Microsoft 365 Is Getting More Expensive. The Risk Is Paying Without Control.

For many mid-market leaders, Microsoft 365 feels like a fixed cost. Necessary. Predictable. Baked into the operating model.

That assumption is about to break.

Microsoft has announced price increases of up to 33 percent across Microsoft 365 and Office 365, effective July 1, 2026, following the removal of volume discounts and several prior increases. For most organizations, this will not land as a single line-item change. It will compound across renewals, bundles, and support costs

For CFOs and business owners, this is not an IT headline. It is a budget, governance, and risk management issue.

What Is Changing and Why It Matters Financially

The headline number gets attention. The mechanics create exposure.

Microsoft is increasing list prices across most commercial Microsoft 365 and Office 365 plans. At the same time, it has eliminated many of the volume and programmatic discounts mid-market organizations relied on to control spend.

The result is not just higher per-user pricing. It is less flexibility at renewal and fewer levers to offset increases once contracts are signed.

For a 100 to 300 employee organization, this can quietly translate into:

• A double-digit percentage increase in annual IT operating expense
• Higher support costs tied directly to Microsoft spend
• Reduced ability to rightsize licenses mid-term
• Budget volatility that surfaces after renewal, not before approval

This is how software inflation becomes operational debt.

The Hidden Risk Most Organizations Miss

The largest risk is not the published price increase. It is paying premium pricing for licenses that do not match how people actually work.

According to Gartner, nearly 40 percent of organizations lack clear visibility into Microsoft 365 usage, leading to unnecessary spend on premium bundles and underutilized services

In practice, that shows up as:

• License sprawl driven by role changes, contractors, and growth
• Premium bundles assigned broadly instead of by role
• Security and management features paid for but never operationalized
• Renewals based on assumptions, not evidence

When prices rise, inefficiency becomes more expensive. When visibility is poor, leadership loses negotiating leverage.

Why Many Mid-Market Organizations Will Overpay

Most renewals follow a familiar pattern.

IT prepares counts. Finance approves based on last year plus growth. Microsoft presents a timeline and options. The agreement is signed to avoid disruption.

What rarely happens is a structured, cross-functional review of:

• Actual usage versus licensed entitlement
• Which roles truly require premium bundles
• Which bundled features overlap with existing tools
• Whether renewal timing or structure can reduce exposure

Without that discipline, organizations absorb the increase by default. Not because it is justified, but because it feels unavoidable.

Questions Leaders Should Be Asking Now

Before the next renewal conversation, executive teams should be aligned on a few simple questions:

• Do we know how many licenses are actively used, by role?
• Are we paying for premium capabilities we do not operationalize?
• How much of our Microsoft spend is fixed versus flexible?
• What happens to support costs as licensing increases?
• Who owns accountability for Microsoft cost governance?

If these answers are unclear, the risk is not theoretical. It is already on the balance sheet.

What to Do Next. Control, Not Panic.

This moment does not require drastic change. It requires discipline.

Smart organizations are using the coming increase as a forcing function to:

• Establish clear visibility into license usage and role alignment
• Rightsize bundles based on operational need, not convenience
• Model renewal scenarios before timelines are dictated
• Treat Microsoft spend as a governed operating expense, not a utility

This is not about chasing discounts. It is about defending predictability.

The Advisor Role Matters More Than the Tool

Microsoft will continue to evolve pricing. That is a given.

The differentiator for mid-market organizations is not how well they understand Microsoft features. It is how well they govern cost, risk, and outcomes across their digital workplace.

At Entech, we work with leadership teams to bring structure, visibility, and accountability to Microsoft 365 decisions so renewals are intentional, not reactive.

If you want to approach 2026 with control instead of surprise, the conversation should start now.