Microsoft is rolling out major pricing and packaging updates for Microsoft 365 across most plans on July 1, 2026. For many small and mid-sized businesses on Microsoft 365 Business Basic or Business Standard, the added cost can feel significant. However, Microsoft is also bundling meaningful AI, security, and device management capabilities into plans that didn't include them before. This means businesses have an opportunity to upgrade for better features and security or consolidate existing add-ons to optimize overall costs.
In this blog post, we explain what’s changing, what you’re gaining, and how to prepare before your next renewal.
Key Takeaways
- Business Basic goes from $6.00 to $7.00/user per month; Business Standard from $12.50 to $14.00/user per month
- Business Premium stays at $22.00/user per month
- New features being added to Business plans include Copilot Chat, URL time-of-click protection, +50 GB mailbox storage, and Copilot Chat Analytics
- Existing customers keep current pricing until their next renewal after July 1
- There is a smaller price gap between Business Standard and Business Premium, making Premium a stronger consideration for security-conscious organizations
- Enterprise plans like Microsoft 365 E3 and E5 increase by roughly $3/user per month, with Office 365 E3 seeing a higher percentage jump
What's changing: Updated Microsoft 365 Business & Enterprise Plan pricing
Microsoft is updating pricing across both Microsoft 365 Business and Enterprise plans. Here’s how the new monthly costs compare:
| Microsoft 365 Plan | Current Price | New Price (July 1, 2026) | Change |
| Business Plans | |||
| Microsoft 365 Business Basic | $6/user | $7/user | 16% |
| Microsoft 365 Business Standard | $12.5/user | $14/user | 12% |
| Microsoft 365 Business Premium | $22/user | $22/user | No change |
| Enterprise Plans | |||
| Office 365 E1 | $10/user | $10/user | No change |
| Office 365 E3 | $23/user | $26/user | 13% |
| Office 365 E5 | $38/user | $41/user | 8% |
| Microsoft 365 E3 | $36/user | $39/user | 8% |
| Microsoft 365 E5 | $56/user | $60/user | 5% |
What new features are being added to Microsoft 365 plans
Alongside the pricing changes, Microsoft is expanding what’s included across both Business and Enterprise plans, primarily in AI, security, and device management. Here’s what’s being introduced or expanded:
- AI-powered productivity with Copilot Chat
Now included across Business and Enterprise plans, Copilot Chat brings AI into everyday workflows in Outlook, Word, Excel, and PowerPoint. - Improved visibility and control with Copilot Chat Analytics
IT teams gain better insight into how AI tools are being used across the organization, along with controls to manage access and usage. - Stronger baseline security with URL time-of-click protection
Available in Business Basic, Standard, and Office 365 E1, this feature checks links at the time they’re clicked to help prevent users from accessing malicious websites. - Expanded mailbox storage for Business plans
Business Basic, Standard, and Premium all receive an additional 50 GB of Exchange Online storage, increasing capacity for email-heavy users. - Built-in email threat protection (Defender for Office 365 Plan 1)
Now included in Office 365 E3 and Microsoft 365 E3, this adds protection against phishing, malware, and malicious attachments. - Enhanced device management with Microsoft Intune (E3 and E5)
Microsoft 365 E3 and E5 plans now include expanded Intune capabilities such as Remote Help, advanced analytics, and additional device management controls, making it easier to manage endpoints at scale. - Advanced security and management tools in Microsoft 365 E5
E5 continues to expand with capabilities like Endpoint Privilege Management, Enterprise Application Management, Cloud PKI, and Microsoft Security Copilot, designed for organizations with more complex security and compliance needs.
Our take: What this pricing update means for your licensing strategy
Our Microsoft 365 consulting team has worked with many organizations over the years to review and optimize their licensing structure and costs. What we often see is that a renewal or price increase is usually the moment when businesses start asking questions like what are we actually paying for and what are we using.
We regularly see environments where security tools don’t align with risk, where plans haven’t kept up with how teams work, or where businesses are paying for tools outside Microsoft 365 that are now being bundled in.
For most organizations, this Microsoft 365 price increase presents an opportunity to evaluate their licensing strategy.
