The Rising Costs Of Microsoft Teams 

Costs of microsoft teams

For a free tool, Microsoft Teams sure is getting expensive. 

In fact, as I’m sure a lot of you have spotted, Teams is no longer free.  

When bundled with Microsoft 365, offered free to schools, and available as a free personal account, Microsoft Teams had fast become the most used collaboration app in the world. It remains so today. But at what cost? 

Aided by both the coronavirus pandemic and its clever packaging as part of the 365 suite, it can’t be a surprise to any onlooker that the Teams figures massively outweigh that of its nearest competitors (Webex, Zoom, Google, Slack, et al). 

In this blog post, we’ve included an estimated average spend for a 1,000-user business. Please do bear in mind that this is an estimate based on experience and sample data. Not every business will be the same.  

Coming in at £3.30 / $4 per user per month for the Essentials plan, that’s already an unplanned and unbudgeted $48,000 per year for access to what you thought was your free collaboration tool. 

Now, the wisest of procurement folks may have advised that the freemium or packaged tool that hundreds of millions of users access every day would become its own line item. But honestly, it was “free” for so long that you can’t blame anybody for enjoying the ride. 

In fact, it may still be free today had Slack’s filing for antitrust against Microsoft not been successful. Petitioning that Microsoft had unfair advantage in the collaboration market, Slack’s appeal meant that Microsoft must unbundle Teams from its 365 suite and charge it as its own standalone line item. 

Of course, Teams is still very much part of the 365 package. Its integration with the rest of the already world-dominating productivity tools is one of the biggest reasons for continued Teams adoption. 

So, we must kick off the rising and once upon a time hidden (to some) costs of Microsoft Team here.  

1 – The core Teams license 

The core Teams license is no longer free, despite the core product you depend on for meetings, chat, and even calling being part of a bundle of other tools you already pay for. 

Core Microsoft Teams license is no longer free

There is no way around this for businesses. You must pay for the core Teams license. 

The only remaining free version of Teams is for home users. 

This grants you access to: 

  • Free 1:1 calls between Teams users for up to 30 hours.  
  • Free group calls and meetings for up to 60 minutes.  
  • Up to 100 participants per meeting.  
  • 5 GB of cloud storage per user.  
  • Chat with friends, family, and contacts in quick and easy conversations.  
  • Communities for more collaboration in your groups and engagement with your audience.  
  • File sharing, tasks, and polling.  
  • Data encryption for meetings, chats, calls, and files.  
  • Anytime chat customer support. 

Now, you might be thinking this is all you need for your business. If you do choose to go down this route, proceed with extreme caution. Just because it’s free today doesn’t mean it’s free forever.  

Likewise, there is nothing contractual to state that all this functionality will remain free or available in the free tier for any period of time. Speaking of contractual, Microsoft specifies with most of its products that home products must not be used in commercial settings. 

It doesn’t often pay to cut corners.  

  • Average spend for a 1,000-user business: $48,000 per year. 
  • Total cumulative spend: $48,000 per year. 

2 – Teams Premium 

In February 2023, Microsoft announced Teams Premium to introduce enhanced features in the following categories: 

  • Meeting customization 
  • Meeting protection and security  
  • Meeting AI and reporting  
  • Webinars 
  • Virtual appointments 

This includes features like meeting lobbies, eCDN, translatable live captions, and even post-appointment follow-ups, to name but a few. 

Aimed at businesses that run lots of and large meetings, Teams Premium turns your collaboration suite into a webinar, broadcast, and patient portal all-in-one. This benefits those who were previously managing multiple apps for types of meetings that weren’t supported (or supported sufficiently) in Teams. 

Teams Premium Teams Standard 
An add-on to standard MS licenses Standalone or part of Microsoft Office, E, or F licensing 
Adds meeting customization  Core meeting functionality 
Adds meeting protection and security  Core chat and channels functionality 
Adds Meeting AI and reporting Core collaboration functionality 
Adds advanced webinar functionality On-net calling 
Adds virtual appointments Gateway to Microsoft PSTN calling 

Not every user needs a Teams Premium license. In many cases, it’s just the meeting/webinar organizer who needs to pay the elevated cost. 

As of September 2024, Teams Premium costs £5.80 / $7 on top of your existing core Teams license. 

  • Average spend for a 1,000-user business: $8,400 per year. 
  • Total cumulative spend: $56,400 per year. 

3 – Handsets and meeting room equipment 

Some businesses, mostly the smaller and more agile ones, opt for a device-free Team environment. They use their laptops for calls and meetings and catch up on chats on their personal mobile device. On the face of it, there are no extra costs associated here. 

