Microsoft 365 commercial pricing takes effect on July 1, 2026, lifting renewal bills across Business, Enterprise, Frontline, and Government suites. Microsoft announced the change on December 4, 2025, framing it as a packaging and pricing update that reflects new AI, security, and IT management features added to Microsoft 365 over the past year. Packaging changes began rolling out in June 2026, with full rollout complete by August 1, 2026.
Microsoft describes the move in corporate speak as a “packaging and pricing update” on its licensing page. The price hike affects select Microsoft 365 commercial suites and standalone components, including Enterprise, Business, Frontline, and Government commercial equivalents. Standalone Microsoft Teams and Copilot SKUs are not included in this update. Consumer and education pricing are not changing at all. Microsoft’s own licensing page publishes the 2026 commercial pricing tables for every affected suite, and the original the December 2025 announcement detailing every new feature confirms the July 1, 2026 effective date.
What Microsoft’s July 1 Pricing Update Actually Does
For most commercial customers, July 1, 2026 is the trigger date. Existing customers stay on current pricing until their next renewal, and the new AI and security features still arrive in their tenant before the new pricing kicks in. Microsoft 365 Personal and Education pricing will not change.
The clearest way to read the move is to compare percentage changes across plan tiers. The hikes are uneven, with smaller plans taking the largest percentage hits and Enterprise plans absorbing the biggest dollar increases. A quick snapshot:
- Microsoft 365 Business Basic: +16% (from $6.00 to $7.00 per user per month)
- Microsoft 365 F1 (Frontline): +33% (from $2.25 to $3.00)
- Microsoft 365 F1 without Teams: +43% (from $1.75 to $2.50)
- Microsoft 365 E5: +5% (from $57.00 to $60.00)
- Effective date: July 1, 2026
The pattern runs through the whole lineup. Cheaper, frontline-style plans rise by double digits or more. Enterprise E-series plans rise by single digits in percentage terms, but each seat adds several dollars per month, which is why a large enterprise renewal can still produce a noticeable jump in software spending.
Business Suite Pricing Climbs Across the Board
The Business tier covers most small and mid-sized commercial customers, and every plan with Teams is going up except Business Premium. Business Basic rises from $6.00 to $7.00 per user per month, a 16% increase. Business Standard climbs from $12.50 to $14.00, a 12% increase. Business Premium stays at $22.00 per user per month.
The no-Teams versions rise faster than the with-Teams versions. Business Basic without Teams goes from $4.40 to $5.40 per user per month, a 23% increase. Business Standard without Teams rises from $9.29 to $10.79, a 16% increase. Business Premium without Teams stays at $18.79.
Microsoft is bundling extra value into the affected Business plans. Office 365 E1, Business Basic, and Business Standard are getting URL time-of-click protection. Business Basic and Business Standard are also getting Copilot Chat improvements and 50GB of additional mailbox storage.
| Plan | Old price | New price | Change |
|---|---|---|---|
| Business Basic | $6.00 | $7.00 | +16% |
| Business Standard | $12.50 | $14.00 | +12% |
| Business Premium | $22.00 | $22.00 | no change |
| Business Basic (no Teams) | $4.40 | $5.40 | +23% |
| Business Standard (no Teams) | $9.29 | $10.79 | +16% |
| Business Premium (no Teams) | $18.79 | $18.79 | no change |
Enterprise Plans Climb More Slowly, in Dollars More Sharply
The Enterprise E-series sees smaller percentages than the Business tier, but each seat costs more, so a 1,000-seat renewal can still translate into a five-figure jump in software spending. Office 365 E1 stays at $10.00 per user per month. Office 365 E3 rises from $23.00 to $26.00, a 13% increase. Office 365 E5 goes from $38.00 to $41.00, an 8% increase.
The Microsoft 365 E-series is moving too. Microsoft 365 E3 goes from $36.00 to $39.00, an 8% increase. Microsoft 365 E5 rises from $57.00 to $60.00, a 5% increase. Microsoft 365 E7, the newer Frontier suite, is not part of this pricing update at all.
The no-Teams Enterprise variants also rise. Office 365 E3 without Teams climbs from $14.45 to $17.45, a 14% increase. Office 365 E5 without Teams rises from $29.45 to $32.45, a 10% increase. Microsoft 365 E3 without Teams goes from $27.45 to $30.45, an 11% increase. Microsoft 365 E5 without Teams rises from $48.45 to $51.45, a 6% increase. Office 365 E1 without Teams stays at $6.79.
The new packages add features that were once sold separately. Office 365 E3 and Microsoft 365 E3 are getting Microsoft Defender for Office 365 Plan 1. Microsoft 365 E3 and E5 tenants also receive Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2.
| Plan | Old price | New price | Change |
|---|---|---|---|
| Office 365 E1 | $10.00 | $10.00 | no change |
| Office 365 E3 | $23.00 | $26.00 | +13% |
| Office 365 E5 | $38.00 | $41.00 | +8% |
| Microsoft 365 E3 | $36.00 | $39.00 | +8% |
| Microsoft 365 E5 | $57.00 | $60.00 | +5% |
| Office 365 E3 (no Teams) | $14.45 | $17.45 | +14% |
| Office 365 E5 (no Teams) | $29.45 | $32.45 | +10% |
| Microsoft 365 E3 (no Teams) | $27.45 | $30.45 | +11% |
| Microsoft 365 E5 (no Teams) | $48.45 | $51.45 | +6% |
Frontline Plans Take the Steepest Percentage Hits
Microsoft’s frontline worker plans were built for the lowest-priced seats in the Microsoft 365 lineup, and that is exactly where the largest percentage increases land. Microsoft 365 F1 jumps from $2.25 to $3.00 per user per month, a +33% increase. Microsoft 365 F3 rises from $8.00 to $10.00, a 25% increase.