The security gaps from under-licensing
One finding we often see in Microsoft 365 configuration reviews is that licensing gaps create security gaps. Organizations will lack protections like Safe Links, Safe Attachments, and conditional access policies because their licensing doesn’t cover it. With this price increase and the corresponding new tool add-ons, businesses can review whether to fill security gaps by upgrading their plan.
Why Business Premium deserves a serious look
With this update, Business Premium is the only Business-tier plan that isn’t increasing in price. It stays at $22.00/user/month while Business Standard moves to $14.00, shrinking the gap between the two from $9.50 to just $8.00 per user.
That $8 difference gets you:
- Microsoft Defender for Business (endpoint protection)
- Microsoft Intune (device management and compliance)
- Entra ID P1 (conditional access, self-service password reset)
- Advanced email threat protection
If you’re on Business Standard today and paying separately for endpoint security, mobile device management, or phishing protection, Premium is worth exploring to see if it can help you optimize costs and consolidate tools.
If you're comparing plans side-by-side, we break this down in more detail in our Microsoft 365 Business plan comparison guide.
Role-based licensing strategy
We sometimes recommend a mixed-license approach to reduce costs. With the price gap between Business Standard and Premium now narrower, and new features like Copilot Chat and URL time-of-click protection rolling into the lower tiers too, this is a good time to re-evaluate role-based licensing strategy.
What you should do before your next renewal
Here’s a few things you can do before your next renewal to review what you have and optimize costs.
If you're just getting started or re-evaluating your Microsoft environment, our full Microsoft 365 guide for businesses walks through licensing, security, and planning considerations in more detail.
Check your renewal date
New pricing applies at your next renewal after July 1, 2026. If you’re renewing soon, you may be able to lock in current rates.
Audit your licenses and usage
Look for inactive users, mismatched plans, or licenses that exceed what certain roles need. A mixed-license approach can control costs significantly.
Evaluate whether Business Premium makes sense now
With no price increase and the narrowing gap to Standard, Premium offers significantly more built-in security and device management per dollar than it did before.
Review your standalone add-ons
If you’re currently paying separately for Defender, Intune, or other security tools that are now being bundled into your plan, you may be able to drop those add-ons and reduce your total spend.
Talk to your IT partner
A licensing review before renewal can identify optimization opportunities that offset or even exceed the price increase.
Microsoft 365 price increase FAQ
Why is Microsoft increasing Microsoft 365 prices in 2026?
Microsoft is increasing prices as part of a broader packaging update that adds AI, security, and device management capabilities into existing Microsoft 365 plans, expanding what’s included in each plan.
When does the Microsoft 365 price increase take effect?
The new Microsoft 365 pricing takes effect on July 1, 2026. Existing customers will not see immediate changes; new pricing applies at the next renewal after that date.
How can businesses avoid or reduce the impact of the Microsoft 365 price increase?
While you can’t completely avoid the price increase, there are several ways to reduce its impact:
- Renew early, if possible, to lock in current pricing
- Audit licenses to remove unused or inactive users
- Consolidate add-ons that are now bundled into your plan
- Move to a role-based strategy to avoid over-licensing
- Evaluate Business Premium vs. Standard if you're paying for separate security or device management tools
How do I choose between Microsoft 365 Business Basic, Standard, and Premium?
The best approach is to match licenses to roles rather than choosing one plan for everyone. Most businesses benefit from a mixed licensing model, where higher-risk roles use Business Premium, and other users stay on Standard or Basic.
For a detailed breakdown of each plan and when to use them, see our full Microsoft 365 business plans comparison guide.
When will Microsoft 365 feature changes roll out?
Microsoft 365 pricing and packaging updates will roll out in phases starting June 2026:
- June 2026: New features begin rolling out
- July 1, 2026: Updated pricing takes effect for new purchases and renewing customers
- By August 1, 2026: Feature rollout is expected to be complete across all eligible tenants
- 30 days prior: Organizations will receive notifications in the Microsoft 365 Message Center before changes are applied
For IT teams, it’s important to monitor the Microsoft 365 Admin Center and plan for both feature availability and renewal timing in advance.
