Microsoft 365 Price Increase 2026: New Pricing, Licensing Changes, and What to Do Before Renewal
Microsoft 365 price increases take effect July 1, 2026, with most Microsoft 365 and Office 365 Enterprise plans increasing 5%–16% and Microsoft 365 F1/F3 plans increasing 25%–43%.
The changes are part of broader Microsoft 365 licensing and packaging updates that add more AI, security, compliance, and IT management capabilities into core plans.
TL;DR
What Should You Do Right Now?
- Expect moderate price increases on Microsoft 365 and Office 365 Enterprise Plans (5–16% depending on plan).
- Recognize this is a packaging shift, not just pricing update
- Review licensing before renewal
- Maximize built-in capabilities you’re already paying for
- Align licensing to AI, security, and business outcomes
When Does the New Microsoft 365 Pricing Start?
- Packaging updates begin: June 2026
- New pricing effective: July 1, 2026
- Existing customers:
- Keep current pricing until renewal, including multi-year contracts
- Will receive the new features as they roll out in 2026, regardless of the price paid or agreement term
- Receive ~30 days’ notice via Message Center updates becomes available in their tenant
How Much Are Microsoft 365 Prices Increasing in 2026?
The following table summarizes key pricing adjustments announced for July 2026.
Pricing shown reflects annual commitment with monthly billing. Actual pricing may vary by region, agreement type, and purchasing channel.
Enterprise Suites
| Plan | 2025 Price | 2026 Price | Change |
| Office 365 E3 (with Teams) | $23 | $26 | 13% |
| Office 365 E3 (no Teams) | $14.45 | $17.45 | 14% |
| Office 365 E5 (with Teams) | $38 | $41 | 8% |
| Office 365 E5 (no Teams) | $29.45 | $32.45 | 10% |
| Microsoft 365 E3 (with Teams) | $36 | $39 | 8% |
| Microsoft 365 E3 (no Teams) | $27.45 | $30.45 | 11% |
| Microsoft 365 E5 (with Teams) | $57 | $60 | 5% |
| Microsoft 365 E5 (no Teams) | $48.45 | $51.45 | 6% |
Business Suites
| Plan | 2025 Price | 2026 Price | Change |
| Microsoft 365 Business Basic (with Teams) | $6 | $7 | 16% |
| Microsoft 365 Business Basic (no Teams) | $4.40 | $5.40 | 23% |
| Microsoft 365 Business Standard (with Teams) | $12.50 | $14 | 12% |
| Microsoft 365 Business Standard (no Teams) | $9.29 | $10.79 | 16% |
| Microsoft 365 Business Premium (with Teams) | $22 | $22 | No change |
| Microsoft 365 Business Premium (no Teams) | $18.79 | $18.79 | No change |
Frontline Suites
| Plan | 2025 Price | 2026 Price | Change |
| Microsoft 365 F1 (with Teams) | $2.25 | $3 | 33% |
| Microsoft 365 F1 (no Teams) | $1.75 | $2.50 | 43% |
| Microsoft 365 F3 (with Teams) | $8 | $10 | 25% |
| Microsoft 365 F3 (no Teams) | $6.93 | $8.93 | 29% |
Which Microsoft 365 Products Are Affected?
The Microsoft 365 licensing changes apply to:
- Microsoft 365 E3 and E5
- Office 365 E3 and E5
- Microsoft 365 Business Basic and Standard
- Microsoft 365 Frontline F1 and F3
- Enterprise Mobility and Security (EMS) E3 and E5
- Entra P1 and P2
- Per device SKUs: Windows Enterprise, Microsoft 365 Apps
Not included:
- Standalone Microsoft Teams SKUs
- Standalone Microsoft 365 Copilot SKUs
- Microsoft 365 E7
Microsoft 365 Licensing Changes 2026: What’s New?
Microsoft’s 2026 licensing update represents a broader evolution of the Microsoft platform.
Microsoft is moving toward more integrated licensing bundles that combine productivity, security, AI, compliance, and management capabilities into fewer, more comprehensive offerings.
What’s changing?
- New AI-powered capabilities across Microsoft 365 workloads
- Expanded security and compliance functionality
- Additional endpoint management and IT administration capabilities
- Greater integration of identity, endpoint management, and governance tools
- Introduction of Microsoft 365 E7 as a new premium licensing option
| Plan | Feature additions |
| Office 365 E1 | SafeLinks Lite, Copilot Chat enhancements*, Copilot Chat Analytics |
| Office 365 E3 | MDO P1, Copilot Chat enhancements*, Copilot Chat Analytics |
| Office 365 E5 | Copilot Chat enhancements*, Copilot Chat Analytics |
| Microsoft 365 E3 | MDO P1, Intune Remote Help, Intune Advanced Analytics, Intune P2, Copilot Chat enhancements*, Copilot Chat Analytics |
| Microsoft 365 E5 | In addition to M365 E3 additions: Microsoft Security Copilot, Intune Endpoint Privilege Management, Microsoft Cloud PKI, Intune Enterprise Application Management |
| Microsoft 365 F1 and F3 | Copilot Chat enhancements*, Copilot Chat Analytics |
| Microsoft 365 Business Basic and Standard | +50GB email, SafeLinks Lite, Copilot Chat enhancements*, Copilot Chat Analytics |
| Microsoft 365 Business Premium | +50GB email, Copilot Chat enhancements*, Copilot Chat Analytics |
What Do the Microsoft 365 Licensing Changes Mean for Organizations?
