Microsoft 365 and Office 365: Price Increases [2026-07]

Effective July 1, 2026, Microsoft will increase pricing while adding license inclusions for Microsoft 365 and Office 365 suites. These changes reflect the addition of new AI-driven productivity tools, enhanced security features, and advanced management capabilities. Organizations should prepare now to avoid unexpected cost impacts.

Note: Before the price increases there will also be currency-based price decreases coming on February 1, 2026, which you can find here: Microsoft Online Services: Price Decreases [2026-02]

Updated Pricing Table

The following list price changes will go into effect on July 1, 2026, and are for informational purposes only. The shown list prices are for products that include Microsoft Teams. You can also purchase suites without Teams which will also have an equivalent dollar value increase. The changes will apply globally with local market adjustments for commercial products. Nonprofit pricing will be adjusted in line with commercial pricing, as it is tied to commercial rates through a fixed percentage discount.

Why Is Microsoft Making This Change?

Microsoft is fundamentally reshaping its offerings to support an AI-powered future. The development and integration of tools like Copilot, advanced security layers, and endpoint management require significant R&D investment and infrastructure costs. To recover these costs and sustain innovation, Microsoft is bundling these capabilities into core suites and adjusting pricing accordingly.

These additions can deliver real benefits and may even save licensing costs, if separate licenses are not required anymore. They may, however, not be equally relevant for every organization or user. We expect core licenses to remain the most viable option, especially when applying discounts via promotions.

Do I Get The New Capabilities When Renewing With Current Prices?

Microsoft has not made any announcements in this regard, so no reliable answer can be given. However, historically: yes. Microsoft applies feature additions to all active subscriptions for that SKU once the feature becomes generally available, even if the subscription was purchased before the price change. This means customers who renew early at the old price typically still receive the new capabilities when they roll out. In this case, it would mean, that the new capabilities would become available from July 1, 2026.

What Should We Do Now?

Consider taking proactive steps before July 1, 2026 to minimize cost impact and maximize value:

1. Secure Current Pricing

• Renew Early: Lock in today’s pricing by renewing subscriptions before July 1, 2026.
• Leverage Promotions: We offer promotions on affected products. Here are the most relevant:
  • Microsoft 365 E3/E5 Promotion: Save 10% on 3-Year term subscriptions in CSP
    • Promotion Duration: Until June 30, 2026.
    • Discount: 10%
    • Subscription Term: Three-year term only
    • Value:
      • a) Lock in current pricing before the price increase
      • b) Benefit from a 10% discount
      • c) Lock in pricing for three years, avoiding the price increase on July 1, 2026, and potential price increases during the subscription term.
  • Microsoft 365 E5 Promotion in CSP extended: Save 15%
    • Promotion Duration: Until June 30, 2026.
    • Discount: 15%
    • Subscription Term: Annual commitment only
    • Value:
      • a) Lock in current pricing before the price increase
      • b) Benefit from a 15% discount
      • c) Stay flexible – only commit for one year
  • Find a list of ongoing Microsoft promotions here: https://www.schneider.im/category/microsoft-promotions/.

2. Optimize Your Licensing Strategy

• Conduct a Licensing Review: Identify unused or underutilized licenses to eliminate waste.
• Right-Size Plans: Ensure users are assigned the correct license based on actual needs, avoiding over-licensing.
• Bundle Smartly: Explore bundled offers for security and management features to reduce overall cost.

3. Budget and Compliance

• Forecast Budget Impact: Calculate the financial effect of the price increase and adjust budgets accordingly.
• Ensure Compliance: Updated security features may require broader licensing coverage. Avoid gaps that could lead to non-compliance.

4. Find more info

General Announcement: https://www.microsoft.com/en-us/microsoft-365/blog/2025/12/04/advancing-microsoft-365-new-capabilities-and-pricing-update/.

US Government-related Announcement: https://techcommunity.microsoft.com/blog/publicsectorblog/advancing-microsoft-365-government-new-capabilities-and-pricing-update/4474648.

Next Steps

Feeling overwhelmed? Contact SCHNEIDER IT MANAGEMENT for tailored advice.

We offer end-to-end licensing consultancy to help you navigate these changes effectively.

Our goal is to ensure you remain compliant, cost optimized and aligned with your business objectives at all times.