The no-Teams frontline variants rise even faster. Microsoft 365 F1 without Teams climbs from $1.75 to $2.50, a 43% increase. Microsoft 365 F3 without Teams rises from $6.93 to $8.93, a 29% increase. Microsoft positions frontline plans for workers in roles like retail, healthcare, logistics, manufacturing, and field service, and the price hikes here will hit any organization that licenses large frontline teams the hardest in proportional terms.
| Plan | Old price | New price | Change |
|---|---|---|---|
| Microsoft 365 F1 | $2.25 | $3.00 | +33% |
| Microsoft 365 F3 | $8.00 | $10.00 | +25% |
| Microsoft 365 F1 (no Teams) | $1.75 | $2.50 | +43% |
| Microsoft 365 F3 (no Teams) | $6.93 | $8.93 | +29% |
The AI and Security Bundles Microsoft Says Justify the Hike
Microsoft is pointing at new AI and security capabilities as the reason for higher prices. Every affected suite is getting Copilot Chat improvements, including inbox and calendar awareness, and access to Word, Excel, and PowerPoint agents.
The bigger additions stack on by tier:
- Office 365 E1, Business Basic, Business Standard: URL time-of-click protection (links scanned when users click them, not only when the email first arrives).
- Office 365 E3 and Microsoft 365 E3: Microsoft Defender for Office 365 Plan 1; Intune Remote Help; Intune Advanced Analytics; Intune Plan 2.
- Microsoft 365 E5: all of the above, plus Intune Endpoint Privilege Management, Enterprise Application Management, Microsoft Cloud PKI, and Microsoft Security Copilot at 400 Security Compute Units per 1,000 user licenses, capped at 10,000 SCUs per month.
Microsoft’s December 2025 blog post quoted Dion Hinchcliffe, VP and Practice Lead for CIO at Futurum, framing the bundle.
The latest AI and security capabilities in Microsoft 365 demonstrate Microsoft’s sustained commitment to helping organizations stay ahead of the latest innovations and evolving threats.
Security Copilot is the headline AI addition for E5 customers. Microsoft Learn documents the SCU inclusion rules for E5 and E7 customers, including the 400 SCU per 1,000 user licenses allowance and the 10,000 SCU monthly cap. Rollout started November 18, 2025 for existing Security Copilot customers with Microsoft 365 E5 as of that date.
Government and Nonprofit Customers Move With the Tide
Microsoft is updating pricing for Microsoft 365 Government suites in lockstep with commercial SKUs. The affected Government products are Microsoft 365 G3 (GCC, GCC-High, DoD), Microsoft 365 G5 (GCC, GCC-High, DoD), Office 365 G3 (GCC), and Office 365 E3 (GCC-High, DoD).
Government cloud customers see similar percentage increases to their commercial equivalents. For government suites where the total increase would exceed 10%, Microsoft will phase the change in over multiple years, applying no more than 10% annually until the full adjustment is complete, in accordance with federal regulations. The government cloud update and the 10% phase-in rule are spelled out on Microsoft’s public sector blog.
Nonprofit customers are included in the pricing changes. Microsoft notes that nonprofits already receive a fixed 60% to 75% discount off commercial rates, so their bills move in line with everyone else’s. Microsoft 365 Personal and Education pricing remain unchanged.
How the Renewal Mechanics Actually Work
Microsoft is rolling the change out in stages, and the timing matters for every customer. Packaging updates began rolling out in June 2026, and existing customers remain on current pricing until their next renewal.
For most commercial customers, the new prices apply on July 1, 2026. Existing customers will receive at least 30 days’ notice in the Microsoft 365 Message Center before packaging changes become available in their tenant. Customers who renewed before July 1, 2026 keep their previous price until their next renewal, and they still receive the new features ahead of the price change.
- Packaging changes start rolling out in June 2026.
- Pricing takes effect July 1, 2026 for new and renewing customers.
- Existing customers receive at least 30 days’ notice in the Microsoft 365 Message Center before packaging changes apply in their tenant.
- Customers who renewed before July 1, 2026 keep their current rate until their next renewal and still receive the new features.
Frequently Asked Questions
When does the new Microsoft 365 pricing take effect?
Microsoft announced the pricing update on December 4, 2025. New prices take effect on July 1, 2026 for new and renewing customers. Existing customers stay on current pricing until their next renewal.
Which Microsoft 365 plans saw the steepest price increases?
The frontline tier absorbed the largest percentage hikes. Microsoft 365 F1 without Teams rose 43% (from $1.75 to $2.50 per user per month). Microsoft 365 F1 rose 33% (from $2.25 to $3.00). Microsoft 365 F3 rose 25% (from $8.00 to $10.00). Business Basic without Teams rose 23% (from $4.40 to $5.40).
Do existing customers pay the new price right away?
No. Microsoft says existing customers remain on current pricing until their next renewal. Customers who renewed before July 1, 2026 keep their previous rate until their next renewal and still receive the new features before the price change.
What features is Microsoft adding to justify the price hike?
The biggest additions are Microsoft Defender for Office 365 Plan 1 to E3 suites, Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2 to E3 and E5, URL time-of-click protection to E1, Business Basic, and Business Standard, Copilot Chat improvements across every affected suite, and Microsoft Security Copilot with 400 SCUs per 1,000 user licenses (capped at 10,000 SCUs per month) for Microsoft 365 E5 customers.
Are Microsoft 365 Personal and Family plans affected?
No. Microsoft’s December 2025 announcement confirms that Microsoft 365 Personal and Education pricing will not change. The pricing update applies to select commercial suites and standalone components, including Enterprise, Business, Frontline, and Government commercial equivalents.
