Microsoft 365 Archive cold storage costs $0.05/GB/month, roughly 75% less than standard SharePoint storage at $0.20/GB/month. There are no reactivation fees. And if your tenant is under its storage quota, archiving may cost you nothing at all.
That last point is the one most people miss. The billing model for M365 Archive is genuinely nuanced, and getting it wrong leads to either overestimating costs (and delaying adoption) or underestimating them (and getting a surprise Azure bill). This article breaks it down.
Note: If you're not yet familiar with how file-level archive works, start with our overview: Microsoft 365 file-level archive: What IT admins need to know .
Microsoft 365 Archive uses a pay-as-you-go model billed through an Azure subscription. There is no separate license or SKU to purchase.
The critical rule:
You are only charged for archived storage when your total storage (active + archived) exceeds your tenant's standard SharePoint storage quota. If you're under quota, archived storage is effectively free.
This is counterintuitive. Many admins assume that the moment they archive a file, they start paying $0.05/GB/month for it. That's not how it works. The charge only kicks in for the portion of archived data that pushes you over your included quota.
Microsoft provides five scenarios in their pricing documentation. Let's walk through each one with a concrete example.
Setup: A tenant has 25 TB of standard SharePoint storage quota included with their licenses.
| Scenario | Active Storage | Archived Storage | Total | Over Quota? | What You Pay |
|---|---|---|---|---|---|
| A: Over quota, no archiving | 25.2 TB | 0 TB | 25.2 TB | Yes (200 GB over) | Purchase 200 GB of additional standard storage packs at $0.20/GB/mo |
| B: Archived exactly the overage | 25 TB | 200 GB | 25.2 TB | Yes (200 GB over) | Pay $0.05/GB/mo for 200 GB archived = $10/mo |
| C: Archived more than the overage | 24 TB | 1.2 TB | 25.2 TB | Yes (200 GB over) | Pay only for 200 GB that exceeds quota = $10/mo (the 1 TB of archived data within quota is free) |
| D: Archived some, not all overage | 25.1 TB | 100 GB | 25.2 TB | Yes (200 GB over) | Purchase storage packs for 100 GB active overage + pay $0.05/GB/mo for ~100 GB archived |
| E: Under quota entirely | 20 TB | 4 TB | 24 TB | No | $0. No additional costs |
Scenario E is the critical insight. If your tenant has headroom in its storage quota, you can archive terabytes of content and pay nothing for it. The data is reclassified from active to archived, your active storage drops, and as long as the total stays under quota, there’s no charge.
So why archive anything if you’re under quota? For one, it may help with your Copilot efforts by removing old content from its scope. For another, content being in M365 archive does lessen the cost of storage if at any point in the future, you do begin to exceed your total available quota. Cost-wise, it doesn’t yield an immediate impact, such as in cases where tenants are already over their quota.
Source: Microsoft Learn: Pricing model for Microsoft 365 Archive
This is where file-level archive introduces a subtlety that confuses nearly everyone, including experienced SharePoint admins.
When you archive a file, the site's reported storage usage does not decrease. The file still counts toward the site's storage quota exactly as if it were active.
You cannot use file-level archive to free up space within a site or to push a site below its allocated quota.
From the Microsoft FAQ:
"Archived files are accounted for in site storage the same way as active files. Archiving a file doesn't reduce reported storage usage, change storage calculations, or affect quota enforcement."
The benefit happens at the tenant level. When files are archived, the data is reclassified from active (hot) storage to archived (cold) storage. Your tenant's active storage consumption drops by the amount archived. If you are over quota, this is what determines what you're charged.
To make this concrete, consider a simple scenario: a company with a single SharePoint site containing 500 GB of data. The tenant has 750 GB of SharePoint storage quota, so they have 250 GB of headroom.
A user archives 50 GB of files on that site. Here's what happens:
| Metric | Before Archival | After Archival |
|---|---|---|
| Site-level storage reported | 500 GB | 500 GB (no change) |
| Of which archived | 0 GB | 50 GB |
| Tenant active storage | 500 GB | 450 GB |
| Tenant archived storage | 0 GB | 50 GB |
| Remaining active quota | 250 GB | 300 GB |
| Additional cost | $0 | $0 (total still under 750 GB quota) |
The site still reports 500 GB, so IT admins looking at site-level storage metrics will see no change. But at the tenant level, only 450 GB counts as active storage, and the tenant now has 300 GB of headroom instead of 250 GB. Because the total (500 GB) remains under the 750 GB quota, there is no additional charge for the archived storage.
This is the key distinction: site-level storage is unchanged, but tenant-level active storage decreases. Admins can see the breakdown via PowerShell using the ArchivedFileDiskUsed property on each site.
Now imagine a larger tenant with 25 TB of quota that has grown to 25.5 TB of total data.
If they archive 2 TB of inactive files, their active storage drops to 23.5 TB. The total (active + archived) is still 25.5 TB, or 500 GB over quota. They pay $0.05/GB/month on the 500 GB overage ($25/month) instead of $0.20/GB/month for the same overage in active storage ($100/month).
