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ShareMicrosoft 365 prices rose July 1, 2026 — what to do now
Updated August 19, 2026: the July 1, 2026 increase has taken effect and the pre-July lock-in is gone — the numbers and the renewal-boundary rule below remain accurate for tenants that held their old rate until their next renewal. The live date is now October 1, 2026, when Microsoft applies a 5% cost-of-capital uplift to CSP software subscriptions with annual-term commitments billed monthly, including Windows Server, SQL Server, Client Access Licenses and System Center. It lands at renewal on or after that date, and there is no change to annual billing or to month-to-month. Treat the lock-in section below as the playbook for that one.
Update — August 19, 2026: the next increase now has a date, and it is not a seat price.
Microsoft announced on August 12, 2026 that a 5% cost-of-capital uplift applies to
CSP software subscriptions carrying an annual-term commitment billed monthly,
effective October 1, 2026. The examples Microsoft names are Windows Server, SQL Server,
Client Access Licenses and System Center — the server licensing underneath your tenant, not the
per-user suites this post covers. There is no change to annual billing or to month-to-month, and
the uplift is applied at renewal on or after October 1. Source:
Microsoft
Partner Center announcements, August 2026.
⚠️ Check the date you were handed. The announcement carries a published correction: an
earlier Microsoft communication about this uplift gave the wrong effective date, and partners are told to
disregard it. October 1, 2026 is the correct one. So if a renewal email, a vendor deck or a forum thread quotes
you any other date for this change, that is the tell that it predates the correction — and it is worth asking
what else in that quote is stale.
Why this belongs in a Microsoft 365 pricing post: it is the same mechanic in a different bucket.
July moved the per-user suites; October moves the server licensing sitting under them. Both are decided by which
side of your renewal date you land on — and this one adds a second variable, because it turns on the billing
shape you signed rather than on the product. An annual commitment billed monthly is in scope; annual billing and
month-to-month are not. The playbook further down was written for July. Run it again for October, with your
Windows Server, SQL Server and CAL lines in front of you instead of your seat counts.
A smaller item from the same announcement, if you run Windows Server 2016: the Extended Security
Updates Year 1–3 offers were missing from the August 2026 CSP price list at its regular monthly publication
because of a publishing delay, and were added in a mid-month republish on August 13, 2026
(product IDs DG7GMGF0HPVV and DG7GMGF0HPVW). If your reseller priced your ESU
coverage from an August list pulled before the 13th, those SKUs were not in it. We are not quoting an ESU figure
here — the numbers circulating are not all for the same program. Ask for a quote off the refreshed list.
If you found this searching "Microsoft 365 price increase 2026," here is the short version: Microsoft's new commercial pricing took effect July 1, 2026, it touched almost every suite SMBs actually buy, and the rate you pay is set at your renewal boundary — not on any single calendar date. Microsoft announced the change on December 4, 2025 and rolled it across tenants from June through August 1, 2026. This post is the numbers, the renewal-boundary mechanic, and the action plan for a 25–500-seat shop.
If you are reading this after July 1, 2026: the pre-increase lock-in is gone, and any advice telling you otherwise is stale. Two things still matter. Tenants that renewed before the boundary hold their old rate until their next renewal after July 1, 2026 — so check which side of that line you landed on before you budget. And the mechanic itself is not specific to this increase; it is how Microsoft price changes always land — and as of August 12, 2026 the next one has a date, October 1, on a different set of licences. See the update above.
We are labor-only: Pro IT NW does not resell Microsoft licensing, is not a CSP, and takes no margin or commission on anything you buy. That is precisely why this is worth reading here — there is no version of this advice that makes us money either way. The trap is treating a price change as "prices went up, nothing to do." For a chunk of tenants there was a real, dated decision attached to it, and the same mechanic will apply at the next increase.
