Microsoft is set to implement its significant commercial pricing update for Microsoft 365 since 2022, with changes coming into effect on 1 July 2026. This bold move will impact organisations storing volume discount agreements made before November 2025 more significantly, with the real price increase nearing 20%.
Feedback from Microsoft resellers indicates that many enterprise customers are still unprepared for this shift. According to Strategic Micro Systems, who have extensive experience managing Microsoft 365 licensing since 2002, the key issue is the lack of pre-deadline preparation. They note that while the price hike is no longer shocking, businesses remain caught off guard due to inadequate planning.
The announced price adjustments are as follows: Business Basic will increase from $6 to $7 per user/month, Business Standard will rise from $12.50 to $14 per user/month, whereas Business Premium remains at $22 per user/month. Certain frontline plans will see a substantial increase, with Microsoft 365 F1 rising by 33% if Teams are included and 43% if not. Similarly, F3 will increase by 25% with Teams.
Microsoft argues the platform’s development justifies these increases, citing substantial investment since 2022 and the introduction of over 1,100 features. Microsoft highlights that they aim to combat growing security concerns, escalating IT demands, and the pressing need for AI-enhanced transformation. Thus, they plan to include additional security and management capabilities powered by AI in Microsoft 365.
CEO Satya Nadella emphasized this during an investors’ meeting, referring to Copilot as a “coworker” and highlighting the overall data model, Work IQ, as valuable to CIOs. The licensing model is shifting towards serving both autonomous AI agents and human workers, aligning with these pricing changes.
New capabilities will be bundled into existing plans between June and August 2026. For example, Business Basic and Standard plans will receive enhancements like 50GB of additional email storage and advanced phishing protection. E3 and E5 customers, meanwhile, will gain additional security features and management applications.
However, companies running non-Microsoft security solutions might find these additions less appealing. They may be paying for features they don’t need, according to SAMexpert’s analysis. The introduction of bundled Copilot features does not offer the full capability of a separate Copilot license, adding $30 per user per month.
For enterprise clients, the pricing structure will shift significantly due to the removal of volume discounts starting from November 2025, further exacerbated by the July pricing update. SAMexpert modeling estimates a considerable fiscal impact for enterprises with E5 users.
Companies managing the significant increase on frontline worker plans must act strategically to mitigate costs. Additionally, organisations that have been postponing a commitment to Copilot now face rising costs across the board, pushing them to make decisive actions before renewing their licensing contracts.
For IT teams, it’s critical to check renewal dates, conduct thorough audits of existing licenses, and evaluate the Business Standard to Premium gap. This period may also be an opportunity to reassess frontline solutions and solidify a confident stance on adopting Copilot before the impending renewal cycle.
