Microsoft 365 Licensing change on 1 July 2026
Price increases have become all too commonplace in recent years and for businesses they can be a real challenge to get ahead of. This July, Microsoft is introducing a major update to it’s Microsoft 365 licensing bringing changes to pricing, plan features and subscription terms.
These updates will apply across Business, Enterprise, Frontline and standalone services, and will come into effect on all renewals taking place from 1st July 2026 onwards. It represents one of the largest shifts in Microsoft licensing in recent years.
Why are Microsoft increasing their prices?
Microsoft are adding new capabilities into existing licences which can reduce the need for common add-ons and this additional functionality and value is reflected in their revised pricing structure. Key enhancements include:
- AI integration (Copilot features and improved Copilot Chat)
- Enhanced security, including Defender for Office 365 Plan 1 in some plans
- Improved endpoint and device management (Intune enhancements)
- Advanced threat protection and email security (e.g., URL scanning)
Why Microsoft 365 Plans are Impacted?
From 1 July 2026, list prices will increase across the majority of Microsoft 365 subscriptions. The increases range from 5% to over 40%, depending on the plan you are on. Examples include:
- Microsoft 365 Business Basic: +16%
- Microsoft 365 Business Standard: +12%
- Microsoft 365 E3: +8%
- Microsoft 365 E5: +5%
- Frontline plans (F1/F3): up to +43%
The important thing to understand that, even though you might pay for your Microsoft services monthly, you are on an annual contract agreement and Microsoft will maintain your current pricing until your next renewal. The new pricing applies to all renewals and new purchases after 1 July 2026.
Why does this matter? Well, if you want to beat the price rises, you can make changes to your plans before June 30th 2026, and retain your Microsoft pricing at the current rate for 12 months. The difference may be hundreds of pounds in savings.
What This Means for Businesses
These changes are not just price increases, they represent a shift in how Microsoft delivers value:
- Higher costs, but with significantly more built-in capability
- Increased importance of licence optimisation and renewal timing
- Opportunity to replace add-ons with included features
- Growing role of AI, security, and automation as standard components
The bottom line is from 1 July 2026, Microsoft licensing will become:
- More expensive
- More feature-rich
- More structured around AI, security and cloud-first services
How can I beat the Microsoft Price Increase?
We’re very glad you asked! There’s a loophole and you have a very small window in June to take advantage – but it may well be worth its weight in gold. Well, not gold, but actual money.
For instance, we’ve identified a £437.60 saving for one client whose licence expires on 19th February 2027. By purchasing a new plan on 30th June 2026, they can continue paying monthly for 12 months, and retain their current pricing structure, saving themselves £36.46 per month and that’s just the saving on one licence. They have many licences, so we expect their final savings will be significantly higher.
The key thing to understand is that this is a price increase you can plan around and, most importantly, avoid.
Here’s what you should do now:
- Review which licences you have currently and what dates you are due to renew your contract. Any contract renewal date falling on or after 1st July may offer you savings if you purchase a new plan prior to that date.
- You can find your licences by logging into your Microsoft 365 Admin Center and navigating to Billing and Your Products on the menu on the left hand side of Admin Center will show you how many of each type of licence you have, when they expire. and how many of those licences you are actively using.
- Ensure you are only paying for the licences that you actually need – if you have unassigned licences, remove them now before they are due to renew.
- To make things easier, we’ve built a ready reckoner which can help you quickly understand the value of the saving to be gained if you purchase a plan on the 30th June 2026, rather than simply allowing your plans to renew normally. Complete the form below and you will receive your own personalised savings calculation for your organisation.
