Microsoft 365
Microsoft 365 Price Increases Coming July 2026: What’s Changing and What to Do
Updated 11 May 2026
Microsoft has confirmed pricing and packaging changes for almost every Microsoft 365 commercial SKU from 1 July 2026, with new features rolling into existing licences between June and August. Microsoft frames the change as "extending value to more customers" with features it says have "collectively... increased the value of our suites across security, productivity, and management." The headline numbers: most plans go up between 5% and 16%, frontline plans up 25–33%, and Business Premium is unchanged. Existing customers stay on current pricing until renewal, so what you do in the next few months matters.
This is the third significant repricing since the New Commerce Experience launched in 2022, and the first to bundle a meaningful set of previously paid add-ons into the base licences.
A note on the GBP figures
Microsoft has only published USD list prices for the new pricing so far. The GBP figures in the tables below are the announced percentage increases applied to current UK list prices on microsoft.com/en-gb (ex VAT, annual commitment, with-Teams variants). Prices through CSP partners may differ slightly from Microsoft.com retail; ask your provider for their exact figures. When Microsoft publishes official UK list prices closer to July, expect a few pence of variance from these estimates due to FX rounding, the direction and approximate magnitude will not change.
Enterprise plans
| Plan | Current £/user/mo | From 1 July 2026 | Change |
|---|---|---|---|
| Office 365 E1 | £7.70 | £7.70 | unchanged |
| Office 365 E3 | £20.60 | ~£23.30 | +13% |
| Office 365 E5 | £34.10 | ~£36.85 | +8% |
| Microsoft 365 E3 | £31.00 | ~£33.50 | +8% |
| Microsoft 365 E5 | £49.00 | ~£51.45 | +5% |
Business plans
| Plan | Current £/user/mo | From 1 July 2026 | Change |
|---|---|---|---|
| Microsoft 365 Business Basic | £4.60 | ~£5.35 | +16% |
| Microsoft 365 Business Standard | £9.60 | ~£10.75 | +12% |
| Microsoft 365 Business Premium | £16.90 | £16.90 | unchanged |
Frontline plans
Microsoft 365 F1 is rising 33% (from $2.25 to $3.00 USD) and F3 is rising 25% (from $8.00 to $10.00 USD). Microsoft does not publicly list F-plan GBP prices, speak to your CSP partner for current and post-July figures.
Business Premium is the only mainstream commercial SKU not increasing. The frontline plans take the biggest hit by percentage but remain the cheapest licences in the catalogue.
What you're getting for the extra money
Microsoft is bundling several capabilities that were previously paid add-ons into the affected SKUs. Whether the additions are useful to your business is the question that decides whether the price rise is reasonable or just a rise.
Source: Microsoft (December 2025 packaging announcement). Click image to enlarge.
Across the board: Copilot Chat enhancements (the free Copilot tier, not Microsoft 365 Copilot per-seat) are rolling into every affected plan.
Office 365 E1: URL time-of-click protection.
Business Basic, Business Standard, and Business Premium: +50GB of mailbox storage (doubling from 50GB to 100GB per user).
Business Basic and Business Standard also gain URL time-of-click protection, previously only available in Business Premium and above via Defender for Office 365 Plan 1.
Office 365 E3 and Microsoft 365 E3: Microsoft Defender for Office 365 Plan 1, Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2 are all moving in. If you currently pay for any of these as add-ons, the price rise effectively pays for itself.
Microsoft 365 E5: Microsoft Security Copilot, Intune Endpoint Privilege Management, Microsoft Cloud PKI, and Intune Enterprise Application Management join the bundle on top of the E3 additions. E5 is becoming materially more capable, and the 5% increase is the smallest in the catalogue.
Standalone Microsoft 365 Copilot and Teams SKUs are not in scope for this update.
