Can you save money with Microsoft 365 Archive?

Microsoft 365 Archive was announced a year ago, but it finally became generally available at the end of May 2024, which means enterprises can start using it in a supported way. In this blog post we will learn how Microsoft 365 Archive works – and see if we can actually save money using it.

What is Microsoft 365 Archive?

As organizations store more data in Microsoft 365, many are starting to reach their pooled storage limit. This means that they have to pay Microsoft additional costs to keep adding data to their SharePoint Online sites. The price is not necessarily cheap, either. Microsoft charges $0.20/GB/month, so an extra 1TB of storage your company needs adds around $205 to your monthly Microsoft 365 bill.

It would probably be a no-brainer if all this storage was needed for active and relevant content. Still, most of the time, most of the content in our tenant is old and not accessed and utilized anymore. And while it’s easy to say let’s remove old data, we all know how IT Professionals all have a spare box of VGA cables in their office, just in case!

All jokes aside, data is an organization’s most valuable asset. Therefore, it’s difficult for organizations to remove data about old projects or clients, as they never know if they’ll need something for future projects. But how can we balance keeping old data and not paying a fortune in storage costs?

Microsoft 365 Archive is here to help. It allows you to move SharePoint sites that aren’t needed or accessed today to a cold storage tier. To keep the storage active inside SharePoint Online, it costs $0.05/GB instead of $0.20/GB (a 75% discount!).

Even better, as it’s all under the Microsoft umbrella, archived sites maintain the same security and compliance features, including retention policies, eDiscovery, sensitivity labels, and data loss prevention (DLP). So you can save money while staying compliant! What’s not to love?

If you ever had to deal with Microsoft licensing in the past, you know Microsoft is not a charity, and if you do not use Microsoft 365 Archive correctly, it can end up costing you more than just paying for hot storage.

How to turn on Microsoft 365 Archive

Before you can archive sites in the SharePoint Admin Center, you need to set up a few things. First, you need to have a subscription in Azure pre-created. As the M365 Archive cost will depend on monthly usage, there is no pre-set cost, so all the costs go through an Azure Subscription.

After that is done, you need to go to the Syntex settings in the Microsoft 365 Admin Center  (Home > Org Settings > Syntex) and set up Pay-as-you-go billing. Note that despite the rename of Syntex to SharePoint Premium, the admin center still shows it as Syntex.

You will then click on “Set up billing”

Configure your subscription, resource group, and region in which you want Syntex services to run.

 Finally, you click on Archive under Storage Services and turn it on.

After you do this, in the SharePoint Online admin center, you will now be able to Archive a site and have an Archived Sites page where you can quickly view all your Archived Sites. There are also PowerShell cmdlets for all those activities, but we will not cover them as this post is focused more on pricing.

When you Archive a site, you will be able to see how much storage it takes, as well as the Last site activity date. The site below had no activity in almost four years, so I think I can probably archive it safely.

The site will now show up in my Archived sites page, from where I can reactivate it, if needed.

After reactivating it, in a few seconds, the site will be back to exactly the same state it was before, including metadata, permissions, and everything else. Microsoft also provides us with an estimate of the reactivation fee, which is $0 for me right now, but it could be higher for you. More on that in just a moment.

With the crash course on how to enable Microsoft 365 Archive and how to use it, let’s move on to probably the most important question, can it save us money?

Microsoft 365 Archive pricing deep dive

I am happy to say that my demo above didn’t cost me even 1 cent, so let us deep dive into how Microsoft 365 Archive so you know exactly how much it could cost you.

If we look at the very basics, the costs of Archive are based on the following two factors:

• The number of gigabytes (GB) of data archived, which costs $0.05/GB/month (shows on the invoice as $0.00167/GB/day)
• Reactivation of archived data, which costs $0.60/GB

Before we go into the exceptions, let’s run a quick simulation. Let’s say our organization is currently over our pooled storage limit, and we have a project site that is 100 GB that we will archive. The costs would be:

• Before Archive – 100 * 0.20 =  20$ per month to keep it in “Active Sites”
• Microsoft 365 Archive – 100 * 0.05 = 5$ per month to keep it as Archived 

So far, it seems that Microsoft 365 Archive is a clear winner. However, where it can cost you more money is if, after a month, a project manager tells you they need to access some files from the site for a similar project. We will now incur a reactivation fee of $0.60/GB, so our cost becomes:

• Restore from Archive – 100*0.60 = 60$ to restore the site. 

