Every SharePoint administrator eventually receives the same email from the SharePoint admin center: the tenant is approaching its storage limit. What happens next is usually a purchase order for extra storage, signed under time pressure, that quietly becomes a permanent line in the Microsoft 365 bill. This article explains where the growth comes from, what it costs, what Microsoft's own options cover, and why we decided to build an archiving solution rather than sell more migration licenses.
How the SharePoint quota really works
The rules are documented in Microsoft's SharePoint limits: each organization gets a pooled 1 TB of SharePoint storage, plus 10 GB per licensed user on Business, Enterprise and Office 365 plans. Frontline F1 and F3 licenses add nothing. A 200-user tenant therefore has 3 TB; a 1,000-user tenant has 11 TB. The pool is shared by every SharePoint site, every Teams channel (Teams files live in SharePoint) and every site recycle bin. OneDrive is counted separately, per user.
The same page carries a sentence that is easy to miss: if your tenant continues to operate above its storage limit, you are at risk of the environment being put into read-only mode. Users can still open files but cannot add or modify content. That is the lever that turns a storage question into an emergency purchase.
Why tenants overflow faster than expected
When we run storage assessments before a migration, the tenant is rarely full of documents people actually use. It is full of things nobody decided to keep:
- Version history. SharePoint keeps up to 500 major versions by default on new libraries, and up to 50,000 are supported. A 20 MB deck edited fifty times can occupy a gigabyte on its own. Version storage is invisible in the file list but fully counted in the quota.
- Teams sprawl. Every team, every private channel and every shared channel creates a SharePoint site. Chat attachments, meeting recordings and screenshots pile up in sites that outlive the project by years.
- Recycle bins. Deleted content sits in the site recycle bin and then the second-stage recycle bin for 93 days, and Microsoft explicitly notes that this space counts toward the organization's total. Deleting a large library does not free the quota for three months.
- Migrations and consolidations. Tenant-to-tenant projects, file-server migrations and acquisitions bring in entire archives that were already cold at the source. The data arrives, the storage bill follows, and nobody revisits it.
- Abandoned sites. Project sites, event sites, sites created by a plugin or a Power Automate flow. They are never deleted because no one knows whether something in them still matters.
What extra storage actually costs
Microsoft offers two ways to buy capacity above the quota, and both settle at the same rate. The Office 365 Extra File Storage add-on is bought in 1 GB increments through the admin center. The newer pay-as-you-go Microsoft 365 SharePoint Storage meter, in public preview for all commercial tenants since June 2026, bills usage above the quota through an Azure subscription. Microsoft's pay-as-you-go price list puts it at $0.20 per GB per month.
| Storage above quota | Monthly cost | Yearly cost | Over 3 years |
|---|---|---|---|
| 1 TB | $200 | $2,400 | $7,200 |
| 5 TB | $1,000 | $12,000 | $36,000 |
| 10 TB | $2,000 | $24,000 | $72,000 |
| 25 TB | $5,000 | $60,000 | $180,000 |
List prices in USD, excluding volume agreements. The pay-as-you-go meter shows on the invoice as $0.00667 per GB per day.
Two things make this worse than the table suggests. The cost never stops: extra storage is rented, not bought, and the data it holds keeps growing. And it is paid for the wrong reason: a large share of that volume is content that nobody will open again, kept only because deleting it feels riskier than paying for it.
Microsoft's own options, and their limits
Microsoft has three storage-related services, and it is worth being precise about what each one does.
Microsoft 365 Archive: $0.05 per GB per month, inside the tenant
Microsoft 365 Archive lets an administrator archive whole SharePoint sites, or individual files inside active sites, into a cold tier. Archived storage is billed at $0.05 per GB per month, and only for the part that exceeds the licensed quota. Since March 31, 2025 reactivating archived SharePoint content is free, with a four-month lock before the same content can be archived again. That is a real improvement over paying $0.20, and for many tenants it is the right first step.
Its limits are structural rather than tariff-related:
- Archived content stays in Microsoft's cloud, under Microsoft's pricing. You cannot place it in a storage account you already pay for, or with another provider.