But even those small agile businesses must shell out for webcams (unless their laptops have an elevated fee for having a significantly better than average built-in webcam) unless they’re okay with an inferior meeting experience. 

The Logitech Brio, for example, comes in at $140 and is a staple for remote meeting attendees. 

But what if you’re a large business with loads of meeting rooms? Or if you run a call center environment with headsets? And what about the use cases where handsets are still a superior experience to softphones? 

This hardware soon adds up. Albeit mostly one-off charges, there are business benefits to wrapping them up into monthly charges.  

Think about devices like: 

  • Speakerphones 
  • Desk phones 
  • Teams panels 
  • Headsets 
  • Teams room systems 
  • Room system accessories 
  • Webcams 
  • Monitors 

These costs will vary depending on bespoke business requirements but must always be factored in when budgeting. 

  • Average spend for a 1,000-user business: $50,000 per year. 
  • Total cumulative spend: $106,400 per year. 

4 – Shared device licenses 

In flexible working environments (think hot desks or multiple occupancy offices), you may have desk phones or meeting room systems where you can log in and use these when you book a room or workspace. 

To avoid everyone using the same phone number or the wrong people logging into each other’s meetings, you must buy a shared device license so each potential users gets a unique login. 

You need a license per device you wish to enable as “shared”. This is on top of the individual user already being licensed for Teams. A shared device license costs £$8 per month 

  • Average spend for a 1,000-user business: $2,400 per year 
  • Total cumulative spend: $108,800 per year. 

5 – Compliance call recording 

Not every business will need compliance call recording. But those who need to take payments in a PCI-compliant manner must first buy a third-party compliance license. 

When armed with this, they can then select a third-party call recording platform of their choice. This enables an admin policy to automatically record calls and meetings instead of relying on ad-hoc recording capabilities included as part of the core license. 

Once licensed for compliance recording, you can choose from a certified Teams third party call recording option: 

  • ASC Technologies 
  • AudioCodes 
  • CallCabinet 
  • Dubber 
  • Touch Call Recording 
  • Insightful Technology 
  • Luware 
  • Mida Solutions 
  • NICE Engage 
  • NICE NTR-X 
  • Numonix 
  • Oak Innovation 
  • Red Box 
  • Theta Lake 
  • Verint 

Now, you may have no need for compliance recording today. But you may in the future. Especially when you receive payments over the phone, staying within the guidelines for compliance is crucial to avoid financial penalties and damage to brand reputation. 

Ask whether this is something you should already have or may need in the future before dismissing the need for compliance call recording. 

  • Average spend for a 1,000-user business: $13,485 per year. 
  • Total cumulative spend: $122,585 per year. 

6 – Extra reporting and analytics 

Especially when you use Teams as your PBX, you’re going to want a base level of reporting. When we’re talking about businesses with 1,000 or more users or those who make or receive a high volume of calls (e.g. call centers or sales functions), key business decisions are made based on data and trends you need your PBX to provide. 

However, if you’re using Microsoft Teams for voice, your reporting capabilities are somewhat restricted.  

Sure, you get basic detail on usage. But you’d get that on an itemized invoice. It’s not the level of insight and analytical detail you can use to influence business decisions. 

And, when compared to other leading UCaaS providers, it’s rather shortcoming. 

To get detailed reporting and analytics, like those comparable to vendors with legacies in call reporting and who partner with AI-first companies to provide countless trend analysis and the likes, you’ve got to find (and pay for) a bolt-on. 

Here, we’re talking about companies like Akixi, Tollring, or Analytics 365 (other tools are available). While there is little doubting the value of such tools, it becomes yet another line item on the ever-growing Teams bill. 

  • Average spend for a 1,000-user business: $24,000 per year. 
  • Total cumulative spend: $146,585 per year. 

Note: You can develop your own call reports using the Graph API. But you need to know your way around it. You can retrieve call data and feed it into your own analytics engine to turn numbers into outcomes and insights. Here, you might be saving the cost of a third-party analytics license but you’re investing significant developer and admin time to reach a workaround solution. 

7 – Setup and training time 

Both in terms of expertise and time, you’re going to invest in people to get your Teams environment optimized for your specific business needs. Once implemented, new users (and new users to specific features) are going to need to know how to use these tools.

Think about the production costs of:

  • Training sessions
  • Video tutorials
  • Group feedback
  • Documentation

The larger the business, the more quirks and custom requirements you uncover. It could be a formal contact center needing omnichannel enablement through to setting up high-end AV setups for boardrooms and broadcast functionality. 

All these types of extra implementation come at a cost. You might outsource this to a professional services firm or you could choose to do this in-house.  

