The Microsoft 365 price increase for 2026 is now live. From 1 July 2026, Microsoft raised commercial subscription prices across enterprise and business plans, with some tiers rising by as much as 13%. If your renewal is approaching, the decisions you make in the coming weeks will determine whether you absorb the full cost or come out ahead.
What is the Microsoft 365 price increase in 2026? The Microsoft 365 price increase of 2026 refers to Microsoft’s global update to commercial subscription pricing, effective 1 July 2026. Enterprise plans, including Microsoft 365 E3, E5, and the Office 365 suite, all saw per-user monthly costs rise between 5% and 13%. In return, Microsoft is bundling new security and AI capabilities into the affected plans, including Microsoft Defender for Office 365 Plan 1, enhanced Intune management tools, and Security Copilot for E5 subscribers.
Existing customers stay on their current pricing until their next renewal date after 1 July 2026. Your renewal timing, your plan mix, and your current add-on spend all determine the net impact on your M365 renewal cost.
Which Plans Are Affected by the Microsoft 365 Price Increase 2026?
Not every plan has changed by the same amount. Here is a breakdown of the main price movements for enterprise and business tiers, all effective 1 July 2026:
- Microsoft 365 E3: from $36 to $39 per user/month (+8.3%)
- Microsoft 365 E5: from $57 to $60 per user/month (+5.3%)
- Office 365 E3: from $23 to $26 per user/month (+13%)
- Office 365 E5: from $38 to $41 per user/month (+8%)
- Microsoft 365 Business Basic: from $6 to $7 per user/month (+16.7%)
- Microsoft 365 Business Standard: from $12.50 to $14 per user/month (+12%)
- Microsoft 365 Business Premium: unchanged
UK organisations buying through a certified partner will see broadly equivalent percentage movements in sterling. Microsoft 365 E3 is currently listed at £33.10 per user per month in the UK and E5 at £52.80. These are the Microsoft UK list prices; your effective cost will depend on your agreement type and any partner discounting.
What the Microsoft 365 Pricing Changes Mean for Your Renewal
For IT leaders and finance teams working through the Microsoft 365 pricing changes in the UK, the key variable is your renewal date. Organisations whose annual subscriptions renew after 1 July 2026 move to the new pricing at that point. If your renewal falls between July and December 2026, you are already in scope.
The Microsoft 365 subscription cost increase in July 2026 does not have to be absorbed in full. Most organisations are carrying unused seats, paying for add-ons now included in the base plan, or sitting on a plan tier that no longer matches their actual usage. A structured review before renewal is where the real savings are found, not after the contract is signed.
Is Your M365 Renewal Cost Working Against You?
The Microsoft 365 price increase 2026 changes the value equation across every enterprise plan. A certified Microsoft Solutions Partner can audit your current seat usage, right-size your licence mix, and identify where newly bundled features offset existing add-on costs, before your next renewal locks you in.
Get a Strategic ConsultationWhat's New in the Plans Going Up in Price?
Microsoft’s position is that these are not pure price increases. New capabilities are being bundled into the affected plans, some of which organisations were previously paying extra for as standalone add-ons.
For Microsoft 365 E3 customers, the plan now includes Microsoft Defender for Office 365 Plan 1 from 1 August 2026. This is the email security layer that detects phishing, malware, and malicious links across Teams, Outlook, and SharePoint. Organisations carrying Defender for Office 365 Plan 1 as a standalone add-on on top of E3 should document that spend now: it becomes a candidate for removal at renewal once the capability is included in the base plan.
Microsoft 365 E5 customers receive the largest bundle of new capabilities with this price change:
- Intune Remote Help, Advanced Analytics, and Endpoint Privilege Management
- Microsoft Cloud PKI and Enterprise Application Management
- Microsoft Security Copilot at 400 Security Compute Units (SCUs) per month, per 1,000 licensed users
Security Copilot, which Microsoft had been selling as a separate product, is now included in the E5 subscription at a defined allocation. For organisations that had been evaluating Security Copilot as a standalone purchase, this changes the value calculation significantly.
