Microsoft 365 Pricing Changes from July 1, 2026 – Official

Microsoft has officially announced Microsoft 365 pricing changes effective July 1, 2026 for commercial suite subscriptions. The update impacts key Business, Enterprise, and Frontline suites, and it is tied to new AI, security, and endpoint management capabilities rolling into Microsoft 365 in 2026.

For IT leaders, finance, and procurement teams, this is more than a higher invoice. It is a practical moment to run a license health check: confirm what you actually use, reduce overlap, strengthen baseline security, and decide where Copilot (and Security Copilot for security teams) fits realistically.

What’s Changing in Microsoft 365 Pricing from July 1, 2026?

Microsoft states it will update commercial pricing for Microsoft 365 suite subscriptions effective July 1, 2026 and is sharing the changes now to give customers time to plan.

Important pricing note (Teams and regional adjustments):

• List prices shown are for SKUs that include Teams
• Suites without Teams will also have an equivalent dollar-value increase
• Pricing applies globally with local market adjustments
• Existing customers should contact their account executive or partner

Simplified list-price changes (USD, per user/month)

Source: Microsoft 365 Blog pricing table

What Microsoft is Adding in 2026 (and Why it Ties to Pricing)

Microsoft positions the pricing update alongside expanded AI, security, and management capabilities coming to Microsoft 365 offerings in 2026. The matrix below summarizes which suites gain which new capabilities in 2026.

1. AI in the Flow of Work: Copilot Chat Expands in Microsoft 365 Apps

Microsoft says that with Microsoft 365 Copilot Chat, it delivered secure AI chat for work to Microsoft 365 users and began rolling out Copilot Chat inside Word, Excel, PowerPoint, Outlook, and OneNote, bringing chat into day-to-day workflows. Microsoft also points to new admin controls to secure, manage, and measure Copilot Chat.

What to take from this: Expect more users to touch AI features by default, which makes governance, data boundaries, and usage reporting more important than “pilot-only” thinking.

2. More Security Built Into Core Suites

Microsoft states it is adding:

• Microsoft Defender for Office 365 Plan 1 to Office 365 E3 and Microsoft 365 E3, to help detect and protect against phishing, malware, and malicious links across email and collaboration platforms.
• URL checks in Office 365 E1, Business Basic, and Business Standard to help protect against known malicious websites when users click links in email and Office apps.

What to take from this: If you currently pay for separate baseline email protections or link-scanning, you now have a concrete reason to reassess overlap before renewal.

3. Integrated Endpoint Management: Intune Capabilities Added to E3 and E5

Microsoft says it is bringing additional endpoint management features to Microsoft 365 E3 and Microsoft 365 E5, including:

• Intune Remote Help
• Intune Advanced Analytics
• Intune Plan 2

And for Microsoft 365 E5, it also calls out:

• Intune Endpoint Privilege Management
• Enterprise Application Management
• Microsoft Cloud PKI

What to take from this: E3 and E5 customers should revisit endpoint tooling, privilege controls, and add-ons that may become redundant as these capabilities land in-suite.

4. Security Copilot Included for Microsoft 365 E5 Customers

Microsoft states Security Copilot “will be coming to all Microsoft 365 E5 customers,” with a rollout that includes 30-day advance notice before activation.

Microsoft’s Security blog further describes the included capacity for Microsoft 365 E5 customers as Security Compute Units (SCUs) and outlines the included monthly capacity scaling approach.

What to take from this: If you have security operations teams and you are debating E3 vs E5, Security Copilot inclusion becomes a real decision factor, but only if you align it to measurable workflows (triage, investigation, response).

Who Is Affected and When Does Pricing Apply?

Microsoft states the pricing changes apply globally with local market adjustments, and that nonprofit pricing will be adjusted in line with commercial pricing (because nonprofit discounts are tied to commercial rates via a fixed percentage discount).

For many organizations, the practical impact shows up during renewal planning. Microsoft’s guidance points customers to work with their account executive or partner for details.

Microsoft 365 Government Suites: What’s Different

Microsoft also announced pricing updates for Microsoft 365 Government suites in a separate Government blog. In that post, Microsoft notes that increases may be phased over multiple years where the total increase exceeds 10%, with no more than 10% applied annually until the full adjustment is completed.

Source

What this Means for Budgets and Renewals

At minimum, the new list prices create a predictable cost step for affected suites. But the bigger risk is paying more while keeping the same sprawl: unused licenses, overlapping security tools, and inconsistent endpoint governance.

A better outcome is possible if you treat this as a short program with clear outputs:

• A current-state license and usage baseline
• A persona-to-SKU map
• An overlap assessment for security and endpoint add-ons
• A Copilot readiness and governance plan
• A renewal timeline strategy aligned to your agreement structure

7-step Action Plan to Prepare for the Microsoft 365 Pricing Change

1. Inventory Licenses and Real Usage

Export assigned vs unassigned licenses, plus activity signals (by workload and department). Your goal is a clean baseline before you model anything.

2. Map Users to Personas (Then Map Personas to SKUs)

Common personas:

• Frontline and task workers (often F1/F3 candidates)
• Standard knowledge workers (Business Standard, E1, E3)
• Regulated or high-risk groups (E3/E5 plus specific controls)
• Security and IT operations teams (where E5 value is concentrated)

3. Reassess Baseline Email and Collaboration Security

If Defender for Office 365 Plan 1 is becoming part of your E3 baseline, check what you still need from third-party protections and where gaps remain.

4. Reassess Endpoint Tooling and Add-ons

For E3 and E5 tenants, validate what Intune capabilities you are paying for separately today and what can shift into the suite as Microsoft rolls in Remote Help, Advanced Analytics, and Plan 2.

5. Put Copilot Usage Behind Governance (Not Enthusiasm)

If Copilot Chat is reaching more users inside core apps, confirm:

• Data access boundaries
• Sensitivity labels and DLP alignment
• Monitoring and reporting expectations
• A rollout plan tied to roles, not job titles

6. Model Three Budget Scenarios

Build three practical models:

• Status quo: same mix, new list prices
• Optimized: right-sized licenses + reduced overlap
• Security-forward: deliberate E5 expansion for teams that benefit, plus consolidation

7. Run a Formal Renewal Readiness Review

Make it real: owners, milestones, outputs, and a decision date. Include IT, security, finance, and procurement so there are no surprises at renewal.

FAQs

1) Is this only about Copilot?

No. Microsoft ties the pricing update to expanded AI, security, and endpoint management capabilities rolling into Microsoft 365 suites.

2) Are suites without Teams affected?

Yes. Microsoft states the published list prices are for suites with Teams, and suites without Teams will have an equivalent dollar-value increase.

3) Do nonprofits see increases too?

Yes. Microsoft states nonprofit pricing will be adjusted in line with commercial pricing because nonprofit discounts are tied to commercial rates via a fixed percentage discount.

4) What about Government suites?

Microsoft’s Government post explains that increases may be phased where the total exceeds 10%, with no more than 10% applied annually until completed.

5) What is the single best first step?

A license and usage baseline. Every optimization decision depends on knowing what you own, what is assigned, and what is actually used.