While in-house is almost always the most cost-efficient option, it does mean you’re already paying for specialist personnel. Naturally, these command a higher salary than an entry-level IT admin. 

Then there’s the time element to factor in. It’s hard to put an exact figure on non-tangible items. But, if you really needed to, you could divide an employee’s salary by the amount of time dedicated to Teams implementation and ongoing support. 

Cost of setup time for Microsoft Teams
  • Average spend for a 1,000-user business: $100,000 per year. 
  • Total cumulative spend: $246,585 per year. 

8 – Ongoing provisioning of new users 

The nature of business is that you’re striving to grow at some point. This could be through the acquisition of an existing company or simply hiring new employees to help find new business or support the new business you’ve secured. 

Whatever the situation, each new employee comes with a plethora of needs and wants. 

Similar to the initial setup of your Teams environment, here you must configure new accounts on Entra (AzureAD) and manually add which policies and types of access each individual user needs. 

One-off, this doesn’t seem like a big issue. But when you factor in the scale of new user adds and the associated cost relating to time and effort, we’re talking about thousands of dollars for manual tasks that could be automated. 

Interested in automating new user additions?  

Read: How To Automate User Provisioning In Microsoft Teams 

  • Average spend for a 1,000-user business: $25,000 per year. 
  • Total cumulative spend: $271,585 per year. 

9 – Moves, adds, and changes 

On top of provisioning new users, we must also consider the moves, add, changes, and even deletions that come as part of a routine Teams deployment. 

Again, it’s the nature of business that people will join, leave, change roles, or need different access.  

When we need to make this change, the responsibility (and time, effort, and associated cost) falls on the IT/telecoms team. 

There are two figures we must take into consideration here: 

  1. The cost of an average provisioning support ticket: ~ $44.57
  2. The cost of an average provisioning ticket when things go wrong: ~$78.83. 

There are many reasons for error. The most common are:  

  • Inaccurate source data that has been entered incorrectly.  
  • Data mistakes in input data preparation for scripts and tasks.  
  • Sub-standard quality through poor training, negligence, tiredness, or tedium. 

Whether or not we like it, we must factor these manual failings and human error into our costs for Microsoft Teams. They seriously add up. 

Number of Monthly Changes  Cost of Change Per Month  Cost of Change Per Year (ongoing)  
50  $1,969.42 $23,633.04 
100  $4,088.76   $49,065.12 
350  $16,037.14 $192,445.68 
500  $26,325.15 $315,901.80 
1000  $54,869.11 $658,429.32 
  • Average spend for a 1,000-user business: $23,633.04 
  • Total cumulative spend: $295,218.04 per year. 

Of course, there is another way to manage moves, adds, and changes. 

Interested? 

You Need To Read: 5 Ways To Automate Microsoft Teams & Make Your Life Easier 

10 – Storage and CDN 

When you create content (in chats, channels, files, etc.), you need somewhere to store it. It doesn’t just float around in the ether.  

As part of your core license fee, you get: 

  • Microsoft Teams Essentials: Includes 10 GB of cloud storage per user.  
  • Microsoft 365 Business Basic: Includes 1 TB of file storage per user. 

For a lot of users, this is way overboard and they’ll never max out their allocation. For other content-heavy or Teams-heavy users, this is somewhat restrictive.  

The alternative is to buy extra cloud storage from Microsoft or set up your own storage mechanism. On the face of it, this is a simple task. But when documents and files are created within Teams, they’re automatically getting saved to your SharePoint/OneDrive backbone. If you need to intervene and redirect where files get stored, there’s some professional services to engineer the right solution. 

Furthermore, enterprise with lots of users and even more content must rely on content delivery networks (CDNs)to help keep Microsoft 365 fast and reliable for end users. Otherwise, like a bloated website full of uncompressed images, users will receive a slow process sending and loading content. 

  • Average spend for a 1,000-user business: $9,000 per year. 
  • Total cumulative spend: $304,218.04 per year. 

11 – PSTN connectivity 

If you plan to use Teams as your phone system, you’ve got a wide range of options to choose from: 

You can even use mobile numbers as your Teams PBX these days.  

The decision here depends on many factors. Differing businesses will have unique requirements and/or existing equipment that leads them down one particular route. 

Whichever the option chosen, there are a few costs we must consider: 

  • Set up, migration, porting, and implementation 
  • Teams Phone licensing 
  • Domestic calling costs 
  • International calling costs 
  • Ongoing maintenance and support 

Utilizing existing vendor contracts and discounts is crucial to reducing costs in Microsoft Teams. As is accurate licensing and appropriate access. For example, does John in accounts really need access to international dialing when his role only involves internal affairs? 

