What are you really paying for? A plain-English guide to M365 storage costs
Microsoft charges storage in three different ways depending on where the file lives. Here is exactly what each byte costs in 2026, and where finance teams tend to lose track.
Every Microsoft 365 tenant has three separate storage meters. Most IT directors we talk to know one of them well, are vaguely aware of the second, and have never seen a line item for the third. That is why "our M365 bill went up again" so often feels inexplicable.
The three storage meters
When you buy a Microsoft 365 subscription — say Business Standard, Business Premium or an E3 — each user account comes with an included quota for each of these:
- SharePoint Online — pooled at the tenant level (1 TB base + 10 GB per licensed user).
- OneDrive for Business — per user (1 TB or 5 TB depending on the SKU).
- Exchange Online — per mailbox (50 GB or 100 GB depending on the SKU, plus a separate Recoverable Items quota).
You pay overage on each independently, at different rates, on different meters. That is the first source of confusion.
The 2026 overage rates
- SharePoint / OneDrive additional storage — $0.20 per GB per month (public list, before any EA discount).
- Exchange In-Place Archive — included with the archive-enabled plans up to 100 GB, auto-expanding thereafter.
- Teams recordings — count against OneDrive (owner) or SharePoint (channel meetings). Not a separate bill line, but they eat quota fast.
On a 500-seat tenant, going 5 TB over your pooled SharePoint quota is a bill of $1,000 a month — $12,000 a year, before you even talk about the same overage on OneDrive. And most tenants we scan are 20-40% over-provisioned on files nobody has touched in three years.
Where finance loses track
The three meters roll up under a single "Additional storage" line on the Azure invoice, so unless someone in IT is looking at the M365 admin storage report every month, the growth is invisible until quota alerts start firing.
Our recommendation is to give whoever owns the M365 budget a monthly one-pager: total consumed vs entitled, per workload, with the reclaimable delta. TSO produces exactly that PDF automatically. Even if you never delete a byte, having the number visible changes behaviour.