Microsoft 365 price increase 2026: what changes at your next renewal
Microsoft 365 price increase 2026: Basic, Standard and E3 rose on 1 July while Business Premium held at US$22. When you pay it, and what to check at renewal.
The Microsoft 365 price increase for 2026 took effect on 1 July. At Microsoft's US list prices, Business Basic rose from US$6.00 to US$7.00 per user per month, Business Standard from US$12.50 to US$14.00 and Microsoft 365 E3 from US$36 to US$39, while Business Premium stayed at US$22. Existing subscribers pay the new price from their first renewal after 1 July 2026.
With the cheaper plans up and Premium unchanged, your next renewal is the moment to check every licence still fits the person holding it, and that you aren't paying for billing flexibility you never use.
What changed on 1 July 2026?
Microsoft flagged the increase in December 2025, tying it to security, management and AI capabilities added to its suites, then published the full list in February 2026 in its Microsoft 365 pricing and packaging update. The figures below are US dollar list prices per user per month for versions with Teams; versions without Teams rose by the same dollar amount.
| Plan | Before 1 July 2026 | From 1 July 2026 | Change |
|---|---|---|---|
| Microsoft 365 Business Basic | US$6.00 | US$7.00 | +16.7% |
| Microsoft 365 Business Standard | US$12.50 | US$14.00 | +12.0% |
| Microsoft 365 Business Premium | US$22.00 | US$22.00 | No change |
| Microsoft 365 E3 | US$36.00 | US$39.00 | +8.3% |
| Office 365 E3 | US$23.00 | US$26.00 | +13.0% |
| Microsoft 365 F1 | US$2.25 | US$3.00 | +33.3% |
| Microsoft 365 F3 | US$8.00 | US$10.00 | +25.0% |
Some standalone products moved too: Microsoft 365 Apps for business went from US$8.25 to US$10.00, and Microsoft Entra ID P1 from US$6.00 to US$7.00.
What will it cost in Australian dollars?
Microsoft says its prices can vary by country and currency, and through resellers it sets new commerce pricing per customer market, so the Australian dollar figure that matters is the one on your renewal quote. Local-currency prices now get one update a year, each January. The next takes effect on 1 January 2027, so a renewal on or after that date could carry a currency adjustment, up or down.
When will we pay the new price?
From your first renewal on or after 1 July 2026. Microsoft's pricing FAQ explains how that plays out:
- Annual term: the new price starts at your first renewal after 1 July. A subscription that renewed in June 2026 keeps the old price until June 2027.
- Month-to-month term: these renew every month, so they moved to the new price at their first monthly renewal after 1 July and are already paying it.
- Multi-year agreements: current pricing continues until the agreement renews.
- New features: every qualifying plan gets the additions whatever price you pay, and Microsoft gives 30 days' notice in the message centre before each one reaches your tenant.
To find your renewal dates, open Billing, then Your products in the Microsoft 365 admin centre. If a provider buys your licences, ask for a renewal calendar listing every subscription with its term and billing frequency.
Why is Business Premium now relatively cheaper?
Business Standard rose US$1.50 and Business Premium didn't move, so the step between them shrank from US$9.50 to US$8.00 per user per month. At list price Premium used to cost 76% more than Standard; now it costs 57% more. For a 20-person business, moving everyone from Standard to Premium now adds US$1,920 a year, against US$2,280 before July.
That US$8 buys the security layer Standard leaves out. Microsoft's Business Premium FAQ lists Microsoft Defender for Business and Defender for Office 365 Plan 1 on top of everything in Standard, and its Business Premium security FAQ confirms full Intune device management and Entra ID P1 are included. That brings Conditional Access, which sets sign-in rules such as blocking logins from countries you don't operate in or requiring a company-managed device.
Standard did gain URL time-of-click protection, which checks a link when someone clicks it rather than only when the email arrives. That's what Safe Links does in Defender for Office 365 Plan 1, but Plan 1 also covers Safe Attachments and impersonation protection, and Premium includes the whole plan. Our Business Basic, Standard and Premium comparison goes feature by feature, and is Microsoft Defender enough for a business? tests whether Premium's tools can stand alone. One caution: Premium only pays off once Defender policies, Intune enrolment and Conditional Access rules are set up and maintained.
What did each plan gain?
Every Microsoft 365 and Office 365 plan in the update picked up Copilot Chat enhancements, such as inbox and calendar awareness, plus Copilot Chat analytics. Beyond that:
- Business Basic and Business Standard: an extra 50GB of mailbox storage, plus URL time-of-click protection.
- Business Premium: an extra 50GB of mailbox storage, at the same price.
- Microsoft 365 E3: Defender for Office 365 Plan 1, Intune Plan 2, Intune Remote Help and Intune Advanced Analytics.
- Office 365 E3: Defender for Office 365 Plan 1.
- Microsoft 365 F1 and F3: nothing beyond the Copilot Chat additions, despite the steepest percentage rises in the table.
The extra storage takes Business mailboxes to 100GB (see our September 2026 Microsoft 365 changes). Click-time link checking is a welcome extra, not a full email security setup.
Monthly or annual billing: which costs less?