- Archived sites are unavailable to users until an administrator reactivates them. There is no self-service "open this old file" path, and reactivation of a large site is not instant.
- For unlicensed OneDrive accounts, the picture is different again: $0.05 per GB per month plus $0.60 per GB reactivated.
- It requires pay-as-you-go billing through an Azure subscription, which many Microsoft 365 administrators do not own and many CSP-licensed customers cannot set up alone.
Microsoft 365 Backup: protection, not reduction
Microsoft 365 Backup is billed at $0.15 per GB per month on top of the data that stays in SharePoint. It answers a different question (can I recover from deletion or ransomware) and adds to the bill rather than reducing it. Cloudiway offers the same protection through SaaS Backup, with the choice of storing backups in our datacenter or in your own Azure storage.
Retention policies and deletion
Microsoft Purview retention policies can delete content after a set period, and that is the cheapest option of all. It is also the one legal teams resist, because deletion is irreversible and most organizations cannot say with confidence what a five-year-old project site contains. In practice, deletion policies get approved for obvious categories and everything else stays.
The real problem: cold data in hot storage
Strip away the pricing details and the situation is simple. SharePoint is a premium collaboration tier, priced for content that people co-author, search and share every day. A large share of what it holds is cold: it must be kept, occasionally found, rarely opened. Paying the collaboration rate for archive-grade data is the mismatch that drives the bill.
Object storage has solved this problem for a decade. Azure Blob cool and archive tiers, and their equivalents elsewhere, store data for a few cents per GB per month. What has been missing is the bridge: a way to move SharePoint content to that storage without losing what makes it SharePoint content, namely the metadata, the permissions, the version history and the ability to find it again.
What Cloudiway's archiving solution does
We have spent fifteen years moving data between tenants and platforms while preserving permissions, metadata and structure. Archiving is the same engine pointed at a different target. The solution we are releasing this autumn does four things.
1. Finds the cold data
It scans the tenant, read-only, and reports storage by site, library and age. You define the policy: for example, files not modified in 18 months, in sites with no activity in 6 months, excluding sites tagged as records. The report shows exactly how many GB the policy would move and what it costs you today.
2. Moves it to storage you choose
Archived content goes to Azure Blob storage in your own subscription, to a storage account managed by Cloudiway, or to the Cloudiway datacenter. Data is encrypted in transit and at rest, and you can bring your own key. Because the storage is yours, the archive is not tied to a Microsoft billing meter, and it is not lost if you change tenant or provider later.
3. Keeps it findable and restorable
The archive keeps the original metadata, permissions and version history, and exposes a searchable catalog. A user who needs a document from an archived project can find it and request a restore; an administrator can restore a file, a folder or a full site back into SharePoint, to the original location or a new one, in a few clicks. Nothing is deleted from the archive when it is restored.
4. Runs on a schedule and reports the savings
Policies run automatically, so the tenant stops drifting back over the quota. Each run reports the GB moved, the SharePoint storage reclaimed and the cost avoided against Microsoft's list price. For MSPs, the console is multi-tenant: one set of policies, applied per customer, with a savings report per tenant.
Cost comparison per TB of cold data
| Option | Storage rate | Per TB per year | Where the data lives | User access |
|---|---|---|---|---|
| Extra SharePoint storage | $0.20 / GB / month | $2,400 | SharePoint, Microsoft billing | Full, immediate |
| Microsoft 365 Archive | $0.05 / GB / month | $600 | Microsoft cold tier, Microsoft billing | None until an admin reactivates the site |
| Microsoft 365 Backup (for reference) | $0.15 / GB / month, added | $1,800 on top of storage | Microsoft, Microsoft billing | Restore only |
| Cloudiway archiving to Azure Blob cool tier | Azure cool tier rate, roughly $0.01 / GB / month, plus Cloudiway license | Around $120 in storage | Your Azure subscription or Cloudiway datacenter | Searchable catalog, self-service restore |
Microsoft rates from Microsoft Learn, September 2026. Azure Blob rates vary by region and redundancy; check the Azure pricing page for your region. Cloudiway licensing is per TB archived and is quoted separately.