All plans receiving a price increase also gain enhanced Microsoft Copilot Chat capabilities, including inbox and calendar awareness, plus access to Word, Excel, and PowerPoint agents. Business Basic and Business Standard users additionally receive an extra 50GB of mailbox storage per user.
If your organisation is assessing how these new inclusions affect your overall stack, Transputec’s Microsoft 365 services include a tenant assessment that cross-references your current add-on spend against the newly bundled features.
How Much Is Microsoft 365 Going Up in Price? The UK Impact
For UK IT leaders trying to quantify the Microsoft 365 subscription cost increase in July 2026 across their estate, the maths is straightforward once you know your plan and seat count.
A 500-seat Microsoft 365 E3 deployment at the new price represents roughly £8 more per user per year (in sterling equivalent terms). At scale, that is a meaningful budget line that most finance teams will flag at the next quarterly review. For Business tier organisations, the percentage impact is larger: Business Standard rises 12% and Business Basic by nearly 17%.
What makes the Microsoft 365 pricing changes UK calculation more nuanced is the add-on picture. A typical mid-market organisation carries between two and five Microsoft add-ons on top of their base plan. If one or more of those add-ons duplicates a capability now included in the updated base plan, removing it at renewal directly offsets part of the price increase. The net movement could be materially smaller than the headline percentage suggests.
According to Microsoft’s own licensing resources page, the packaging updates are designed to deliver more value within the existing subscription, rather than simply raising prices across the board. Whether that holds for your organisation depends on your current configuration.
What to Do Before Your Microsoft 365 Renewal in the UK
If you are asking what to do before Microsoft 365 renewal UK, here are four practical steps that should happen before your contract is signed for the next term.
1. Run a seat usage audit
Pull a sign-in activity report from the Microsoft 365 Admin Centre for the last 90 days. Most organisations find that a portion of their licence count is assigned to users who have left, changed roles, or stopped using the applications their plan covers. Eliminating those seats before renewal reduces the baseline against which the new price is calculated.
2. Model your plan mix
The narrowing price gap between Business Standard and Business Premium, the inclusion of Defender for Office 365 Plan 1 in E3, and the Security Copilot inclusion in E5 all shift the comparative value across tiers. If your organisation was borderline between E3 and E5, run the comparison again at July 2026 pricing. The breakeven point has moved. Our analysis of M365 plan selection for UK organisations covers this in detail.
3. Identify redundant add-ons
Audit every standalone add-on your organisation currently pays for. Cross-reference that list against the capabilities Microsoft is now bundling into the updated base plans. Any add-on that duplicates a newly included feature is a candidate for removal at your next renewal, which directly offsets a portion of the price increase.
4. Consider your renewal timing
Organisations whose annual subscriptions renew between July and December 2026 face the new pricing immediately. If there is flexibility around renewal timing, modelling that decision is worthwhile. A Microsoft Solutions Partner with access to your current agreement and usage data can do that modelling accurately before you commit.
Transputec works with UK organisations to audit M365 estates, right-size licence mixes, and identify where the bundled features reduce existing add-on costs. Our Microsoft Modern Workplace practice has delivered modelled licensing savings of 20 to 75% for mid-market clients, and our tenant assessments are completed before any commitment is made.
Is the Microsoft 365 Price Increase 2026 Worth It?
That is the question most IT leaders and COOs are working through right now. The honest answer is: it depends on what you are currently paying for separately.
For E5 customers who had been evaluating Security Copilot as a standalone product, the new bundle is straightforward to assess: compare the cost of the E5 price increase against what Security Copilot licences would have cost separately. In many cases, the arithmetic favours the bundle. For organisations with 1,000 or more users, 400 Security Compute Units per month is a meaningful allocation.