An annual term paid upfront is the cheapest way to buy Microsoft 365, and flexibility costs extra. Distributor Pax8 reports that month-to-month subscriptions carry a 20% premium over annual terms, and annual commitments billed monthly a 5% premium since 1 April 2025. Microsoft has since applied a 5% uplift to annual-term software subscriptions billed monthly, such as Windows Server and SQL Server, from 1 October 2026.
| How you buy | How you pay | Price against annual upfront (partner-reported) | When you can reduce seats |
|---|---|---|---|
| Annual term, paid upfront | Once a year | Base price | At renewal, or in the first seven days of a term |
| Annual term, billed monthly | Every month | About 5% more | At renewal, or in the first seven days of a term |
| Month-to-month term | Every month | About 20% more | At any monthly renewal |
The trade-off is commitment. Under Microsoft's new commerce rules a subscription can only be cancelled in the first seven days of its term, so an annual licence bought for someone who leaves in month three stays on the bill until the term ends, unless you reassign it to a new starter. A sensible mix for most small businesses is annual terms for the core team and month-to-month for casuals, contractors and seasonal staff. Key IT buys licences through the New Commerce Experience as part of our IT procurement work. Our own service is month to month with no lock-in contract, but Microsoft's licence terms are separate.
Five things to check before your renewal
Licences nobody uses.
Compare assigned licences with your staff list. Seats held by people who've left, or bought for a finished project, are pure cost, and on an annual term the renewal is your chance to cut them.
Frontline plans.
F1 and F3 took the steepest percentage rises, and F3 at US$10 now lists above Business Basic at US$7, though the plans include different things. Microsoft's Product Terms limit who can be assigned a frontline licence, and F1 users aren't entitled to use an Exchange mailbox. Check everyone on an F plan still qualifies.
Business Premium or Microsoft 365 E3.
Microsoft caps the Business family at 300 seats in total across Basic, Standard and Premium. Below that line, Premium at US$22 lists US$17 per user below E3 at US$39 and already bundles Defender for Business, Intune and Conditional Access. Near or above the cap, E3 is the usual route, and its new Defender for Office 365 Plan 1 inclusion gives E3 users the email protection Premium users already had.
Copilot.
Check who actually uses it. Microsoft lists Copilot Business at US$21 per user per month for up to 300 users, and since 1 July 2026 has sold permanent Copilot bundles: Business Standard with Copilot at US$23.50 and Business Premium with Copilot at US$32, on an annual term billed annually. That's US$11 less per user than buying Premium and Copilot Business separately at list, provided everyone on the bundle uses Copilot. Our guide to whether Copilot is worth it helps with that call.
Not-for-profit pricing.
Microsoft ties nonprofit prices to commercial ones through a fixed discount, 60% to 75% on the affected products, so many rose too: nonprofit Business Standard went from US$3.00 to US$3.50, nonprofit Business Premium held at US$5.50 and nonprofit Business Basic stays free. A registered charity still paying commercial rates should fix that first; our not-for-profit IT page explains the grants and discounts.
Frequently asked questions
Did Microsoft 365 Business Premium go up in price in 2026?
No. Business Premium stayed at US$22 per user per month at Microsoft's list price when Basic, Standard and the E3 plans rose on 1 July 2026, and it still gained an extra 50GB of mailbox storage. Your Australian dollar invoice can still change with local-currency pricing and your billing term.
How much did Microsoft 365 Business Standard increase?
Business Standard rose from US$12.50 to US$14.00 per user per month at Microsoft's US list price, an increase of 12%, from 1 July 2026. Existing customers move to the new price at their first renewal on or after that date, and the Australian dollar figure appears on your renewal quote.
Can we still lock in the old Microsoft 365 price?
No, that window has closed. Customers who renewed before 1 July 2026 keep the old price until their next renewal, so an annual term that renewed in May or June 2026 stays on old pricing until 2027. Savings now come from right-sizing seats, choosing billing terms carefully and matching each person to the right plan.
Why did Microsoft raise Microsoft 365 prices?
Microsoft says the increase reflects the value of each suite as a whole rather than any single feature, pointing to new security, management and AI additions: Copilot Chat enhancements in every plan, Defender for Office 365 Plan 1 and Intune Plan 2 in Microsoft 365 E3, and an extra 50GB of mailbox storage in the Business plans.
Does the July 2026 price rise apply to Copilot?
No. Microsoft's FAQ says the update doesn't apply to standalone Copilot or Teams products. Copilot Business still lists at US$21 per user per month for up to 300 users, with a reseller promotion taking about 15% off until 31 December 2026. The Business Standard and Business Premium bundles with Copilot are now permanent offers.
Is monthly billing for Microsoft 365 worth the extra cost?
Only for seats you genuinely expect to drop. Partner-reported pricing puts month-to-month terms about 20% above annual, and annual terms billed monthly about 5% above paying upfront. Month-to-month suits casual, contract and seasonal staff; for a stable core team, annual terms usually cost less, provided the seat count is right at renewal.
More insights
Secure Boot certificate expiry
Secure Boot certificate expiry 2026: Windows Production PCA 2011 lapses on 19 October. What it…
Read article →Microsoft 365Microsoft's September tenant changes
Microsoft 365 September 2026 changes: 100GB Business mailboxes, Teams external chat limits…
Read article →PhishingDevice code phishing
Device code phishing gets past MFA and even passkeys in Microsoft 365. See how it works, what ASD…
Read article →Book your free IT & Cyber Security Review
See exactly where your IT and security stand, and what to fix first. No jargon, no obligation.