Microsoft 365 tenant
Your organisation's own instance of Microsoft 365, containing all your users, licences, mailboxes and settings.
A tenant is the container for everything: the users, the licences assigned to them, the mailboxes, the shared drives, the security policies. Managing it means the admin centre, which is a genuinely powerful console designed for people who work in it weekly.
That design assumption is where small offices come unstuck. The person holding the login is usually whoever is best with computers, not somebody who knows what a conditional access policy does, and the console is where the expensive mistakes are available.
The single point of failure matters too. When one person knows the password and they leave, recovering control of your own tenant becomes a support case with Microsoft.
What it costs
Tenant administration is included in the per-person plan here. There is no separate admin fee and no per-mailbox charge.
Related questions
Do we have to buy licences through our IT provider?
No. Keep buying direct from Microsoft or through whoever you use now. A provider can take delegated admin on the tenant regardless of who bills you for the seats.
What happens to a leaver's mailbox and files?
Done properly: forward the mail, transfer the OneDrive contents, then release the licence, in that order. Deleting the account first is how files get lost.
Related service: Microsoft 365 management · Microsoft 365 Support Pricing