Microsoft 365 Price Increases 2026: How to Cut the Cost at Renewal

Microsoft 365 2026 prices, by plan (with Teams)

Commercial list prices in USD, per user per month, for the suites that include Microsoft Teams. Pricing varies by region, currency, and agreement; CSP and volume pricing may differ.

No-Teams prices: where the biggest jumps are

Microsoft sells versions of these suites without Teams at lower prices, a split that started with EU competition rulings and now applies globally. The percentages here are higher than those for the Teams versions, and Microsoft 365 F1 without Teams shows the single largest increase across the entire update at 43 percent. If your organization standardized on a different meeting platform, these SKUs can still come in under the with-Teams prices, but the jump is steeper.

Why the increase is bigger than the headline for many enterprises

The published percentages are only part of the story on an Enterprise Agreement. Microsoft removed a set of EA volume discounts in late 2025, and that change stacks on top of the July list increase, so organizations renewing an EA face two cost events at once. Independent licensing analysts have estimated that for a large E5 estate, the combined effect can push the real increase closer to 20 percent rather than the 5 to 8 percent on the price sheet, with a 25,000-seat organization seeing a seven-figure annual swing. Treat the list-price delta as a floor, not the full number, and confirm your own effective rate against your agreement before you accept a renewal quote.

The lost discount is also prompting many enterprises to question whether an Enterprise Agreement is still the right purchasing vehicle. The Cloud Solution Provider (CSP) model can restore per-seat flexibility and remove the true-up mechanics that make an EA expensive to carry, which is why we cover the pros and cons of switching from EA to CSP and the strategic reasons enterprises are making the move in detail. It doesn’t suit every organization, but a price increase paired with the removal of a discount is exactly the moment to run that comparison.

There is a second enterprise cost to model on E5. Microsoft Security Copilot is now included, but only up to a set capacity: 400 Security Compute Units per month for every 1,000 paid E5 licenses, capped at 10,000. Beyond that, usage is billed pay-as-you-go (confirm the current per-unit rate with Microsoft, as published figures have varied). Heavy investigation, automation, or promptbook use can burn through the included capacity faster than expected, so build a usage assumption into the renewal rather than treating Security Copilot as free-forever.

What the higher price includes

This is a value-and-price update, not a price-only one. E3 gains Microsoft Defender for Office 365 Plan 1 and several Intune tools; E5 adds Security Copilot and advanced Intune management; Business plans get enhanced Copilot Chat and 50 GB more mailbox storage. For the full plan-by-plan breakdown of what each license now includes and when it rolls out, see our companion guide to the Microsoft 365 2026 new features by plan. The reason it matters for cost: if a newly bundled capability replaces something you buy separately, dropping the duplicate is one of the cleanest ways to offset the increase.

How to lower your cost at renewal

The lock-in-before-July-1 window has closed, but the levers that reduce a renewal are evergreen, and they matter more now that the baseline is higher. None of them requires a promotion.

Right-size before you renew

Most tenants hold licenses for people who left, changed roles, or never used the apps their licenses cover. Pull a sign-in and usage report from the Microsoft 365 admin center for the last 90 days and retire or reassign anything below meaningful use. Every seat you remove is now repriced upward, so cleanup pays back more than it did a year ago. Our guide to reducing Microsoft 365 costs through licensing optimization walks through the process. On an EA specifically, that unused capacity is the heart of the shelfware-versus-elasticity case for moving to CSP.

Drop add-ons that are now bundled

If you pay separately for Microsoft Defender for Office 365 Plan 1 on top of E3, that capability will move into the base plan by August 1, 2026, and the standalone add-on will be a candidate for cancellation at renewal. Map every add-on you carry to the new bundled features and remove duplicates. The catch is timing: if you are mid-term on a third-party email security contract, you cannot capture the savings until that contract lapses, so line up the two renewal dates.

Model your plan mix and term

The gap between Business Standard ($14) and Business Premium ($22) has narrowed to $8, making Premium worth remodeling for any organization with real device management or security needs. On the enterprise side, weigh E3-plus-add-ons against E5 now that both have shifted. Term length and renewal timing also affect your rate, so model a multi-year commitment against annual before you sign. Our cost optimization playbook covers the right-sizing and CSP-versus-direct analysis in depth.