Therefore, moving the site to Archive for a month cost us 65$, when it would have cost us 20$ to just keep it as an active site all along. We ended up paying more money!  This is where this delicate balance comes in – Microsoft 365 Archive can save you 75% in storage costs, as long as you do not need to restore those sites often!   We lost money because we restored that site after only one month; however, if we only restored it three years later, the cost would have been way different.

• Keeping the 100GB site in Active sites for 3 years –  $720!
• Arching the 100GB site for 3 years and then restoring once – $240!

Each company will have a different calculation, but here is Microsoft’s calculation for the Cost savings using Microsoft 365 Archive and conclusion:

The following table helps visualize the savings you’ll realize by archiving content based on the frequency and percent of all archived content you’re restoring. The key takeaway is that if you are not reactivating more than 30% of your data more than twice a year, you’ll achieve most of the savings offered by the product.

So, even according to Microsoft’s calculations, if you do not manage Microsoft 365 Archive correctly, you can end up paying 225% more in storage costs with Archive versus leaving it in Active Sites. However, if you do not need to restore data often, your savings can go up to 75%, which is a huge amount—so, like many tools in the Microsoft stack, your savings and ROI will depend on how well you use them.

Before we move on to the best practices, I want to mention some exceptions in pricing you need to know about. First of all, Microsoft will not charge you for storage in Archive until you hit your pooled storage limit. So in my very empty demo tenant,  given I still have 1.29 TB pooled storage available, I could archive sites and keep them in Microsoft 365 Archive for free.

I would only start paying the $0.05/GB/Month once my total storage in Active Sites + storage in Microsoft 365 Archive exceeds my pooled storage limit of 1.29 TB that I have available in this tenant. If you anticipate your organization needing Microsoft 365 Archive soon, and you have sites that for sure make sense to send them to Archive, you could start creating your archival process at potentially no cost. I say potentially because even if you are under your pooled storage cost, reactivating Archived sites is only free for 7 days!

While we didn’t cover it before, when I showed you the site in Archived sites, the Status was “Recently Archived,” which is the status a site gets for 7 days after it has been archived. While in this status, it can be reactivated without a fee. After 7 days, the site’s status will move to “Archived,” and any reactivation will cost you $0.60/GB, no matter how much free storage you have inside your tenant.

Best practices to save money with Microsoft 365 Archive

Now that we know how pricing works as well as the exceptions, what are some best practices to save money with Microsoft 365 Archive?  The best way to save money is, of course, to not have to use it by having a process in which you constantly evaluate your storage requirements and remove data that is no longer needed.

However, of course, many organizations have valid needs to keep data for long periods of time, or else Microsoft wouldn’t have created the feature, so a few ways to make sure you get the best ROI on Microsoft 365 Archive are:

1. Make sure you reduce the number of versions that you keep for Archived sites!  Most of the time, when a site is ready for archival, you only need the last version (or maybe 2-3 versions), you do not need the last 500 versions of each document.
   
   a) By reducing the number of versions, you reduce your ongoing archival and potential reactivation costs. You can use Microsoft’s new Intelligent version control or a more advanced tool like Syskit’s Storage tools.
   
2. Before you archive a site, decide what information needs to be kept in the archive for future purposes. Do you need the recordings of every single meeting that happened for that project? Those hours of meeting recordings add up.
   
3. Create a process for archiving sites that will avoid unnecessary reactivations. Consider using the SharePoint lock / unlock functionality for a while before moving it to Archive since sites could be unlocked at no cost if needed.
   
4. Remember that while Microsoft 365 Archive does make storage cheaper – it’s not 100% free. Consider having a process to permanently delete the content whenever your organization feels comfortable is no longer needed.

Is Microsoft Archive for you?

Microsoft 365 Archive is the newest Microsoft tool to help organizations spend less on storage and keep only active and necessary content as part of their SharePoint storage. While Microsoft 365 Archive can save organizations up to 75% on their excess storage costs, if not used correctly, it can also double their storage costs.

In this blog post, we have learned what Microsoft 365 Archive is and how to turn it on. We have also deep-dived into the pricing structure for Microsoft 365 Archive and looked at scenarios where it can save you money and cost you more.

Remember to leverage some of the best practices, such as reducing the number of versions and evaluating the content that goes into Microsoft 365 Archive before you archive a site. Simply removing your 400 versions for each document will save you even more money in the long term, both while the content is in the archive and potential reactivation costs.