What's actually changing on July 1
These are Microsoft's published commercial list prices in USD, per user per month. Percentages are the increase off the current rate.
| Plan | Now | July 1, 2026 | Change |
|---|---|---|---|
| Microsoft 365 Business Basic | $6.00 | $7.00 | +16% |
| Microsoft 365 Business Standard | $12.50 | $14.00 | +12% |
| Microsoft 365 Business Premium | $22.00 | $22.00 | unchanged |
| Microsoft 365 E3 | $36.00 | $39.00 | +8% |
| Microsoft 365 E5 | $57.00 | $60.00 | +5% |
| Office 365 E3 | $23.00 | $26.00 | +13% |
| Office 365 E5 | $38.00 | $41.00 | +8% |
| Frontline F1 | $2.25 | $3.00 | +33% |
| Frontline F3 | $8.00 | $10.00 | +25% |
| Microsoft 365 Apps for business | $12.00 | $14.00 | +17% |
| Enterprise Mobility + Security E3 | $10.60 | $12.00 | +13% |
| Microsoft Entra ID P1 | $6.00 | $7.00 | +17% |
Three things stand out for a mid-market buyer. First, Business Premium did not move — at $22 it is now an even sharper value against a Business Standard that climbed to $14, because Premium bundles the Intune and Defender layer Standard does not. Second, Frontline took the biggest percentage hit; if you license F1/F3 for shift, warehouse, or field staff, this is the line that surprises you. Third, the Microsoft 365 E3/E5 family is not the same as the Office 365 E3/E5 family — they share names and nothing else. Confirm which one is on your invoice before you do the math, because we routinely find tenants who think they are on one and are on the other.
The one date that matters: your next renewal after July 1, 2026. If it lands before July 1, you can renew or upgrade at today's pricing and carry that rate to the following renewal. If it lands after, you renew at the new rate. Everything in this post is about getting on the right side of that boundary deliberately instead of by accident.
The lock-in mechanic — and what it is not
Microsoft's own FAQ is specific: customers with a renewal before July 1, 2026 "will be able to renew or upgrade to their chosen suite and lock in the current pricing… until their next renewal after July 1, 2026." Read that carefully, because the internet has already mangled it into "renew anytime before July 1 and freeze forever." That is not what it says.
- It is tied to your term boundary. The lock-in happens when you renew or upgrade — not on an arbitrary date you choose. If your annual NCE term renews in September, you cannot reach back and re-price it in June just to dodge the increase; you align the next renewal, and any planned seat changes, to the term you control.
- Multi-year agreements already hold. If you are mid-term on a multi-year commitment, your pricing stays until that agreement renews. You are not exposed on July 1 — you are exposed at renewal.
- It buys one cycle, not permanence. Locking current pricing carries it to your next renewal after July 1, 2026. At that renewal you move to the new rate. This is a one-cycle hedge that buys planning time, not a permanent escape.
For most SMBs in this position, the right play is unglamorous: pull your exact renewal date and seat count, decide whether any known hiring or new licensing should be committed now at the current rate, and align the renewal so the boundary falls where you want it. That is a 30–60 minute exercise per tenant, and it is the whole game.
Don't just defend the cost — check whether your stack just consolidated
The increase is not arbitrary; Microsoft moved capability down into the suites, and for some tenants that quietly eliminates tools you pay for separately today.
- Microsoft 365 E3 gains Defender for Office 365 Plan 1, Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2.
- Microsoft 365 E5 adds Security Copilot, Intune Endpoint Privilege Management, Cloud PKI, and Intune Enterprise App Management.
- Business Basic and Business Standard pick up a 50 GB mailbox and URL time-of-click protection.
If you are paying a third party for endpoint privilege management, a separate email-security gateway, or a standalone Intune analytics or remote-help tool, run the net number. The suite increase can be partly or fully offset by retiring a line item you forgot you were renting — and occasionally the consolidated number comes out lower than what you pay today. The mistake is to look at the suite increase in isolation and miss the tool you can now cancel.
Where Copilot actually lands
Expect to hear that "Copilot is folding into the suites" and that your AI is now free. That is half-true in a way that matters. The paid Microsoft 365 Copilot add-on (about $30 per user/month) is excluded from this update — it is a separate SKU, its price is not changing here, and it is still a standalone line item. What folds into the suites is the free, enterprise-data-protected Copilot Chat tier, which gains enhancements and Copilot Chat Analytics. So the suite you pay for picks up more built-in AI, but the full Copilot you may have piloted is not suddenly bundled. If a vendor or a forum tells you the increase "includes Copilot," ask which Copilot — the answer changes the business case entirely. We cover the readiness side of an actual Copilot rollout in Copilot readiness: the 12,000-permission problem.