For E3 customers, the Defender for Office 365 Plan 1 inclusion is valuable if you were previously paying for it as an add-on. If you were already on a higher security tier, or using a third-party email security product, the new inclusion may not change your net spend and the full price increase applies without offset.
For Business tier customers, the increases are the largest in percentage terms and come with the fewest new capabilities. This cohort has the strongest case for a careful seat audit and plan mix review before renewal. The question is whether Business Premium, which has not changed in price, now represents better value than a price-increased Business Standard.
Microsoft Copilot consulting is an area where Transputec has significant experience. If you are trying to understand whether the Copilot Chat additions in the new plans change your AI strategy, our Microsoft Copilot consulting service can model the ROI before you commit.
Conclusion
The Microsoft 365 price increase 2026 is a fixed cost change, but its net impact on your organisation is not. The audit steps above give you four levers: seat reduction, plan right-sizing, add-on removal, and renewal timing. Used together, they can offset a significant portion of the increase, and in some configurations bring your effective cost down despite the headline rise.
Transputec works with UK organisations as a certified Microsoft Solutions Partner, helping IT leaders and finance teams understand their current M365 renewal cost, model the impact of the July 2026 pricing, and make licence decisions that hold up at renewal and beyond.
If you are preparing for your next Microsoft 365 renewal, our team is ready to help with a no-commitment tenant assessment. Contact us to arrange yours.
FAQs
When does the Microsoft 365 price increase 2026 take effect?
The Microsoft 365 price increase 2026 took effect on 1 July 2026 for new and renewing customers. Existing subscribers stay on current pricing until their next renewal date after that date. If your annual subscription renews in August 2026, you pay the new prices from that point. Organisations whose subscriptions renewed before 1 July were able to lock in current pricing for a further full term.
How much is Microsoft 365 going up in price in 2026?
Increases vary by plan. Microsoft 365 E3 rises by 8.3% (from $36 to $39 per user/month), M365 E5 by 5.3% (from $57 to $60), Office 365 E3 by 13% (from $23 to $26), and Office 365 E5 by 8% (from $38 to $41). In the Business tier, Business Standard rises by 12% and Business Basic by around 17%. Microsoft 365 Business Premium remains unchanged. UK sterling pricing reflects broadly equivalent percentage movements. See our Microsoft 365 services page for guidance on right-sizing your licence mix ahead of renewal.
What new features are included with the Microsoft 365 price increase?
Microsoft is bundling new capabilities to justify the Microsoft 365 subscription cost increase July 2026. Microsoft 365 E3 gains Defender for Office 365 Plan 1 from 1 August 2026. E5 plans gain Intune Remote Help, Advanced Analytics, Endpoint Privilege Management, and Microsoft Security Copilot at a defined allocation per 1,000 users. All plans receiving a price increase also gain enhanced Copilot Chat functionality, including inbox and calendar awareness. Business Basic and Standard customers receive an additional 50GB of mailbox storage per user.
What should I do before my Microsoft 365 renewal in the UK?
Start with a seat usage audit: pull a 90-day sign-in activity report from the Microsoft 365 Admin Centre to identify unused or underused licences. Then audit your add-ons for duplication with the newly bundled features, and model whether a plan tier change makes sense at the new prices. If your renewal falls between July and December 2026, consider whether the timing of your renewal is worth modelling in advance. Transputec provides a modern workplace assessment that covers exactly this analysis, including indicative licence savings before any commitment is made.
Will the Microsoft 365 pricing changes UK affect all businesses the same way?
No. The impact of the Microsoft 365 pricing changes UK depends on your current plan, seat count, and add-on configuration. Business tier customers face the largest percentage increases (up to 17% for Business Basic), while E5 enterprise customers face the smallest (around 5%). Organisations already paying for Defender for Office 365 Plan 1 as a standalone add-on will see a partial offset at the E3 level. A licence audit and plan modelling exercise is the most practical way to understand your specific net impact. Our team at Transputec can help: see our Microsoft 365 services for details on how we approach this work.
