Microsoft 365 prices rise up to 43% from July 1 as Copilot features move into the base price
Microsoft's July 2026 pricing update bundles Copilot Chat, extra storage, and security tools into most M365 plans, with price rises of 5–43%.
Microsoft’s July 2026 pricing and packaging update is now live, and if you run Microsoft 365 for a business of any size, your next renewal will cost more. The increases range from 5% on Microsoft 365 E5 to 43% on certain Frontline configurations, and they apply across Business, Enterprise, Frontline, and Government tiers. Microsoft 365 Personal and Education plans are not affected.
This is only the second significant price adjustment Microsoft has made to its commercial Microsoft 365 licensing in over 15 years. The last one was March 2022.
What’s actually changing, plan by plan
Here are the headline numbers for the most common plans:
| Plan | Old price | New price | 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 | 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% |
| Microsoft 365 F1 | $2.25 | $3.00 | +33% |
| Microsoft 365 F3 | $8.00 | $10.00 | +25% |
The steepest increase in the whole update actually sits on Microsoft 365 F1 without Teams, which goes from $1.75 to $2.50, a 43% jump. Frontline workers arguably need AI tools the least, so that particular number has raised eyebrows.
All prices are per user per month. The standalone Microsoft 365 Copilot add-on (around $30 per user per month) is explicitly excluded from this update.
What you’re getting for the extra money
Microsoft’s framing is that this reflects “continuous innovation delivered over the past several years.” In practical terms, the additions bundled into the higher prices include:
For Business Basic and Standard users: an extra 50GB of mailbox storage and Copilot Chat enhancements, including inbox and calendar awareness plus Word, Excel, and PowerPoint agents.
For Office 365 E3: Microsoft Defender for Office 365 Plan 1 (previously a paid add-on), plus the same Copilot Chat enhancements and Copilot Chat Analytics.
For Microsoft 365 E3: Everything in Office 365 E3, plus Microsoft Intune Remote Help, Intune Advanced Analytics, and Intune Plan 2, all folded into the base suite.
For Microsoft 365 E5: Everything in E3 additions, plus Microsoft Intune Endpoint Privilege Management, Microsoft Cloud PKI, Intune Enterprise Application Management, and, notably, Microsoft Security Copilot. E5 customers get 400 Security Compute Units (SCUs) per month for every 1,000 licenses, capped at 10,000 SCUs. If usage runs over that, it moves to pay-as-you-go at $6 per SCU.
Microsoft’s full FAQ has the complete per-plan breakdown.
The real story: AI is now a utility cost, not an optional add-on
The percentage increases are the obvious headline, but there’s a more durable shift happening underneath them. For most of Microsoft’s commercial subscriber base, generative AI assistance is no longer a separate purchase decision. Copilot Chat capabilities are now baked into the base price of the suite.
That matters for how IT and finance teams budget going forward. AI spend on Microsoft 365 is no longer a discrete line item you can cut or defer. It’s table stakes, built into the per-seat cost whether individual users engage with it or not.
For E5 customers, the inclusion of Security Copilot is genuinely significant. Microsoft had been selling it separately, and the bundled 400 SCUs per 1,000 users represents real value for security teams who’ve been sitting on the fence about the product.
What this means for your budget
If you renewed before July 1, 2026, your current price holds until your next renewal. The features still roll out to your tenant regardless.
If you’re coming up for renewal soon, the increases are real, but the compounding effect is worth understanding:
- Large enterprises absorbing the loss of EA (Enterprise Agreement) volume discounts, which Microsoft removed in November 2025, may see their effective per-seat increase closer to 20% rather than the stated 5 to 8%.
- Government customers on GCC, GCC High, and DoD see the same percentage increases as commercial equivalents. Any government increase above 10% gets phased in over several years to comply with federal rules. US AGC is unaffected.
- Nonprofit pricing adjusts in line with commercial rates through a fixed discount of 60 to 75%, so the relative cost position stays similar.
Microsoft says packaging changes began rolling out in June 2026 and will be complete by August 1. You’ll get at least 30 days’ notice in the Message Center before changes land in your tenant.
Practical steps worth taking now
A few things worth doing before your next renewal:
Audit your licence mix. If your organisation carries a lot of F1 or F3 licences for frontline workers who aren’t getting meaningful value from the new AI additions, now is the time to review whether those assignments are accurate.
Check your renewal date. If you’re on a monthly or annual commitment, knowing exactly when your current price locks out will help you plan conversations with your Microsoft account team or CSP partner.
Evaluate the E5 Security Copilot inclusion. If you’re on E5 and haven’t explored Security Copilot yet, the 400 SCU monthly allocation per 1,000 users is a reasonable opportunity to run a pilot without additional spend.
For Business Standard buyers, the promotional “Business Standard with Copilot” bundle ($23.50 per user per month) is now a permanent SKU. If your team was already paying for Copilot separately or evaluating it, that bundle pricing may simplify the conversation.
Microsoft’s own licensing news page has the full details, and your Microsoft partner or CSP should be reaching out proactively if they haven’t already.