Microsoft 365 Pricing Is Going Up: What You Need to Know

Microsoft just announced a major pricing 💰 update for Microsoft 365, marking one of the most significant changes in recent years. While the company has been rolling out new AI, security, and management features across the suite, prices are increasing globally starting July 1, 2026.

Let’s take a closer look at what’s changing and how it may impact your costs 💵.

Microsoft provided an update revealing that nearly all Microsoft 365 plans from small business tiers to enterprise suites will see a price increase next year.

Yes, that includes Business Basic, Business Standard, Office 365 E3/E5, and Microsoft 365 E3/E5.

Microsoft’s message is basically this:

We’ve added a ton of new value to M365 (security + AI + device management), so pricing needs to catch up.

The changes will apply globally, with local market adjustments for commercial products. Based on Microsoft’s updated list pricing, the increase varies significantly across plans, ranging from about 5% to as high as 33%, depending on the SKU.

Nonprofit pricing will also be updated in line with commercial pricing, as nonprofit discounts are tied to commercial list rates through a fixed percentage reduction.

Below is a comparison of the current pricing and the updated pricing list that will go into effect. All prices are listed per user per month (USD).

Alongside commercial products, Microsoft has also announced pricing changes for the Microsoft 365 Government suites. The update includes percentage-based increases across Microsoft 365 E3, Microsoft 365 E5, and Office 365 E3 plans.

Microsoft plans to raise prices by 13% for several government SKUs, including Office 365 G3 (GCC), Office 365 E3 (GCC High), and Office 365 E3 (DoD). However, federal regulations require that suite pricing cannot increase by more than 10% in a single year. To comply with this rule, Microsoft will apply the first 10% increase in 2026, with the remaining 3% implemented the following year.

Microsoft says the upcoming price increase is tied to the new 1100+ features they’ve added across Microsoft 365. Here’s a simplified look at what’s coming.

1. AI for Every User – Copilot
Microsoft is expanding access to AI tools like Microsoft 365 Copilot across more plans, bringing smarter writing, summarizing, and productivity features to everyday users. And IT administrators now have integrated with enterprise-grade controls to secure, manage, and measure Copilot Chat.

2. Stronger Email and Threat Protection
More users will now get enhanced security from Microsoft Defender for Office:

• Office 365 E3 and Microsoft 365 E3 are getting improved phishing, malware, and malicious-link protection.
• Office 365 E1, Business Basic, and Business Standard will now include URL checks to block known malicious websites when users click links in email or Office apps.

3. Integrated Endpoint Management
To help the environment safeguard AI usage, reduce risks, and maintain compliance.

• Microsoft is adding more Intune capabilities to M365 E3 and E5 to help IT teams manage and secure devices more effectively. This includes Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2.
• For Microsoft 365 E5 customers, even more features are coming, such as Endpoint Privilege Management, Enterprise App Management, Microsoft Cloud PKI.

4. Security Agents Built into Workflows

• Security Copilot agents are being integrated into Microsoft Defender, Entra, Intune, and Purview to help security teams work faster and smarter.
• Security Copilot will be available to all Microsoft 365 E5 customers. The rollout will continue over the next few months with a 30-day notice before activation.

Here’s a visual summary of the major upcoming feature improvements in 2026:

Alongside these updates, here are a few additional key capability highlights worth noting:

• Business Premium customers will receive an additional 50 GB of email storage at no extra cost.

• Advanced Intune capabilities will now be included with Microsoft 365 E3/E5 subscription.

• Since the Microsoft 365 price increase takes effect on July 1, 2026, organizations renewing in mid-2026 or later will feel the impact immediately.
• If you’re on multi-year agreements, you may have a bit more time before the new pricing applies—but only until your next renewal cycle.
• Organizations must also conduct internal license usage reviews to optimize license costs and avoid paying for unused or unnecessary units.
• Some organizations may choose to downgrade or consolidate licenses to reduce costs, while others might upgrade if the expanded features allow them to eliminate separate security or management tools.

Conclusion

Microsoft has given customers more than six months’ notice, but that doesn’t mean the transition will be smooth for everyone. Now is the time to take stock of your licensing, tighten up unused seats, and evaluate whether the new features justify your current plan. A little preparation today can save a lot of budget headaches when the new prices kick in.

Even though Microsoft says it has shipped more than 1,100 new features, but ultimately this pricing update signals one clear direction: “Copilot everywhere.”

What’s your take reg this update? Leave your thoughts in the comments section and stay tuned for more updates.