Starting on 1st July 2026, Microsoft is implementing one of the most significant commercial pricing updates in recent years, affecting Microsoft 365, Office 365 and other related cloud services.  

For many businesses, this is more than a simple rate adjustment as it directly affects IT budgets and strategies, and overall operational planning. In this blog, we’ll explain everything you need to know about Microsoft’s planned increases.

Pricing increase overview 

Microsoft 365 and Office 365 subscription prices will rise across the board, and key list-price changes include: 

  • Microsoft 365 Business Basic: $6 to $7 
  • Microsoft 365 Business Standard: $12.50 to $14 
  • Office 365 E3: $23 to $26 
  • Microsoft 365 E3: $36 to $42+ 
  • Microsoft 365 E5: $57 to $65+ 

The exact rates will vary by region, renewal timing and local currency. 

The price adjustments, however, are accompanied by expanded capabilities and many plans will now include enhanced security features and AI tools like Microsoft Copilot. These updates emphasise Microsoft’s broader strategy of shifting from traditional productivity tools to more secure, AI-ready workspaces. 

Why does the price increase matter? 

For most businesses, Microsoft tooling underpins collaboration, productivity and security company-wide and maintaining this tooling is essential.

For IT and finance leaders, these price increases could mean: 

  • Higher operational expenditure on core productivity tools 
  • Budget pressure for various departments like IT, HR and finance 
  • Re-evaluation of licensing strategy and asking if current user licenses are appropriate for the needs of the business 
  • Potential impact on renewals and strategies for large agreements. 

Proactive planning today can reduce the exposure to higher rates after July 2026, particularly for organisations with large or complex licensing structures. 

Strategic preparation steps 

Conduct a licence audit 

The most effective way to respond to Microsoft’s 2026 price increase is to understand exactly how licenses are being used across your organisation and what value you’re currently getting. Many businesses accumulate Microsoft subscriptions that no longer align with how users are working (employees changing toles, teams growing or shrinking, and temporary access not being removed). 

A thorough licence audit will help you to identify over-licensing, inactive accounts or premium licenses being used by employees who only require basic functionality. Addressing these inefficiencies early can soften the financial impact of the upcoming price increase. 

Align license types to employee roles 

Not every employee needs the same level of tooling within Microsoft 365 and frontline staff, executives and contractors might all interact with Microsoft tools in very different ways. 

Reviewing licence assignments through the lens of job type can allow you to reserve higher cost plans like E5 to users who genuinely benefit from advanced security or analytics features. 

Review contract terms and billing 

The structure of Microsoft contracts can have a huge impact on your total cost and businesses that delay the decision until after 1st July 2026 will be more likely to absorb the full financial effect of the price increase. 

Renewing early or committing to annual or multi-year agreements before the increase takes effect can lock in your current rates for longer. 

Assess value from new features 

It’s no surprise that Microsoft is positioning this increase as paving the way for a perceived value boost in AI and security capabilities, but paying these higher prices only makes sense if these features are actually being adopted. 

Your business should be evaluating which Microsoft tools they are actively using as well as which tools you have roadmapped to adopt in the next 12-24 months. Could any of these features replace current third-party tools? Could spend be better invested in engaging with a partner company to provide training or Microsoft 365 consultancy? 

Engage early with Microsoft or your licensing partners 

Proactive engagement is the most key preparation step and waiting until a renewal deadline only reducing your options and negotiating power. By engaging early, you allow your IT and finance teams to align budgets, avoid nasty surprises and make more informed decisions rather than reactive ones. 

Microsoft’s price increases are coming, and now is the time to prepare for it. Need some expert help or guidance? Get in touch with our team to talk through your options and help you control your costs with confidence.