That's a 75% reduction on the overage portion, and the 1.5 TB of archived data within quota costs nothing.
Microsoft eliminated the reactivation fee for archived content on March 31, 2025. Prior to that date, there was a $0.60/GB charge to bring content back from archive. That cost was removed entirely.
The only restriction: once a file is reactivated, it cannot be re-archived for 30 days. This prevents abuse of the tier transition but doesn't cost anything.
The billing rate is identical: $0.05/GB/month for both. There is no separate SKU or pricing tier. The same Azure billing subscription covers both.
Monthly archive storage usage is calculated as the total of:
Archived files within an archived site are counted only once (as part of the site's archived storage), not double-counted.
For EDU tenants, Microsoft applies pooled storage quotas. See Microsoft's pricing documentation for current details on the education offering.
Let's look at three representative scenarios:
| Scenario | Data Archived | Standard Storage Cost (if purchased) | Archive Cost (if over quota) | Annual Savings |
|---|---|---|---|---|
| Mid-size org, moderate overage | 2 TB | $400/mo ($4,800/yr) | $100/mo ($1,200/yr) | $3,600/yr |
| Enterprise, significant overage | 10 TB | $2,000/mo ($24,000/yr) | $500/mo ($6,000/yr) | $18,000/yr |
| Large enterprise / EDU | 50 TB | $10,000/mo ($120,000/yr) | $2,500/mo ($30,000/yr) | $90,000/yr |
And remember: if you're under quota, those archive costs drop to $0.
Microsoft provides an Excel-based pricing calculator to model your specific scenario: Download the M365 Archive Pricing Calculator
It accepts your tenant quota, current active storage, and estimated archive volume, then projects costs. It's directional, not precise, but useful for building a business case.
Before file-level archive, the only content eligible for cold storage savings was content in fully inactive sites. For most organizations, that represented a fraction of their total inactive content. The majority of stale data (old versions, legacy documents, historical records) lives inside active sites that will never be archived as a whole.
File-level archive changes the denominator. Suddenly, the addressable pool of archivable content expands dramatically. Organizations that thought they'd already captured most of their archive savings may find an equally large opportunity waiting inside their active sites.
Understanding the pricing model is one thing. Actually identifying what to archive across hundreds of sites, and doing it at scale, is another.
Orchestry is building the reporting and execution layer that M365 Archive's native tooling doesn't provide:
Microsoft is building toward admin-driven policies, but they won't arrive until later in 2026. Orchestry is developing rule-based archival at scale, using the same first-party M365 Archive infrastructure, with no external storage and no compliance boundary changes.
Archived storage for most sectors is billed at $0.05/GB/month, compared to $0.20/GB/month for standard SharePoint storage, a 75% reduction.
However, you only pay this rate for archived data that exceeds your tenant's included storage quota. If your total storage (active + archived) is under quota, there is no additional charge.
No. Microsoft eliminated the reactivation fee on March 31, 2025. Reactivating archived files is completely free. The only restriction is a 30-day cooldown before a reactivated file can be re-archived.
No. M365 Archive is a pay-as-you-go service with no license requirement. You need to set up an Azure billing subscription and enable M365 Archive in the SharePoint admin center. Charges are consumption-based.
Yes. If your combined storage (active + archived) does not exceed your tenant's standard SharePoint storage quota, there is no additional cost for archived storage. This is Microsoft's "Scenario E," the most favorable billing outcome.
No. At the site level, archived files continue to count toward storage exactly like active files. The reduction happens at the tenant level, where archived data is reclassified from active storage to archived storage, lowering your active consumption.
Yes, both use the same rate of $0.05/GB/month. There is no separate SKU. Archived files within an archived site are counted only once (as part of the site's storage), not double-counted.
Archived content stays archived and can still be reactivated. However, new archive actions are blocked. While Archive or billing is unavailable, all archived content counts as active storage and counts toward your standard quota.
Monthly archive storage usage equals: (1) storage used by all archived sites, plus (2) storage used by archived files in non-archived sites. This total, combined with active storage, determines whether you exceed your quota and what you're billed.
Yes. Microsoft provides an Excel-based pricing calculator at aka.ms/Microsoft365ArchiveCostCalculator. It lets you model scenarios based on your quota, active storage, and projected archive volume.
EDU tenants use pooled storage quotas. Microsoft has indicated discounted archive storage rates for education. See Microsoft's pricing documentation for current details on the education offering.
Yes. Deleted archived files in the recycle bin retain their archived state and are billed at the archive rate until they are permanently deleted (either manually or through recycle bin expiration).
During public preview, reporting is PowerShell-only. Use Get-SPOSite with the ArchivedFileDiskUsed property to check per-site archived storage. Microsoft plans tenant-level reporting by GA.
For comprehensive analytics across your entire tenant, Orchestry will provide tenant level and workspace level storage reporting that identifies inactive content and tracks archival impact.
Sources: Microsoft Learn: Pricing model for Microsoft 365 Archive | Microsoft Learn: FAQ | OneDrive Sync Up Ep. 22: File Archive with Trent Green