On December 4, 2025, Microsoft announced price increases for most commercial Microsoft 365 Business and Enterprise licenses, effective July 1, 2026. The changes affect the Business Basic, Business Standard, Office 365 E3, Microsoft 365 E3 and Microsoft 365 E5 plans, while per seat costs for Business Premium and Office 365 E1 remain unchanged.
This is the biggest broad pricing increase for M365 since 2022, which saw the first upsurge in user license cost since Microsoft Office was migrated to the cloud with the Office 365 suite in 2011. SWK Technologies has put together this article to help your business better understand what to expect and how to get ahead of these changes to Microsoft 365 before Q3 2026:
Microsoft 365 Price Increases by License Tier
Microsoft has structured the July 2026 price changes to vary by plan, with some licenses seeing increases while others remain at current rates. The table below is taken directly from the December 4 announcement and lists the planned per seat pricing changes for each license type:
| Microsoft 365 Suite | Current List Price in December 2025 | List Price as of July 1, 2026 |
|---|---|---|
| Business Basic | $6 | $7 |
| Business Standard | $12.50 | $14 |
| Business Premium | $22 | $22 |
| Office 365 E1 | $10 | $10 |
| Office 365 E3 | $23 | $26 |
| Microsoft 365 E3 | $36 | $39 |
| Microsoft 365 E5 | $57 | $60 |
| Microsoft 365 F1 | $2.25 | $3 |
| Microsoft 365 F3 | $8 | $10 |
Here is a more comprehensive breakdown of the 2026 pricing for each Microsoft 365 plan:
Microsoft 365 Business Plans
Business licenses, designed for companies with up to 300 users, see the following changes:
- Microsoft 365 Business Basic increases from $6 to $7 per user per month, representing a 16.7 percent increase. This entry-level plan provides web and mobile apps with basic productivity and collaboration tools.
- Microsoft 365 Business Standard moves from $12.50 to $14 per user per month, a 12 percent increase. Business Standard includes desktop application access and advanced collaboration features compared to Basic.
- Microsoft 365 Business Premium holds steady at $22 per user per month with no price change. This comprehensive plan includes advanced security and device management capabilities.
Microsoft 365 Enterprise Plans
Enterprise licenses, which have no user seat limit, experience more substantial increases:
- Office 365 E1 remains at $10 per user per month. This web-based plan provides cloud services without desktop applications.
- Office 365 E3 increases from $23 to $26 per user per month, a 13 percent increase. E3 includes desktop applications and advanced compliance tools.
- Microsoft 365 E3 moves from $36 to $39 per user per month, an 8.3 percent increase. This plan adds Windows 11 Enterprise and advanced security features to the Office 365 E3 foundation.
- Microsoft 365 E5 increases from $57 to $60 per user per month, a 5.3 percent increase. E5 represents the most comprehensive offering with advanced security, compliance and analytics capabilities.
A History of M365 Pricing Changes
The July 2026 price increases represent only the second significant adjustment to Microsoft 365 commercial licensing in over 15 years. The last major price increase for Business and Enterprise plans occurred in March 2022, and saw upcharges of between 8 to 25 percent across every license tier.
In both cases, Microsoft has justified the increases as reflecting the expanded investment in and improved value of their offerings throughout the M365 suite of products, which includes several new tools, significantly upgraded features and enhanced security protections against malware, phishing, etc. However, the growing pace of these pricing changes – alongside other cost surges for various services – may signal that they will become a more frequent occurrence as Microsoft tries to navigate economic and market shifts.
Other Price Increases in the Microsoft Ecosystem
New price hikes by Microsoft has been predicted by observers for some time given the other cost increases applied for other versions of M365, various additional Microsoft product lines and increased costs for enterprise cloud service providers. These include:
- Regular increases of monthly billing subscription prices starting in 2022 and continuing through 2025
- Cost adjustments for cloud services delivered internationally
- Increased pricing for individual apps such as Power BI
- Upsurges for Microsoft 365 Personal and Family plans
- Price changes for Office 365 Government plans
New Capabilities Behind the 2026 Price Changes
Microsoft reported that they added over 1100 new features across M365 and related applications, including their new Copilot AI tool launched in 2023. Here are a few of the expanded capabilities and updates that will become available across the Business and Enterprise plans for Microsoft 365 and Office 365 by July 1, 2026:
Enhanced Security Features
All Business Basic, Business Standard and Office 365 E1 plans will gain URL checks in Outlook and Office applications, which review and verify potentially malicious hyperlinks in emails and documents. Standard, O365 E3 and M365 E3 will also feature access to enhanced security features from Microsoft Defender.
Copilot Chat Enhancements
Microsoft rolled out Copilot Chat across all Microsoft 365 users in 2025, and by 2026 will integrated fully with Word, Excel, PowerPoint and more. It will also be connected to user inboxes and calendars in Outlook, as well as Agent Mode for iterative content creation. All Business and Enterprise licenses will also include security, management and analytics controls for Copilot Chat in-plan.