The price increases are modest when viewed in isolation, but they reflect a broader shift in how Microsoft delivers value.
From Microsoft’s own positioning:
- Pricing reflects years of innovation across AI, security, and IT management
- New features are being bundled into core licenses instead of sold separately
This means many organizations may be paying slightly more per license while simultaneously reducing spending on overlapping third-party solutions.
Microsoft 365 E5 New Price: Is It Still Worth It?
Under the new pricing structure, Microsoft 365 E5 increases from $57 to $60 per user per month, representing a 5% increase.
For many organizations, E5 continues to provide substantial value because Microsoft continues expanding capabilities across:
- Security
- Identity and access management
- Compliance and governance
- Analytics
- AI-powered productivity experiences
Organizations already licensing multiple security and compliance add-ons should evaluate whether consolidating into E5—or potentially E7—creates a lower total cost of ownership.
Thinking about moving from E3 to E5? See the difference between Microsoft 365 E3 vs E5.
Microsoft 365 F1/ F3 Price Increase
Microsoft 365 Frontline plans are seeing some of the largest percentage increases in the 2026 update.
Microsoft 365 F1 increases from $2.25 to $3.00 per user/month, while Microsoft 365 F3 increases from $8.00 to $10.00 per user/month.
For organizations with large frontline workforces, these changes can create a meaningful renewal impact.
Introducing Microsoft 365 E7
Alongside these pricing updates, Microsoft has introduced Microsoft 365 E7, a new top-tier package that bundles the latest AI, security, and compliance capabilities into a single license.
For organizations aggressively investing in AI, cybersecurity, and governance, E7 provides another option when evaluating whether to continue layering add-ons onto existing E3 and E5 deployments.
See how E7 compares to E5.
How Organizations Should Respond Before Renewal
If your renewal is after July 1, 2026, you will transition to the new pricing.
Before your next Microsoft renewal, consider:
Audit license usage: Review assigned licenses versus active usage to identify waste and reclaim unused subscriptions.
Identify tool overlap: Many organizations continue paying for third-party solutions that duplicate capabilities already included in Microsoft 365.
Align licensing with business outcomes: Licensing decisions should support AI readiness, security maturity, compliance requirements, and your long-term technology strategy.
Evaluate renewal timing: Organizations may be able to lock in current pricing before future increases depending on contract options available through their licensing program.
How ProArch Helps Organizations Navigate Microsoft 365 Licensing Changes
ProArch helps organizations turn Microsoft’s changes into clear, cost-effective decisions.
We can help you:
- Identify unused licenses and eliminate waste
- Compare E3, E5, E7 and Business to find the right mix
- Align licensing to AI, security, and compliance goals
- Reduce third-party tool sprawl
- Optimize Microsoft renewals before pricing changes take effect
See how ProArch can help: Microsoft 365 Licensing Cost Optimization & Renewal Services
Frequently Asked Questions
What is the Microsoft 365 price increase for 2026?
Most Microsoft 365 and Office 365 Enterprise plans are increasing between 5% and 16%, while Frontline F1 and F3 plans increase between 25% and 43%.
When does Microsoft 365 new pricing start?
Microsoft’s updated pricing becomes effective July 1, 2026. Packaging updates begin in June 2026.
Which Microsoft 365 plans are affected?
The changes impact Microsoft 365 E3, Microsoft 365 E5, Office 365 E3, Office 365 E5, Microsoft 365 Business plans, Frontline plans, EMS, Windows Enterprise, Apps, and Entra-related SKUs.
What is the new Microsoft 365 E5 price?
Microsoft 365 E5 increases from $57 to $60 per user per month.
How much are Microsoft F1 and F3 licenses increasing?
Microsoft has indicated increases ranging from 25% to 43% for Frontline licensing.
Is Microsoft 365 E7 replacing E5?
Microsoft has introduced E7 as a new premium licensing option, but the available source does not state that E5 is being replaced.
Should organizations review licensing before renewal?
Yes. Organizations should evaluate utilization, eliminate waste, review opportunities for consolidation, and align licensing to business outcomes before renewal discussions begin.
How can organizations reduce Microsoft licensing costs?
Organizations can reduce overall licensing costs by identifying unused licenses, eliminating overlapping tools, and aligning Microsoft investments to actual business needs.
Director of Marketing Rebecca is part of the marketing team at ProArch, where she creates content that connects technology expertise with real-world business challenges. She is passionate about making complex topics—like cloud, cybersecurity, data, AI, and digital transformation—more accessible, actionable, and relevant for today’s organizations.