Microsoft promotions do exist and change frequently, and eligibility is usually limited to new-to-offer or new-to-suite customers on multi-year terms. Because those offers move month to month, we don’t list them here; a quick licensing review with TrustedTech will surface any promotion you actually qualify for at your renewal.

Savings scenarios: what the increase looks like in dollars

Representative examples at the new list prices, to size the impact and the payback from right-sizing. Your real numbers depend on seat counts, agreement, and eligibility.

Mid-market: 500 users on Microsoft 365 E3

At the new $39 rate, 500 seats run about $234,000 a year, roughly $18,000 more than at the old $36. Trimming even 5 percent of unused seats before renewal (25 licenses) claws back about $11,700 a year, more than half the increase.

Enterprise: 1,000 users on Microsoft 365 E5

At $60, 1,000 seats cost about $720,000 a year, roughly $36,000 above the old $57 on list alone. If your EA also lost volume discounts, the effective jump can be materially larger, which is why the enterprise number is worth modeling fully rather than reading off the price sheet.

Frontline: 5,000 users on Microsoft 365 F1

At the new $3 with-Teams rate, 5,000 frontline seats add about $45,000 a year over the old $2.25. Choosing the without-Teams SKU only makes sense if those workers genuinely don’t use Teams, because that version carries a 43 percent increase of its own.

Microsoft 365 price increase: FAQ

How much are Microsoft 365 prices going up in 2026?

Increases run from 5 percent (Microsoft 365 E5) to 33 percent (Microsoft 365 F1 with Teams), and up to 43 percent for F1 without Teams. Microsoft 365 E3 goes from $36 to $39, E5 from $57 to $60, Business Basic from $6 to $7, and Business Standard from $12.50 to $14. Business Premium ($22) and Office 365 E1 ($10) are unchanged.

When does the price increase apply to my organization?

New pricing took effect July 1, 2026 for new purchases. Existing customers move to the new prices at their next renewal after that date, so a mid-term agreement keeps their current rate until they renew.

Why is my enterprise increase higher than the published percentage?

For Enterprise Agreement customers, the list increase stacks on top of EA volume discounts that Microsoft removed in late 2025. Independent analyses estimate the combined effective increase can approach 20 percent for large E5 estates. Model your fully loaded cost, not just the list delta, before renewing.

Is Security Copilot really included in E5, or is there a catch?

It is included up to a capacity of 400 Security Compute Units per month per 1,000 paid E5 licenses (capped at 10,000). Usage beyond that is billed pay-as-you-go, so heavy Security Copilot use can create an additional metered cost. Confirm the current overage rate with Microsoft.

What’s the best way to reduce the cost now that the increase is live?

Right-size unused and duplicate licenses before renewal, cancel add-ons that are now bundled into your plan (such as Defender for Office 365 Plan 1 on E3), and model your plan mix and term length. A licensing review can also identify any current Microsoft promotion you qualify for.

Should we move from an Enterprise Agreement to CSP because of the increase?

For some organizations, yes. With EA volume discounts gone, the CSP model can offer more flexible per-seat purchasing and easier right-sizing, though the right answer depends on your size, term length, and how you buy Azure. Our EA to CSP FAQ covers the common questions.

Do the increases apply to standalone Teams or Copilot?

No. Standalone Microsoft Teams and standalone Microsoft 365 Copilot licenses are excluded from this pricing and packaging update.

The bottom line: model it before you renew

The increase is here, so the win is no longer in beating a deadline; it’s in walking into your renewal with clean license data, the add-ons you no longer need cancelled, and a plan mix that matches how your team actually works. For enterprises, the EA discount change means the real number is bigger than the price sheet suggests, which makes modeling before the conversation more valuable than ever.

Want the fully loaded number for your tenant and a plan to bring it down? Request a Microsoft 365 licensing review and we’ll model your renewal against your actual seat count and usage.