Integrated Endpoint Management
Microsoft 365 E3 and E5 plans gain additional endpoint management capabilities through Microsoft Intune, including Remote Help, Advanced Analytics and Intune Plan 2. M365 E5 customers also receive Intune Endpoint Privilege Management, Enterprise Application Management and Microsoft Cloud PKI.
Security Copilot for M365 E5 Customers
Microsoft announced that Security Copilot agents will roll out to all Microsoft 365 E5 customers in the coming months. These AI-powered agents integrate into security workflows for Microsoft Defender, Entra, Intune and Purview.
Strategies to Manage M365 Licensing Costs
Though the upcoming pricing change is at the very least inconvenient, there are several options available to help you manage the financial impact of the July 2026 increases. Here are a few strategies for your consideration:
Lock in Current Pricing Through Early Renewal
Businesses with renewals scheduled between July 2026 and June 2027 can take advantage of early renewal before July 1. This locks in current pricing for the entire subscription term, deferring the increase by up to one year; however, it should be noted that this technically will only push off the price hike until your next renewal.
Annual Versus Monthly Subscriptions
Microsoft offers both annual and month-to-month subscriptions for Business plans, the latter of which includes an additional cost premium. The July 2026 price increases apply to both payment structures; however, the percentage increase compounds with the monthly premium. Businesses currently on month-to-month subscriptions should evaluate whether switching to annual commitments before the price increase would generate meaningful savings and align with their objectives.
Microsoft 365 Partner Discounts
Microsoft 365 resellers and managed service partners receive access to discounted license pricing, enabling you to offset the added cost of the increase depending on your plan. Vendors also qualify for special limited-time prices for add-ons such as Copilot, as well as better rates for licenses purchased in bulk.
Right-Sizing License Investments
Many businesses carry unused or underutilized licenses. Conducting a Microsoft 365 usage audit before renewals can identify opportunities to reduce license counts without impacting productivity.
Common areas for optimization include:
- Licenses assigned to departed employees not yet reclaimed
- Users with higher-tier licenses than their actual usage requires
- Duplicate accounts or test accounts still consuming paid licenses
- Frontline workers assigned full Business licenses when F3 would suffice
Right-sizing typically requires coordination with IT teams or a Microsoft 365 partner to analyze usage data, interview department managers, and implement changes without disrupting users.
3-Year Agreements Offer Price Stability
Some businesses can negotiate multi-year licensing agreements through Microsoft partners or Enterprise Agreements. These arrangements can provide pricing stability beyond a single renewal cycle, though they require larger commitments. Multi-year agreements make most sense for businesses with predictable growth patterns.
The Value of Working with a Microsoft 365 Partner
Microsoft partners offer distinct advantages for businesses navigating M365 licensing changes and managing ongoing IT needs when it comes to your Microsoft 365 environment. These benefits become particularly valuable during pricing transitions:
Access to M365 License Discounts
Microsoft vendors can provide discounts on Business and Copilot licenses through their relationship with Microsoft. While specific discount rates vary based on the agreement and purchase volume, working with a partner typically results in lower per-seat costs compared to direct purchases. Microsoft Gold Partners such as SWK Technologies can provide access to partner-exclusive programs not available for individual Business plans.
Limited-Time Copilot Promotions
Through March 31, 2026, Microsoft is running promotional pricing on Copilot Business licenses and bundles. Partners can help businesses take advantage of these time-limited offers:
- Standalone Copilot Business receives a 15 percent discount
- Business Standard with Copilot Business bundles receive a 35 percent discount
- Business Premium with Copilot Business bundles receive a 25 percent discount
These promotions end three months before the July price increases take effect, creating a narrow window for businesses to adopt Copilot at reduced rates.
Implementation Expertise
Beyond licensing discounts, partners provide implementation support that helps businesses maximize their Microsoft 365 investments. This includes:
- Deployment planning and execution for new features and capabilities, ensuring smooth rollouts that minimize disruption to daily operations.
- Security configuration and management for advanced features like Microsoft Defender and Intune, helping businesses leverage new security capabilities included with price increases.
- User training and adoption support to ensure teams can effectively use new features, particularly AI-powered tools like Copilot Chat and Security Copilot agents.
Integration Differentiator
Many businesses often overlook or are completely unaware that Microsoft 365 applications feature integrations with other business software systems. For example, you can connect your Outlook account with your CRM (customer relationship management) or accounting solution to capture contact details and automate actions like emailing invoices.
When you work with a partner with multiple technology proficiencies, you also gain access to their expertise across these different platforms, including M365 and its various apps and services. This will enable you to optimize how your technology stack operates, from taking advantage of pre-built data connectors to creating customizations from shared coding architecture.
Get a Free Microsoft 365 Assessment with SWK Technologies
Explore how much more you could get from your Microsoft 365 subscription with a complimentary plan assessment before July 2026 price increases take effect. SWK’s Managed Cloud Services team will examine your current licenses and usage to uncover features you may have overlooked and identify where consolidation could reduce your monthly costs.
Request your assessment here and see how a Microsoft Gold Partner can help you capture more value from your subscription.