Microsoft announced this in December 2025 and most businesses will meet it at their next renewal, which for many has not arrived yet. Microsoft 365 licensing prices rose on 1 July 2026 across almost every commercial plan, by between 5% and 23% on the published US list, depending on which one you hold. One plan did not move at all, and it happens to be the plan that carries the security tooling. That single fact changes the upgrade maths for a lot of businesses, and it is the part nobody sends a letter about.
What Microsoft changed on 1 July
Two changes landed together. Prices went up, and products were added to plans.
Microsoft’s pricing and packaging update publishes the figures as US list prices, and states that the pricelist ‘is subject to change and may vary by country and currency’. The December announcement says the changes ‘apply globally with local market adjustments’. So treat what follows as the shape of the change and not as your invoice:
| Plan | Was | Now | Change |
| Business Basic | $6.00 | $7.00 | 16% |
| Business Standard | $12.50 | $14.00 | 12% |
| Business Premium | $22.00 | $22.00 | No change |
| Apps for Business (standalone) | $8.25 | $10.00 | 21% |
| Office 365 E3 | $23.00 | $26.00 | 13% |
| Microsoft 365 E3 | $36.00 | $39.00 | 8% |
| Microsoft 365 E5 | $57.00 | $60.00 | 5% |
The suite rows above are the with-Teams versions. Meanwhile, the no-Teams variants rose further, with Business Basic up 23% and Business Standard up 16%. However, Business Premium without Teams held flat at $18.79.
Two conditions decide whether you have felt it yet, and Microsoft’s licensing FAQ sets both out. Existing customers see the new prices at their next renewal after 1 July 2026, and the new pricing applies to annual and monthly billing alike. Multi-year agreements run on at the original rate until they come up. So a business on an annual term signed in May is still on last year’s pricing and will meet the increase in 2027, with no warning beyond this one.
Business Premium did not move, and that changes the arithmetic
The pattern in that table is worth sitting with. Every entry-level plan rose. Business Premium did not.
Premium was always the tier that carried the controls a small business needs: device management through Intune, conditional access through Entra ID P1, and Defender for Business. The objection was always the gap in price over Business Standard. That gap has now narrowed by the full amount Standard went up, without Premium costing a penny more.
Where UK businesses overpay on Microsoft 365 priced that gap and worked through whether the upgrade earns its place. Check the figure in it against your own renewal quote before relying on it, because the gap moves with every price change. The direction of travel is what matters here, and it has moved in the reader’s favour, which is an unusual direction for a price rise to push anybody.
None of that makes Premium automatically right. A business with ten users who all work from one office on company-owned desktops may genuinely not need device management. The point is narrower: if you looked at Premium in 2025 and decided the gap was too wide, the gap you rejected no longer exists.
What arrived in your plan without an announcement
The packaging half of the change is where the money partly went, and what you received depends entirely on which family you are in. This is where a lot of the coverage has been careless.
On the Business plans, which is where most SMEs sit, the additions are an extra 50GB of mailbox storage, URL time-of-click protection, and Copilot Chat enhancements with Copilot Chat analytics. The time-of-click protection is the one worth switching on and checking, because it rewrites links in mail and tests them at the moment somebody clicks instead of at the moment the message arrived.
On E3, the additions are larger: Microsoft Defender for Office Plan 1, Intune Remote Help, Intune Advanced Analytics and Intune Plan 2, alongside the same Copilot Chat enhancements and analytics.
On E5, everything in E3 plus Microsoft Security Copilot, Intune Endpoint Privilege Management, Microsoft Cloud PKI and Intune Enterprise Application Management.
If you hold E3 or E5, you are now licensed for device management tooling that many businesses buy separately. Standing it up is a project in its own right, and a practical Intune setup shows what that involves. Paying for a third-party product that duplicates something already inside the licence is a cost worth checking for this quarter.
A licence you hold and have not configured produces no security benefit whatsoever. It produces a line on an invoice.
Microsoft 365 licensing decisions worth making before your renewal
Four questions settle most of this, and they take an afternoon between them.
- When does your term renew, and are you still on pre-July pricing? That date is your deadline, not July.
- How many seats are you paying for against how many people signed in last month?
- Are you on Business Standard, and does the narrowed gap change the Premium decision you already made?
- Which of the products newly included in your plan are switched on, and which are you buying twice?
Question four is the one that pays back fastest. Question two usually pays back most.
Where this leaves a forty-person business
A forty-user business on Business Standard faces roughly 12% more at renewal than it would have paid in June, for close to what it had in June, plus 50GB of mailbox and a link-checking feature nobody has mentioned to them. The same business on Business Premium faces no increase at all. Whether Premium also receives the packaging additions is not stated plainly in Microsoft’s material, and we would confirm it against your own tenant before counting on it.
That comparison is the whole argument. The increase is real and there is no route around it, so the useful response is to make sure the plan you are on is the one you would choose today, at today’s prices, with today’s contents.
Two things people get wrong here. Government and nonprofit pricing are not exempt: Microsoft states that both are adjusted in line with commercial pricing, with the nonprofit discount rate held at 60 to 75%, which holds the discount and not the price. What genuinely sits outside the update is standalone Teams and Copilot.
We manage Microsoft 365 for businesses across the North East, and our Microsoft 365 support and licence guidance covers migration, configuration, single sign-on and advice on which tier fits. If your renewal is coming and you want the seat count and the tier checked before you sign it, that is a short piece of work and the best time for it is before the quote arrives.