thresholds are exceeded, additional domestic and international minutes are billed on a per-minute basis. Similarly, Audio Conferencing dial- in is covered by licensing, but dialing out to add participants incurs metered charges. Pay-as-you-go PSTN usage also applies when using Direct Routing or Operator Connect if billing is handled through Microsoft. Another category of consumption charges is tied to Azure and security services that integrate with Microsoft 365 . For example, Defender for Cloud Apps and Defender Vulnerability Management can create incremental costs if additional assessments or high volumes of app activity are monitored. Microsoft Sentinel is also tightly linked to 365 security and compliance logging. If an organization chooses to ingest Microsoft 365 audit and security logs into Sentinel, Azure billing applies for both log ingestion and long-term retention, making it a significant variable expense. (Customers with certain premium licenses, such as Microsoft 365 E5, E5 Security, or A5, receive a data grant benefit, which covers the cost of ingesting a certain amount of data from specific Microsoft sources into Sentinel each day.) Storage and archiving represent another area where consumption billing is triggered. Exchange Online Archiving provides an included archive mailbox quota, but if more capacity is needed, extra storage is billed on a per-gigabyte, per-month basis. The same applies to SharePoint Online and OneDrive, where each tenant receives a pooled storage allocation and overages are billed monthly. Microsoft Purview compliance features such as eDiscovery and long- term retention can also generate additional costs when large volumes of data are collected, stored, or exported.
The Power Platform services are another key source of variable billing. Power BI Premium is generally sold as a dedicated capacity license, but autoscale capacity—used during spikes in usage—is charged on a pay-as-you-go basis. Power Automate workflows that exceed the base allocation of API calls also drive incremental charges, as do Power Apps using the pay-as-you-go model. AI Builder credits, used in both Power Automate and Power Apps, are consumed based on the number of operations performed and can lead to additional billing through Azure. Finally, newer AI and Copilot services can introduce usage-based charges depending on the scope of deployment. Copilot Studio, which evolved from Power Virtual Agents and AI Builder, includes a base set of entitlements but bills extra sessions, API calls, and advanced AI workloads on a consumption basis. Similarly, Copilot extensibility through custom connectors or plugins may invoke underlying Azure billing when external compute or APIs are used. Even traditional services like Project, Visio, and Teams Rooms are generally flat-licensed, but their reliance on SharePoint or Azure for storage, telemetry, or monitoring means they can indirectly lead to additional storage or compute charges. Taken together, the main drivers of Microsoft 365 consumption billing are telephony minutes, extra storage, log ingestion and retention, Power Platform and AI capacity, and certain advanced security and compliance workloads. Organizations should keep a close eye on these categories when forecasting costs, since they extend beyond the predictable per-user licensing model.
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