Your Microsoft 365 costs are going up. On July 1, 2026, Microsoft raises prices across nearly every commercial suite and standalone component. The increases range from 5% to over 40%, depending on what you license.
This isn't a minor adjustment. For a mid-market organization with hundreds of seats, the new pricing can add tens of thousands of dollars to your annual technology spend. If you renew after July 1 without a plan, you'll absorb the full increase at your next contract date.
The good news: you have time to act. Below is what's changing, what it costs, and how to protect your budget before the deadline.
Microsoft announced two changes on December 4, 2025. They take effect together but serve different purposes.
Pricing updates take effect July 1, 2026. They apply to new and renewing customers globally.
Packaging updates begin rolling out in June 2026. Microsoft is adding security and management features to most suites. These roll out at no extra charge and finish by August 1, 2026.
The price increase covers Office 365, Microsoft 365 Enterprise, Business, Frontline and Government suites, plus standalone products like Windows, Enterprise Mobility and Security, and Entra.
Two things are not affected: standalone Microsoft Teams and Copilot SKUs. Their pricing stays the same for now.
The increase depends on your specific plan. Here are the commercial price changes for the most common suites, effective July 1, 2026, in USD per user per month.
Enterprise suites (with Teams):
Business suites (with Teams):
Frontline suites (with Teams):
Standalone components rise too. Windows Enterprise per device jumps 31%, from $5.85 to $7.63. Apps for Business climbs 21%, from $8.25 to $10.00.
Run the math on your seat count. A 13% increase on 500 Office 365 E3 licenses adds about $18,000 a year. That number belongs in your budget planning now, not in a surprise invoice later.
Timing is the lever you control.
Existing customers keep current pricing until renewal. If your renewal falls before July 1, 2026, you can renew or upgrade and lock in today's rates until your next renewal after that date.
If your renewal falls after July 1, you'll move to the new pricing at that date.
Microsoft will give at least 30 days notice in the Message Center before packaging changes reach your tenant. The new pricing applies to both annual and monthly billing plans.
The takeaway is simple. Your renewal date determines your exposure. Know it. Plan around it.
Microsoft is adding features to justify the increase. Several strengthen security and IT management, two areas that drive real business risk.
By August 1, 2026, these capabilities roll out across qualifying suites:
Smaller suites get additions too. Business Basic, Business Standard and Business Premium each gain 50GB of email storage and URL time-of-click protection against malicious websites.
These features carry value. Defender for Office 365 Plan 1 alone closes a common gap in email security. The question for leadership is whether you're set up to use what you're now paying for.
The increase reaches beyond standard commercial accounts.
Nonprofits are tied to commercial rates through a fixed discount. Their prices rise in line with commercial pricing. The nonprofit discount stays between 60% and 75% on impacted products, but the underlying increase still applies.
Government customers face matching increases across GCC, GCC High and DoD environments. For Government suites with total increases above 10%, federal regulations require the increase to phase in over multiple years. Government feature rollouts follow compliance timelines, so they arrive later than commercial equivalents.
If you operate in a regulated or mission-driven sector, these changes affect your budget and your compliance posture at the same time. That combination deserves attention before renewal.
Many organizations will do nothing until the renewal invoice arrives. That's the most expensive option.
Three gaps show up when leadership skips planning:
The increase isn't the real problem. The lack of a plan is. You can't control Microsoft's pricing. You can control your renewal strategy, your license mix and how well you use what you're paying for.
Take these steps now.
Done well, this update becomes a chance to tighten your environment, not just a cost to absorb.
The July 2026 increase is locked in. How it affects your business is not.
The organizations that come out ahead will treat this as a planning event. They'll confirm their timing, clean up their licensing and put the new security features to work. The rest will pay more for the same outcome.
At Entech, we help mid-market organizations across construction, manufacturing and other sectors manage Microsoft 365 with cost, risk and performance in view. We'll review your licensing, map your renewal strategy and make sure you get value from every feature you're paying for.
Schedule an IT strategy session with Entech to build your Microsoft 365 plan before the July 1 deadline.