Update — September 2026: one promotional window closes October 1, another runs to December 31
Two promotional changes landed in Microsoft's partner channel after this post was written, and they pull in opposite directions. Both are worth knowing before your next renewal conversation, because the dates are close and the offers are easy to confuse.
From Microsoft's own partner announcement, dated August 3, 2026:
“To support continued customer acquisition and upsell opportunities for Cloud Solution Provider (CSP) partners, key Microsoft 365 E3 promotions now continue through December 31, 2026. At the same time, Microsoft 365 E7 promotional offers retire on October 1, 2026…”
Concretely: the E3 promotions — a 10% discount on a three-year term for new-to-offer customers, and a 20% discount on a one-year term as a targeted offer — now run through December 31, 2026. The E7 promotions — 10% on one year, 15% on one year, and 15% on three years — are going away. Microsoft's wording on the cut-off is precise, and the precision matters:
“Eligible Microsoft 365 E7 promotional purchases remain available through September 30, 2026… New promotional transactions aren't available beginning October 1, 2026.”
Read that as a transaction deadline, not a decision deadline. The offer does not expire when you make up your mind; it expires when the purchase is actually transacted. If an E7 promotional term is something you want, the paperwork has to be through your licensing partner before September 30 — and partner-side processing is not instant, so a decision made in the last week of September may not land as a September transaction.
One thing not to conflate: a separate CSP promotion covering E5, Defender and Purview was announced three days later and runs through September 30, 2026. It shares a date with the E7 retirement but it is a different offer on a different product set. If someone tells you “the Microsoft promotion ends September 30,” ask which one they mean.
The action plan for a 25–500-seat shop
Concrete, in the order we run it:
- Pull the truth (week 1). Exact SKUs, exact seat counts, exact renewal date, annual vs. monthly. Confirm Microsoft 365 vs. Office 365 family. 30–60 minutes per tenant.
- Model the boundary (week 1). Does your renewal land before or after July 1, 2026? If before, decide what to lock and whether to pre-commit known seat growth at current pricing. If after, you are renewing at the new rate — model that into the budget now, not in Q4.
- Run the consolidation check (week 1–2). Map the newly-bundled capabilities against tools you license separately. Cancel what the suite now covers. This is where the increase often pays for itself.
- Watch the Message Center (ongoing). Packaging changes hit tenants between June and August 1, with at least 30 days' notice in the Microsoft 365 Message Center. Don't be surprised by your own tenant.
- Decide once, document it (week 2). Whatever you choose — lock now, ride to renewal, or move suites — write down why, so next year's renewal starts from a decision, not a guess.
If you want this run for your tenant before your renewal date passes, that is exactly the kind of work we do — a short licensing review that pulls your real numbers, finds the boundary, and tells you whether to lock, ride, or restructure. Start with our Microsoft 365 consulting, see the migration practice, or get in touch and we will model it with you.
None of this is an emergency. But it is a dated decision with money attached, and the clean version of it happens before the renewal rolls past the boundary — not after, when the only option left is to pay the new rate and wish you had looked sooner. For the per-user suites that boundary was July 1, 2026 and it has passed. For CSP software subscriptions billed monthly on an annual term it is October 1, 2026, which is close enough to plan for and far enough away to still have choices.
Questions we get asked
- How much is Microsoft 365 going up on July 1, 2026?
- Microsoft announced the increase on December 4, 2025, effective July 1, 2026 (USD, per user/month). Microsoft 365 E3 goes from $36 to $39 (8%), Microsoft 365 E5 from $57 to $60 (5%). For small business: Business Basic $6 to $7 (16%), Business Standard $12.50 to $14 (12%), and Business Premium is unchanged at $22. Frontline rises hardest in percentage terms — F1 $2.25 to $3 (33%) and F3 $8 to $10 (25%). Several standalones also move: Microsoft 365 Apps for business $12 to $14, Enterprise Mobility + Security E3 $10.60 to $12, and Entra ID P1 $6 to $7. Note the Office 365 E3/E5 family is separate and changes by different amounts (Office 365 E3 $23 to $26, Office 365 E5 $38 to $41) — confirm which SKU you actually license before you model the cost.
