Microsoft 365 July 2026 Price Increase

Microsoft announced another round of price increases for Microsoft 365 Business plans, effective July 2026. If you're a business running on M365 — and statistically, you probably are — here's what you need to know.

What is Microsoft changing about M365 Business pricing in July 2026?

Microsoft is raising Microsoft 365 Business prices in July 2026 by 12% to 17%: Business Basic moves from $6 to $7 per user, Standard from $12.50 to $14, Premium from $22 to $24.75, and Exchange Online Plan 1 from $4 to $4.50. For a 25-person Standard team, that's $450 a year extra.

The increases affect all Microsoft 365 Business tiers:

• Business Basic: $6.00 → $7.00/user/month (17% increase)
• Business Standard: $12.50 → $14.00/user/month (12% increase)
• Business Premium: $22.00 → $24.75/user/month (12.5% increase)
• Exchange Online Plan 1: $4.00 → $4.50/user/month (12.5% increase)

For a 25-person company on Business Standard, that's an extra $37.50/month or $450/year. For a 50-person company on Business Premium, it's $137.50/month or $1,650/year. Not catastrophic, but not nothing either.

Why It Matters More Than the Numbers Suggest

The real issue isn't the 12-17% increase itself — it's the compounding effect. Microsoft has been raising M365 prices every 12-18 months for the past few years. If you're still on the same plan you chose in 2022, your per-user cost has gone up roughly 35-40% since then.

And unlike most subscriptions, M365 isn't optional for most businesses. You need email. You need Office apps. You need collaboration tools. Microsoft knows this, and they price accordingly.

Three Things You Should Do Before July

1. Audit Your Licenses Right Now

This is the single highest-ROI activity you can do before the price increase. I guarantee you have license waste. Here's what to look for:

Ghost licenses. Former employees who still have active accounts. I've audited companies where 15-20% of their licenses were assigned to people who left months ago. At $22/user/month, that's expensive.

Over-licensed users. Not everyone needs Business Premium. Your receptionist who only uses email doesn't need the same license as your operations manager who uses the full Office suite, Teams, and SharePoint. Drop them to Business Basic and save $17+/user/month.

Duplicate services. If you're paying for M365 Business Premium AND a separate antivirus, AND a separate backup solution — you might be doubling up. Premium includes Defender for Business, Intune, and basic backup features. You may not need all those extra subscriptions.

At a recent audit we did for a client, we found over $4,000/year in wasted licensing. That's real money, and it took us about two hours to identify.

2. Evaluate Your Tier

Microsoft bundles a lot into each tier, and most businesses don't use everything they're paying for. Here's a quick guide:

Business Basic ($7/user/month after July) is enough if your team primarily uses:

• Email (Outlook)
• Teams for chat and meetings
• OneDrive for file storage
• Web versions of Word, Excel, and PowerPoint

Business Standard ($14/user/month after July) adds:

• Desktop Office apps (Word, Excel, PowerPoint, Outlook)
• More advanced Teams features
• Bookings, Forms, and other business tools

Business Premium ($24.75/user/month after July) adds:

• Advanced security (Intune, Defender for Business)
• Conditional access policies
• Data loss prevention
• Advanced compliance features

If you're not using the security and compliance features in Premium, you're overpaying. If your team doesn't need desktop Office apps, Standard is overkill.

3. Consider Annual Commitments

If you're on month-to-month billing, you're already paying a premium. Annual commitments are typically 15-20% cheaper per user. Yes, you're locked in for a year, but for a service you're going to use anyway, the savings are significant.

For a 30-person company on Business Standard, switching from monthly to annual billing saves roughly $1,000/year. Combined with a license audit, you might actually end up paying less after the price increase than you're paying now.

The Managed IT Services Alternative

This is where I'll be transparent about what we offer, because it's directly relevant.

Our Managed IT Services bundles your M365 licensing with Proofpoint email security, identity management, and ongoing optimization — all for one monthly fee. We handle the license audits, the tier optimization, and the security configuration so you don't have to.

More importantly, because we manage licenses across all our clients, we can often negotiate better rates than you'd get buying directly from Microsoft. Our Managed IT Services clients saw zero effective price increase during the last M365 hike because we optimized their licenses and absorbed the difference. We extend that promise to every managed-services client: M365 license price increases are absorbed within your service term.

I'm not saying this is right for everyone. If you have a solid IT person handling your M365 environment and you're confident your licenses are optimized, the price increase is just a line item to update in your budget.

But if you're not sure whether your licenses are right-sized, if you've never done a proper audit, or if you're tired of managing this stuff yourself — it's worth a conversation.

The Bottom Line

The July 2026 price increase is happening whether we like it or not. The smart move is to use it as a forcing function to clean up your M365 environment. Audit your licenses, right-size your tiers, and consider annual billing.

You might end up saving money even after the increase. And if you don't want to do the audit yourself, you know where to find us.