In many interviews, audits, and ShArc demo sessions, we hear the same concern from IT admins: "Why is our SharePoint storage running out so fast?" The root of the problem usually lies in a lack of clarity around how Microsoft 365 tenant storage is calculated, especially with SharePoint Online and Teams files.
The reality is that Microsoft 365 storage isn’t as unlimited as some organizations assume. Understanding your Microsoft 365 tenant storage calculation is critical for planning, budgeting, and avoiding surprise overage charges.
In this article, we’ll explain how storage is allocated in Microsoft 365, how to check your usage, what contributes to your quota, and how to effectively manage your tenant storage to stay within limits.
If you wonder, what the difference between M365 storage, SharePoint storage is: none. We use the terms synonymously. Also files stored in Teams are saved in a SharePoint Online site collection and count against your storage limit.
Default Microsoft 365 tenant storage calculation
Every Microsoft 365 tenant starts with a default SharePoint Online storage quota of 1 Terabyte (TB) per organization. On top of that, Microsoft adds 10 GB of additional storage per eligible license.
Lets calculate an example
Let’s assume your organization has 2,250 Microsoft 365 E3 licenses. Your total storage quota would be:
1 TB (base storage) + (2,250 x 10 GB) = 1 TB + 22.5 TB = 23.5 TB
This means your Microsoft 365 storage quota would allow you 23.5 TB across SharePoint Online, which also includes Teams file storage. A good rule of thumb: every 100 licenses provide an additional 1 TB of storage. You might have read some articles saying only "assigned licenses to active users" would count for the storage quota. But that is not right. An active license in the M365 tenant is sufficient.
Important to know, not all licence have the +10 GB benefit. Plans not including SharePoint (e.g. Visio) or F1 licenses do not add extra storage. Basically, all Microsoft 365 suites (M365 Business Basic, Standard and Premium, Office 365 E1/E3/E5, M365 E3/E5) and SharePoint Online plan 1 & 2 and Teams grant 10 GB per license. For more information, please read:
Storage calculation for educational (EDU) tenants
Licenses for educational (academic) tenants are calculated differently if you have more than 50% EDU licenses assigned. When this threshold is met, an "education pooled storage" model replaces the default storage calculation. This means your organization is granted a single shared storage pool instead of per-user allocations. The storage pool is used across SharePoint, Teams, Exchange, and OneDrive (!) and begins with a generous 100 TB of capacity. Additional storage may be allocated based on the number and type of EDU licenses assigned. This approach is designed to simplify management and better accommodate academic workloads, which often involve large datasets, shared resources, and collaborative content creation.
The calculation is a bit more complicated and described in more detail here:
Differences for non-profit organizations
The storage capacity for non-profits is calculated as for business with one difference: licenses granted by Microsoft for free, known as volunteer-use benefit, do not provide extra storage. Only paid licenses give +10 GB storage. This limitation can pose a significant financial challenge for large non-profit organizations, especially those operating across multiple countries with thousands of users. As storage demands grow due to collaboration, media content, and shared documents, the need to purchase licenses solely to increase storage capacity can strain limited budgets. Organizations must carefully plan their license distribution and consider hybrid strategies, such as mixing free and paid licenses, to optimize both cost and storage availability.
How much storage is available in my tenant and how many TB are used right now?
Let’s get to practice. To find out how much storage your Microsoft 365 tenant has and how much is currently in use, you’ll need to access the Microsoft 365 Admin Center: https://admin.microsoft.com/. Once logged in, navigate to the left-hand menu and select "Reports", then go to "Usage". From there, look for the "SharePoint" section, which includes insights on how much storage space is being consumed across your environment. Click on the "Storage" tab to view a detailed breakdown, including total available storage, used storage in terabytes (TB), and any trends over time. This overview can help you identify whether your organization is approaching its storage limit, and guide decisions around purchasing additional licenses or reorganizing content. For tenants using pooled storage (such as educational or enterprise), this is also where you can monitor shared usage across services like OneDrive, Teams, and Exchange.
Frequently asked questions about Microsoft 365 tenant storage calculation
Here we'll answer some frequently asked questions about Microsoft 365 tenant storage calculation:
How to check M365 tenant storage?
You can check your M365 tenant storage in the Admin Center. Log into the Microsoft 365 Admin Center. On the left, go to Reports > Usage, then head to the SharePoint section and click the Storage tab. There you’ll see total allocated storage, current usage, and a breakdown over time. If you're EDU or Enterprise with pooled storage, it shows shared usage across SharePoint, Teams, OneDrive, and Exchange.
How to calculate SharePoint storage?
SharePoint storage is calculated by Microsoft 365 per tenant and per license. You start with 1 TB per tenant, then get +10 GB per eligible license (like M365 E3/E5, Office 365 E1–E5, Business Standard, etc.). So, if you've got 1,000 eligible licenses, that’s:
- 1 TB base + (1,000 x 10 GB) = 11 TB total SharePoint storage
Teams files count too, they’re just sitting in a SharePoint site behind the scenes. So when Teams fills up, it’s really SharePoint filling up.
How to get a Microsoft 365 tenant?
You can get a Microsoft 365 tenant on the Microsoft 365 for business website. Go to Microsoft 365 plans and pricing and choose a plan that fits your org. Hit "Buy now" or start with a free trial. That’ll spin up a tenant, basically your private slice of the Microsoft cloud. You'll get a tenant name like yourcompany.onmicrosoft.com. From there, you can start assigning licenses and setting up users.
Do all Microsoft 365 licenses add 10 GB of SharePoint storage?
No, not all Microsoft 365 licenses add 10 GB of SharePoint storage. All paid licenses that include SharePoint add 10 GB storage.
- M365 Business Basic/Standard/Premium
- Office 365 E1/E3/E5
- M365 E3/E5
- SharePoint Online Plans 1 & 2
- Microsoft Teams (some tiers)
How can I exceed my Microsoft 365 storage limit?
You may exceed your M365 storage limit for various reasons, such as:
- Upload tons of files in SharePoint/Teams/OneDrive without lifecycle rules.
- Forget to clean up old content or large media files.
- Enable versioning without limits (500 versions of every file = pain).
- Rely on Teams chat file sharing—it stacks up fast.
- Use shared mailboxes or shared drives as dumping grounds.
Once you hit the quota, Microsoft doesn't just shut you down, but uploads will start failing, and you’ll see warnings in the admin center. You’ll need to buy extra storage, archive files, or offload cold data.
