Microsoft 365’s biggest price jump since 2022
Microsoft’s latest commercial price increase for Microsoft 365 officially goes live today, July 1, 2026, and it’s the biggest jump customers have seen since 2022. If your organization is renewing any time after today, you’re now negotiating against the new per‑user rates, and the old pricing window closed at midnight.
This update doesn’t touch consumer plans like Microsoft 365 Personal or Family, but it hits Business, Enterprise, and Frontline suites across the board, with some plans seeing double‑digit percentage increases. The headline figure everyone’s talking about is that certain frontline SKUs are up as much as 43%, with enterprise E‑class suites climbing into the low‑teens.
What actually changed: new prices by plan
Here’s how the most common commercial Microsoft 365 plans look now (annual commitment, per user, in USD).
Standalone add‑ons are also moving: Windows Enterprise per device jumps from $5.85 to $7.63 (about 31%), and Microsoft 365 Apps for Business goes from $8.25 to $10 (around 21%). Standalone Teams and Copilot SKUs are explicitly excluded from this round, so those prices stay where they are—for now.
Frontline workers take the hardest hit
If you run a hospital, retail chain, or manufacturing operation with a big frontline workforce, this update bites hardest. Microsoft 365 F1 without Teams now carries a 43% increase, going from $1.75 to $2.50 per user per month.
That sounds tiny on paper, but at scale it adds up very quickly. A 5,000‑user deployment on F1 without Teams is looking at roughly an extra $45,000 per year on that single SKU. Organizations with thousands of shift workers should revisit whether the “with Teams” variant at $3.00—up 33%—is a better long‑term play if Teams adoption is growing or expected to grow.
On the enterprise side, Office 365 E3 sees a 13% jump from $23 to $26 per user per month. For a 500‑seat organization, that alone is roughly $18,000 in additional annual cost before you touch any other plan, add‑on, or overage.
What Microsoft is bundling to justify the hike
Microsoft isn’t just cranking up the bill; it’s also folding more security and management capabilities into certain suites to make the new pricing slightly easier to swallow.
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E3: Customers now get Microsoft Defender for Office 365 Plan 1 baked into the suite, plus Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2 features. Defender for Office 365 Plan 1 used to run around $2 per user per month as a standalone add‑on, so if you were already paying for it separately, some of this increase will be offset at renewal.
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E5: E5 tenants now receive Security Copilot at 400 Security Compute Units (SCUs) per 1,000 licensed users per month, giving them a built‑in pool of AI‑powered investigation capacity. Additional SCUs are charged at $6 per SCU, so heavy incident response shops will want to model usage carefully to avoid surprise charges.
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Business Basic/Standard: These plans gain extra mailbox storage (an additional 50 GB), time‑of‑click URL protection in Outlook, and Copilot Chat enhancements with inbox and calendar awareness plus access to Word, Excel, and PowerPoint agents.
A lot of organizations are paying for overlapping security add‑ons, and this update quietly folds some of that functionality into the base suite. The flip side is that it nudges customers deeper into Microsoft’s security and AI stack whether they were ready or not.
Why enterprise bills are rising faster than the headline percentages
For large enterprises, the percentage increases Microsoft lists don’t tell the whole story. Microsoft removed Enterprise Agreement volume discounts in November 2025, which means Level B, C, and D customers are now paying Level A list prices regardless of seat count.
Under the old EA model, Level D (15,000+ seats) often saw automatic discounts of around 12% on online services, with slightly smaller percentage breaks at Levels C and B. As of November 1, 2025, those volume discounts disappeared, so the new higher list prices stack directly on top of an already less favorable EA model.
Organizations that locked in multi‑year EAs before that cutoff are shielded until their current term ends. Everyone else negotiating renewals in late 2026 is getting hit by both the pricing changes and the loss of volume discounts at the same time, which is why a lot of CIOs and CFOs are reporting much larger year‑over‑year jumps than the 5–13% headline numbers suggest.
What month‑to‑month and annual customers will actually see
How quickly your bill goes up depends on how you’re subscribed.
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Month‑to‑month: You’ll see the new pricing on your next billing cycle after July 1, which for most tenants means the August invoice.
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Annual commitment: If your renewal date is after today, you keep your current price until renewal, then move to the new rates.
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Consumer plans: Microsoft 365 Personal and Family stay at $69.99 and $99.99 per year respectively; they aren’t part of this update.
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Education and nonprofit: Education pricing is unchanged, while nonprofit plans move in proportion to commercial rates via a fixed discount structure.
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Government: Government suites do see increases, but any hikes above 10% are phased in over multiple years to comply with regulations.
This gives IT and finance teams a bit of breathing room to clean up licensing before renewal—but not much.
How Microsoft 365 now compares to Google Workspace
One interesting wrinkle: at the lower tiers, Microsoft 365 and Google Workspace are now basically price‑matched. Google raised Workspace prices when it bundled Gemini AI into all plans in early 2025, and today Business Starter is $7 per user per month and Business Standard is $14.
Microsoft 365 Business Basic is now also $7, and Business Standard is $14 on an annual commitment. With that cost gap narrowed to almost zero, the decision for many organizations shifts away from list price and toward migration cost, integration depth, and existing investments in either Microsoft 365 or Workspace.
What you should do before your next renewal
Even though the “early‑renewal” window closed yesterday, there are still concrete moves customers can make before their next renewal date.
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Audit seat usage
Pull a 90‑day sign‑in report from the Microsoft 365 Admin Center and look for inactive accounts—departed employees, unused apps, and test licenses that were never shut off. Trimming those before renewal reduces the base on which the new price is multiplied. -
Right‑size your plan tiers
The price gap between Business Standard ($14) and Business Premium ($22) is now just $8 per user per month, which makes Premium more attractive for organizations with device management or remote work needs. Re‑evaluate whether you’re under‑buying or over‑buying based on today’s pricing rather than last year’s assumptions. -
Kill overlapping add‑ons
If you’re on E3 and still paying separately for Defender for Office 365 Plan 1, drop the standalone add‑on when you renew, because it’s being folded into the E3 suite by August 1. This won’t erase the increase, but it will soften the blow a bit. -
Re‑model frontline licensing
For large frontline populations, compare the economics of F1 with and without Teams under the new pricing structure. With the F1 non‑Teams plan up 43% and the Teams version up 33%, actively used Teams deployments probably justify the slightly higher spend. -
Export usage analytics now
If your renewal is in the second half of 2026, start building a data‑backed case for your license mix today instead of when the invoice lands. Being able to show clear usage patterns is one of the few pieces of leverage left in EA negotiations.
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