Consider an annual license, telephony, and costs audit before you migrate to Teams Phone

  • Average spend for a 1,000-user business: $92,700 per year. 
  • Total cumulative spend: $396,918.04 per year. 

12 – Integration with existing apps and systems 

The success of Teams is due to, in no small part, its integration with the wider Microsoft ecosystem. I’m writing this blog post in Word embedded into Teams as we speak. It’s saved into OneDrive and accessible via SharePoint. 

That’s really the most basic integration we’re talking about here, too. The integration of Power Automate, Dynamics, Azure, and the rest of the 365 stack is comprehensive

But What about external third-party apps? 

The Teams App Directory is full of pre-built apps with all most your favorite line of business apps. For large businesses who rely on Teams + HubSpot or Salesforce or Zendesk, it’s a few clicks and you’re set up. 

The things outside of this remit, however, require considerable planning, coding, and implementation efforts. The things you can do with the Teams API are impressive. It’s not like you’re being held back if you have the resources and know-how. 

For the average business, this may not be on your radar. Hence, we’re not including an extra cost for the average 1,000-person business (in our cumulative costs at the end of each section). 

For large enterprises, however, it’s not unheard of for these projects to reach the hundreds of thousands of dollars levels. 

  • Average spend for a 1,000-user business: $0. 
  • Total cumulative spend: $396,918.04 per year.

13 – Copilot (and other AI possibilities) 

Look, I’ll be the first person to say that when you adopt Copilot and use it correctly, in the right departments and with the users who will get the most out of it, you will get great value from it. 

However, there are a lot of murmurings in the Teams community as to whether many businesses have fallen into that category or not yet. 

Adding on Copilot incurs another cost

If you’re someone like the Paysafe IT team, who reports saving between 10% and 50% of their time preparing documentation using Copilot M365, then it’s a no-brainer. 

But it’s still another added cost that you once upon a time hadn’t planned for.  

  • Average spend for a 1,000-user business: $7,200 per year. 
  • Total cumulative spend: $404,118.04 per year. 

How to regain control of your Microsoft Teams costs 

With the average (and this will fluctuate from business to business) cost of Microsoft Teams coming in at around $400,000 per year, it’s no wonder procurement and IT teams are left scratching their heads.  

That said, this does mean the average cost per user is $400 per year, which doesn’t seem to bad if that user uses everything at their disposal.

As Kevin Kieller, Co-Founder and Lead Analyst of enable UC, puts it…

“The effective implementation of any technology comes at a cost. The key is ensuring the value > the costs; i.e. there is a reasonable return on investment (ROI). And adopting a more sophisticated perspective, that you maximize the ROI by investing available capital in the optimal areas.”

Building a business case for extra functionality, licenses, or technology has fallen victim to meticulous scrutiny as we’ve entered and tumbled through a cost of living crisis. 

So, what can we do about the cost of Microsoft Teams? 

The obvious answer is to buy less. But, as businesses become more and more dependent on Teams, you’d be removing key reliances that keep the lights on and boost productivity. 

The best piece of advice we (as a collection of Teams and UC consultants) can give is to audit your costs on a regular basis. Use this guide as your template to ensure you don’t miss any key costs. The last thing you need is to show your workings to the CFO, only to find out they’ve got something up their sleeve to deny your next purchase. 

How Callroute can help with Teams costs 

We can’t solve all your budgeting issues but can help with Teams auto-provisioning.  

We’ve built Orto for Teams to save you time and reduce manual errors when provisioning users in Microsoft Teams. 

How? 

We automate the assignment of numbers, policies, licenses, queues, and teams. 

Businesses with 1,000 to 100,000+ users can now streamline new user setup and save time on moves, adds, and changes. 

Orto is a replacement for your spreadsheets and scripts. You get a single pane of glass for everything related to Teams Phone management

  • A single place to manage your numbers 
  • Add agents to call queues without PowerShell 
  • License users for Teams Phone & Calling Plans 
  • Automate user provisioning to eradicate manual errors 

We use Teams policy personas as the base of our automation. Once you’ve created a persona for a specific job role/location/seniority, you never need to run a dodgy script you inherited from the last IT admin. 

Instead, you create the user details in Entra (AzureAD) and everything else is done for you. 

The end result? 

A new configured Teams user with everything they need to carry out their day to day work. There are no follow up tickets asking for more policies and new access. There’s no repairing the manual errors we’re all prone to as humans. 

Save money on Microsoft Teams using auto-provisioning

On top of that, we’ve calculated you could save up to 77% of your provisioning costs with Orto. 

Sounds too good to be true? 

📆 Book a call with our Teams experts and we’ll show you exactly how you get there. 

Connect Teams with your telephony today

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