- Can I still lock in the old Microsoft 365 price?
- No — that window closed on July 1, 2026, and this answer was updated on August 14, 2026 to say so. It is worth understanding what happened, because the same mechanic governs the next increase. Microsoft's guidance was that customers with a renewal before July 1, 2026 could renew or upgrade to their chosen suite at current pricing and hold that pricing until their next renewal after July 1, 2026. This is tied to your renewal or term boundary, not a blanket freeze you can trigger any day. If you are on a multi-year agreement, your existing pricing already holds until that agreement renews. The practical move for SMBs on annual NCE terms is to align a renewal — and any seat additions you know are coming — to land before your term rolls past July 1. We model this per tenant because the right answer depends on your renewal date, seat trajectory, and whether you are mid-term.
- Is the price increase only for annual plans, or monthly too?
- Both. The new pricing applies to annual and monthly billing at your next renewal after July 1, 2026 — there is no monthly-versus-annual loophole that avoids it. Annual commitment still costs less per seat than month-to-month flexibility, so the annual-versus-monthly decision is the same one you should already be making; the price change does not create a new arbitrage. One separate change does turn on billing shape, so do not conflate them: the 5% cost-of-capital uplift Microsoft announced on August 12, 2026, effective October 1, 2026, applies to CSP software subscriptions with annual-term commitments billed monthly, and Microsoft states it does not change annual billing or month-to-month. That one covers server licensing such as Windows Server and SQL Server — not the Microsoft 365 suite prices in this answer.
- Does this change the cost of Microsoft 365 Copilot?
- No. The paid Microsoft 365 Copilot add-on (about $30 per user/month) is a separate SKU and is explicitly excluded from this update — its price is not changing here. What is changing is that the free, enterprise-data-protected Copilot Chat tier gains enhancements and Copilot Chat Analytics inside the suites. So the suite you already pay for picks up more built-in AI value, but the full Copilot you may have evaluated is still a standalone line item priced on its own.
- What do we actually get for the higher price?
- Microsoft is moving real capability down into the suites to justify the increase. Microsoft 365 E3 gains Defender for Office 365 Plan 1, Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2. E5 adds Security Copilot, Intune Endpoint Privilege Management, Cloud PKI, and Intune Enterprise App Management. Business Basic and Business Standard pick up a larger 50 GB mailbox and URL time-of-click protection. For some tenants this collapses third-party tools you pay for separately today — a standalone Intune add-on, a separate email-security gateway — so the net change to your stack cost can be smaller than the sticker increase, or even negative. That consolidation is worth modeling before you assume the increase is pure cost.
- What is changing for Microsoft licensing on October 1, 2026?
- Microsoft announced on August 12, 2026 that a 5% cost-of-capital uplift applies to Cloud Solution Provider (CSP) software subscriptions that carry an annual-term commitment billed monthly, effective October 1, 2026. The examples Microsoft names are Windows Server, SQL Server, Client Access Licenses and System Center — server and infrastructure licensing, not Microsoft 365 per-user suites, which changed separately on July 1, 2026. The uplift is applied at renewal on or after October 1, 2026, so an in-term subscription is not repriced mid-cycle, and Microsoft states there is no change to annual billing or to month-to-month subscriptions. Note that Microsoft published a correction alongside this announcement: an earlier communication gave the wrong effective date and partners were told to disregard it. October 1, 2026 is the correct date, so a quote citing a different one predates the correction.
- Does the October 1, 2026 uplift apply to our Microsoft 365 seats?
- No. The 5% cost-of-capital uplift effective October 1, 2026 applies to CSP software subscriptions with annual-term commitments billed monthly, and the examples Microsoft names are Windows Server, SQL Server, Client Access Licenses and System Center. Microsoft 365 per-user suites are a separate matter: those list prices rose on July 1, 2026 and are not part of the October uplift. The two are easy to conflate because both land at your renewal boundary rather than on the calendar date itself, but they hit different lines on your bill — one is seats, the other is the server licensing underneath them. If you buy both, model them as two separate renewals.
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Microsoft 365 Migration serviceWritten by the team at Pro IT NW · Senior-led Microsoft project consultancy · Seattle and the Pacific Northwest, delivered USA-wide.