Standalone product changes
Several non-bundle SKUs are also moving on 1 July (USD figures from Microsoft's announcement):
- Microsoft 365 Apps: $12.00 → $14.00 (+17%)
- Windows E3: $6.63 → $7.63 (+15%)
- Enterprise Mobility + Security E3: $10.60 → $12.00 (+13%)
- Microsoft Entra ID P1: $6.00 → $7.00 (+16%)
If you've historically licensed users à la carte (Apps + EMS + Windows + Entra) rather than as an M365 bundle, your effective per-user cost is rising 13–17% across most components, making the M365 E3 bundle, which rises only 8%, relatively cheaper.
What to do before your renewal
Existing customers stay on current pricing until their next renewal date, and Microsoft will post at least 30 days notice in your Microsoft 365 Message Center before the new packaging arrives in your tenant. That gives most SMEs anywhere from one month to twelve. Use the window well.
1. If your renewal is between now and August 2026, consider pulling it forward
A renewal completed before 1 July locks in 12 more months at current pricing. If yours falls in May or June, talk to your CSP about an early renewal. If it falls later in the year, there's no benefit to bringing it forward; the new pricing will apply either way.
2. Audit who really needs what
Most businesses have an E5 user who should be on E3, or an E3 user who'd be fine on Business Premium. The cheapest licence change is the one that downgrades an over-provisioned user. We typically find 10–20% of seats can move down a tier with no loss of function.
3. Cancel overlapping add-ons
If you're paying separately for Defender for Office 365 Plan 1, Intune Plan 2, Intune Remote Help, or Intune Advanced Analytics and you're on E3, you're about to start paying twice. Drop those standalone SKUs at renewal, they're now included.
4. Reconsider bundle vs à la carte
With Apps, EMS, Windows, and Entra all rising 13–17% and M365 E3 rising only 8%, the bundle wins on price more clearly than before. If you assembled your stack component-by-component historically, this is the moment to model the bundle alternative.
5. Stay on annual commitment
Microsoft's NCE monthly-commitment pricing is roughly 20% above annual. Switching to monthly to "preserve flexibility" almost always costs more than the savings from the flex you actually use. Annual remains the right default for stable seat counts.
How we help customers optimise their licensing
TheLogic runs a licence optimisation review for clients heading into renewal. The aim is simple: land you on the cheapest correct licence position before the new pricing takes effect, and surface any standalone add-on spend that's about to be duplicated by the new bundle inclusions.
A review typically covers:
- Seat-by-seat tier audit: every active user mapped against their actual M365 usage (Apps, Teams, mailbox size, Intune enrolment) to flag over-provisioned seats.
- Add-on overlap check: cross-reference standalone Defender, Intune, and EMS subscriptions against what your base licences are about to absorb on 1 July.
- Bundle vs à la carte modelling: with Apps, EMS, Windows, and Entra all rising 13–17%, the maths is changing in your favour or against depending on how your stack is built.
- Renewal timing: where pulling your renewal forward saves money, we quantify the saving. Where it doesn't, we say so.
- Dormant and shared-account cleanup: leavers still consuming licences, orphaned mailboxes, shared mailboxes that should be free Exchange resources. Quick wins.
You'll get a written report with current spend, post-July spend without changes, post-July spend with our recommendations, and the implementation steps to get there. Two to three weeks for an existing client, or wrapped into a free initial assessment for new ones.
Get in touch to scope a review.
Bottom line
Most of the price rise is genuinely buying you more, particularly on E3 and E5, where several previously paid add-ons are being absorbed. The pain is concentrated in Business Basic, Business Standard, and the frontline plans, where the bundled additions are smaller. Treat the period before your next renewal as an audit window: get the right seat on the right SKU, drop overlapping add-ons, and you can usually neutralise the increase.
If you'd like a hand reviewing your tenant before renewal, get in touch. We'll model your seat-by-seat post-July cost against current spend and flag where the licensing optimisations are.
Sources
- Microsoft 365 pricing and packaging updates, formal licensing news, full SKU pricing in USD.
- Advancing Microsoft 365: new capabilities and pricing update, Microsoft 365 Blog announcement, 4 December 2025.