With inflation continuing to affect businesses worldwide, rising costs have unfortunately become the norm for many organisations. Today, we’re here to help Microsoft 365 users understand what is changing later this year, why it matters, and how to prepare.
Microsoft has announced updates to Microsoft 365 licensing that will take effect on 1st July 2026. These include pricing changes across most subscriptions, alongside a range of new features, many of which focus on Copilot, AI innovation, and enhanced security capabilities.
While price increases are never welcome, this update brings tangible improvements that businesses should be ready to take advantage of, both from a productivity and security standpoint.
The question on most business decision-makers’ minds is simple: what is actually changing in our Microsoft 365 package this summer?
The exact impact will depend on which plan your organisation is currently using. However, Microsoft has confirmed that there will be broad pricing increases across nearly all Microsoft 365 Business, Enterprise, and Frontline plans from 1 July 2026. This means that the vast majority of Microsoft 365 users will be affected.
The minimum price increase is expected to be around 5%, rising to as much as 17% for some plans. For example:
Other key SKUs impacted include:
Although these rising costs will be disappointing for many organisations, it is more helpful to view them as upgrades rather than simple price rises. These changes introduce new AI capabilities, deeper integrations, and enhanced security features, all designed to make Microsoft 365 more powerful, productive, and secure in the long term.
The July 2026 increase represents the first major global Microsoft 365 price rise since 2022. Before that, the last increase occurred in 2011, highlighting how infrequent Microsoft’s global pricing changes typically are.
The 2022 increases ranged between 8% and 25%, depending on the licence type. Popular plans such as Microsoft 365 E3, Office 365 E1/E3/E5, and Business Basic and Premium were all affected.
This time, the increase aligns with Microsoft’s heavy investment in:
It reflects how significantly the Microsoft 365 platform has evolved in recent years.
Microsoft has released updated pricing in US Dollars (USD), with local currency pricing (including GBP) expected to be confirmed closer to the July 2026 implementation date. The level of increase may also depend entirely on the structure of your current agreement (monthly vs. annual billing).
What will the new Microsoft 365 pricing be?
Microsoft has released updated pricing in US Dollars (USD), with local currency pricing (including GBP) expected to be confirmed closer to the July 2026 implementation date. For UK customers, this means the figures currently published should be treated as provisional guidance, not finalised GBP amounts.
Because Microsoft aligns its pricing globally and adjusts regional currencies semi‑annually, the USD rate serves as the baseline. The exact GBP pricing for July 2026 will depend on the exchange‑rate alignment applied at the time, similar to the 5–6% GBP adjustment made in February 2025.
Annual vs monthly commitment impact
How your organisation is billed will also determine what you actually pay.
This remains relevant as organisations on monthly schedules may feel the increase more sharply going into the July 2026 price change.
The July 2026 pricing update does not apply immediately. Instead, it takes effect at your next renewal on or after 1 July 2026. This mirrors Microsoft’s standard approach: price adjustments only take effect when your term renews, not mid-contract.
This means:
Below is a table breaking down the official price list and increased pricing as of July 1st 2026:
Now, this is the exciting bit. Thankfully, this new price model comes with enhanced features, meaning you should get more bang for your buck from your Microsoft 365 subscription regardless of your product package.
Microsoft’s investment is heavily focused on AI and security, with Copilot capabilities becoming increasingly central to the Microsoft 365 ecosystem.
Below, we’ve outlined some of the more notable improvements they’ve made to the Microsoft 365 Suite:
Mailbox storage limits can be a real pain for end users. Once the mailbox storage limit is surpassed, it ultimately means a higher-tier plan is required, or the user will need to manually archive outdated emails and files.
This enhancement means users will spend less time deleting emails, and decision makers won’t need to factor in increased storage add-ons, such as Exchange Online P2, which are typically priced at £75 per user per year.
Business Premium is a popular product choice, especially amongst small-to-medium-sized businesses (SMBs) and small to medium-sized enterprises (SMEs). Companies that opt for this product will avoid a price increase, delivering higher value and lower cost.
This product also benefits from additional storage in popular tools such as SharePoint, OneDrive, and Teams, meaning end users won’t have to worry about running out of space any time soon.
Decision makers also stand to benefit from this product's enhanced security capabilities, making MS 365 Business Premium the best value all-rounder SKU bundle without needing to upgrade to enterprise plans.
Data analysis has become the backbone of modern business. That’s why providing clean, accurate, and real-time data can be a game-changer for decision-makers and business owners.
Intune advanced analytics is a handy tool for healthy performance and compliance. It makes life easier for IT professionals and engineers, including our in-house experts at Netitude. This should result in fewer slow, outdated laptops and far fewer interruptions for all Microsoft license holders.
Decision makers can rest easy knowing that Intune will remove the need for separate analytics tools, which, in itself, should cut costs across the board. Your IT administrator should also gain deeper visibility into device health, performance bottlenecks and compliance risks – all of which lead to better strategic planning and faster troubleshooting in the long run.
Another cost benefit can also be reaped from device insights, as they will inevitably help businesses extend hardware lifecycles.
Check out the full list of ‘new capabilities’ from Microsoft’s official table down below:
While Microsoft 365 continues to strengthen its built-in security features, organisations that are serious about protecting their environment should still consider the Microsoft Defender Suite as a vital addition.
Microsoft 365 provides a strong security foundation, but the Defender Suite enhances it by bringing together Microsoft’s full enterprise-grade security capabilities into a unified platform. It adds deeper threat detection, advanced endpoint protection, identity security, email and collaboration security, and centralised visibility across your entire environment.
In short, Defender Suite transforms Microsoft 365 from secure-by-default to security-led by design.
For organisations using Microsoft 365 E3, we recommend Microsoft Defender Suite.
For those using Microsoft 365 Business Premium, Microsoft Defender Suite for Business offers the same powerful protections in a more cost-effective package designed specifically for SMBs.
When Defender Suite is combined with Microsoft MDR (Managed Detection and Response) or MXDR (Managed Extended Detection and Response) services, it unlocks true enterprise-level protection, including:
This means your organisation benefits not only from Microsoft’s powerful technology, but also from expert human oversight, ensuring threats are identified and stopped before they can cause serious disruption.
With these changes coming into effect from July 2026, now is the ideal time to take a step back and review your Microsoft 365 environment. A proactive approach will help ensure you are fully prepared, cost-efficient, and getting maximum value from your licences.
We recommend organisations consider the following:
If you would like support reviewing your Microsoft 365 licensing or preparing for the July 2026 changes, please get in touch.
As a Microsoft Solutions Partner, Netitude helps businesses across Microsoft 365, Azure and Dynamics 365 ensure their environments are secure, compliant, and cost-effective. From licence optimisation and Copilot readiness to Defender Suite implementation and managed security services, we’re here to make sure you get the maximum value from your Microsoft investment.