Note: This post was written by Claude Opus 4.8. The following is a synthesis of Microsoft’s own licensing documentation and reporting from independent analysts.
Microsoft is raising the price of Microsoft 365 on July 1, 2026 — its first increase to the commercial suites since 2022. For most businesses, though, nothing changes on July 1: the new rates apply at your next renewal, and there’s a window to lock in today’s price before then. Here’s what’s going up, when it reaches you, and what it buys.
What’s going up
Every enterprise suite rises by exactly $3 per user per month. In percentage terms that lands hardest on the cheapest plans — frontline and small-business — and barely moves the top tier.
| Plan (per user / month) | Old | New | Change |
|---|---|---|---|
| Office 365 E3 | $23.00 | $26.00 | +13% |
| Office 365 E5 | $38.00 | $41.00 | +8% |
| Microsoft 365 E3 | $36.00 | $39.00 | +8% |
| Microsoft 365 E5 | $57.00 | $60.00 | +5% |
| Business Basic | $6.00 | $7.00 | +16% |
| Business Standard | $12.50 | $14.00 | +12% |
| Frontline F1 | $2.25 | $3.00 | +33% |
| Frontline F3 | $8.00 | $10.00 | +25% |
Two notable holdouts don’t change at all: Office 365 E1 ($10) and Microsoft 365 Business Premium ($22). The “without Teams” version of each suite rises by the same $3, which works out to an even steeper percentage — the no-Teams frontline F1 jumps 43%, the largest single bump in the update. Standalone Teams and standalone Copilot licenses are excluded.
When it actually hits you
July 1 is when the new list price takes effect for fresh and renewing orders — not the day your existing bill jumps. Microsoft’s own FAQ is explicit: “Existing customers will see the new prices at their next renewal after July 1, 2026,” and “Customers on existing multi-year agreements will continue at their current pricing until renewal.”
What that means in practice depends on how you buy:
- Enterprise Agreement: you’re protected until the enrollment renews — potentially a year or two out.
- Annual CSP or New Commerce term: locked for the committed 12 months; the new price applies at your annual renewal on or after July 1.
- Month-to-month: the shortest renewal is the next monthly cycle, so these subscribers move to the new rate almost immediately after July 1.
There’s also a hedge Microsoft spells out. If your term ends before July 1, you can “renew or upgrade to their chosen suite and lock in the current pricing (pre-price increase pricing) until their next renewal after July 1, 2026.” Renew early and you buy another full term at today’s rate. The one catch: a mid-term upgrade to a multi-year E3 or E5 pulls your start date forward.
What the extra $3 buys
Microsoft isn’t charging more for the same box. Each suite picks up features:
- Office 365 E3 and Microsoft 365 E3 gain Microsoft Defender for Office Plan 1, and the M365 edition adds several Intune management tools.
- Microsoft 365 E5 gets the headline additions — Microsoft Security Copilot and Microsoft Cloud PKI, both E5-only.
- Business plans pick up 50 GB more mailbox storage and time-of-click URL protection.
One clarification that trips people up: the “Copilot Chat” folded in is the free, included chat experience, not the $30-per-user Microsoft 365 Copilot add-on — that stays a separate purchase. And the bundled Security Copilot arrives capped: E5 tenants get 400 Security Compute Units a month per 1,000 paid licenses (to a ceiling of 10,000), with anything beyond billed on top. Microsoft frames the package against “an increasingly complex threat landscape, rising IT demands, and the urgent need for AI-powered transformation,” pointing to more than 1,100 features shipped in the past year.
Is it worth absorbing?
In absolute dollars this is a softer hit than 2022, the last time these suites moved — that round added $3 to $4; this one averages closer to $2 and spares the flagship Microsoft 365 E5 with only a 5% bump. The harder question is whether the new contents earn it. Tony Redmond, who tracks Microsoft 365 licensing closely, is skeptical: “I’m unsure if any organization can use all the functionality bundled into Microsoft 365,” he wrote, noting that many of those 1,100 features are tied to Copilot and “therefore useless to tenants that don’t use Copilot.”
The practical move is unglamorous: find your renewal date. If it lands before July 1, you can lock another term at the current price — and because Microsoft says the additions roll out in 2026 “regardless of the price paid or agreement term,” locking costs you nothing in capability. If your renewal is already past July 1, the increase is baked in, and the only decision left is whether the Defender, Intune, and Security Copilot adds justify staying on the suite you have.
Sources
- Microsoft - Microsoft 365 commercial pricing and packaging updates (2026)
- Microsoft - 2026 pricing and packaging updates FAQ
- Microsoft 365 blog - Advancing Microsoft 365: new capabilities and a pricing update
- Office365ITPros (Tony Redmond) - Microsoft 365 pricing increase
- US Cloud - Microsoft 365 price increase July 1, 2026: what enterprise buyers need to know
- Practical 365 - Microsoft to increase prices for Office 365 / Microsoft 365 (March 2022 history)