Microsoft 365 price increase from 1 July 2026: which plan rises, by how much and what you get in return

From 1 July 2026, Microsoft has implemented the largest price adjustment for Microsoft 365 since 2022. The increase applies to new customers from that date and to existing customers at their next contract renewal after 1 July. Almost all Enterprise and Business plans become more expensive, though the percentages vary considerably. For IT managers and directors with an upcoming renewal, this is the moment to take a critical look at the licence structure.

The adjustments are not uniform. Looking at the details, Microsoft has chosen differentiated increases by segment, with deliberate exceptions where it is strategically most relevant. That calls for a plan-by-plan analysis rather than a blanket response.

Which plans are getting more expensive and by how much?

In the enterprise segment, the increases are as follows. Microsoft 365 E3 rises from $36 to $39 per user per month, an increase of 8%. Microsoft 365 E5 goes from $57 to $60, equating to 5% more. Office 365 E3 rises from $23 to $26 per user per month, representing 13% — the largest percentage increase in the enterprise segment.

In the Business segment, the adjustments are comparable. Microsoft 365 Business Standard goes from $12.50 to $14 per user per month, a rise of 12%. Microsoft 365 Business Basic rises from $6 to $7 per user per month, amounting to just over 16%.

The steepest increases are reserved for frontline plans. Depending on the specific plan, increases here range from 25 to 43%. For organisations with a large group of frontline workers — in healthcare, logistics, retail or manufacturing, for example — this has a direct and significant budget impact. An organisation with 200 frontline users will see licence costs climb substantially, even at the lower end of that percentage range.

Note: Microsoft charges regional prices in local currency. The amounts above are US list prices in dollars. For customers billed in euros, comparable percentage increases apply, but the exact euro rates are set per Microsoft region and may differ from a direct exchange rate conversion. Your Microsoft partner or reseller can provide the exact euro prices.

Which plans are not increasing?

Two plans have been deliberately spared. Microsoft 365 Business Premium stays at its current price. This is a strategic choice: Business Premium is the plan that combines full security coverage, Intune device management, Azure AD P1 and Defender for Business in a package that Microsoft actively positions as the standard for organisations that take security seriously. By freezing the price, Microsoft lowers the barrier for organisations still on Business Standard.

Office 365 E1 also stays at its current price. This plan includes no desktop apps and minimal AI or security functionality. Microsoft holds the price flat, but market expectation is that E1 organisations will be nudged to upgrade to plans with more functionality — particularly now that Defender for Office 365 Plan 1 is included in E3.

What justifies the increase?

Microsoft points to more than 1,100 new features added to the platform over recent years, including AI-driven productivity tools via Copilot, expanded security capabilities and improved endpoint management. Concretely, several relevant additions have been made in recent months. For E3 customers, Defender for Office 365 Plan 1 is now included, where previously a separate add-on was required.

For E5 and E7 customers, Microsoft has announced Copilot for Security as part of the licence. Within Copilot itself, two new frontier models are now available to licensed users, further extending the AI capabilities of the platform. Whether these additions justify the increase ultimately depends on actual usage within your organisation. Organisations that actively use Copilot and treat security as a priority will see more return for the extra cost. Those who leave features unused are paying for capacity without return.

Impact on your renewal

Existing customers are not immediately confronted with higher rates from 1 July. The new prices apply only at the next contract renewal after that date. An annual contract that began in October 2025 runs at the old price until October 2026. A contract that began in February 2026 will not see new rates until February 2027.

For organisations with a renewal coming in the next six to twelve months, timing is critical. Microsoft now offers three-year subscription terms for E3 and E5 through the CSP channel. In certain scenarios, a longer term offers a more favourable rate or provides protection against potential further increases in coming years. Ask your Microsoft partner for a concrete comparison specific to your situation.

Three ways to manage the additional cost

First, conduct a licence audit before renewal. In many organisations, tens of percent of licences are structurally underused. Inactive accounts, former employees, incorrectly assigned plans and shared mailboxes with full licences are common sources of waste. The savings from removing unused licences can partially or fully offset the increase. Tools such as the Microsoft 365 Admin Center and Entra ID provide reports on login activity and usage frequency per licence.

Second, reconsider your plan mix. Does your organisation have employees who use only email and Teams but hold a Business Standard or E3 licence? A lighter plan may suffice for part of your user population. Also consider whether the frontline category is relevant for operational roles — despite the steeper percentage increase, a frontline plan can be more cost-effective in absolute terms than a full Business Standard licence.

Third, assess whether upgrading makes more financial sense than rolling over. For organisations on Business Standard that actively use security and device management features, the step to Business Premium — which holds its price — may deliver more value per added euro than paying the Standard increase and continuing to buy extra add-ons. This applies especially if you are currently paying for Intune separately or considering investing in Defender for Business.

When to act?

For organisations with a renewal within six months: start planning now. Ask your IT partner or Microsoft reseller for a licence analysis based on the new pricing structure, including a comparison of scenarios such as longer contract terms, plan changes and optimised user distribution. Do not wait until the renewal date itself — negotiating takes time and the best options tend to disappear close to the deadline.

For organisations with a renewal more than twelve months out: use the coming quarters to measure actual Microsoft 365 feature usage. Are Copilot features actively deployed? Are security and Intune being used to their full potential? The results will determine whether the higher rate is justified — or whether adjusting the plan is the right move.

The price increase makes licence optimisation more urgent than ever. Want insight into your current licence usage, a detailed comparison of Microsoft 365 plans or support with your renewal strategy? Contact Zarioh.