On a tenant that is 10 TB over quota, the difference between the first line and the last is roughly $20,000 per year in Microsoft storage fees alone, before counting the operational benefit of a tenant that is no longer at risk of read-only mode.
How to get started
- Measure. Open the SharePoint admin center, Active sites, and note the total used against your quota. Then sort sites by storage and by last activity. Most tenants find their top ten sites hold half the volume.
- Decide what "cold" means for you. Eighteen months without modification is a common starting point. Exclude records, legal holds and anything under a retention label that requires it to stay in place.
- Pilot on one site. Archive a single large, inactive site, verify search and restore with its former owners, and measure the reclaimed storage.
- Schedule the policy. Let it run monthly so the quota stops being an emergency.
Join the early-access program for Cloudiway SharePoint archiving
We are onboarding a limited number of customers and MSP partners before general availability. Get a free storage assessment of your tenant and a projected saving.
Request early access →Frequently asked questions about SharePoint storage costs and archiving
How much SharePoint storage is included in Microsoft 365?
Every Microsoft 365 or Office 365 tenant gets a pooled 1 TB of SharePoint storage, plus 10 GB for each licensed user (Microsoft 365 F1 and F3 plans add nothing per user). A 200-user tenant therefore has 3 TB. OneDrive storage is separate and does not count against this pool, but Teams files, the recycle bins and version history do.
How much does extra SharePoint storage cost?
Microsoft bills additional SharePoint storage at $0.20 per GB per month, either through the Office 365 Extra File Storage add-on (sold in 1 GB increments) or through the pay-as-you-go Microsoft 365 SharePoint Storage meter. That is $200 per TB per month, or $2,400 per TB per year, for as long as the data stays in the tenant.
What happens if a tenant exceeds its SharePoint storage quota?
Microsoft warns that a tenant operating above its storage limit risks being put into read-only mode. Users can still open files but cannot add or modify content until usage drops or additional capacity is purchased. In practice most administrators buy extra storage under pressure, which is the most expensive way to solve the problem.
What is Microsoft 365 Archive and how much does it cost?
Microsoft 365 Archive lets administrators archive entire SharePoint sites, or files inside active sites, into a cold tier inside the tenant. Archived storage is billed at $0.05 per GB per month, but only for the portion that exceeds the tenant's licensed quota. Since March 31, 2025 reactivating archived SharePoint content is free, with a four-month restriction on re-archiving the same content. Archived sites are not accessible to users until they are reactivated.
Is Microsoft 365 Backup a way to reduce SharePoint storage?
No. Microsoft 365 Backup protects data against deletion and ransomware, billed at $0.15 per GB per month on top of the data that stays in SharePoint. It does not remove anything from the tenant, so it adds cost rather than reducing it. Backup and archiving answer two different questions: 'can I get it back' versus 'why am I paying premium storage for this'.
What is the difference between archiving and deleting SharePoint content?
Deleting removes content permanently after it leaves the recycle bin, which is rarely acceptable for contracts, project records or anything under a retention obligation. Archiving moves the content to cheaper storage while keeping it retrievable, with its metadata, permissions and version history, so retention and eDiscovery obligations continue to be met at a fraction of the cost.
How does Cloudiway's SharePoint archiving solution reduce costs?
It identifies content that has not been modified for a period you define, moves it out of SharePoint to low-cost object storage (Azure Blob, the customer's own storage account or Cloudiway's datacenter), and keeps a searchable catalog with the original metadata and permissions. Users and administrators can restore an item, a folder or a whole site on demand. Only the active data stays in the premium SharePoint tier.
Can MSPs use Cloudiway archiving for several customers?
Yes. Like Cloudiway's migration and SaaS Backup products, the archiving solution is multi-tenant. An MSP can define archiving policies per customer, run them on a schedule from a single console and report the storage reclaimed and the money saved for each tenant.
