Microsoft 365 prices rise on 1 July 2026: every enterprise suite goes up exactly $3
Summary. Microsoft's commercial price update took effect on 1 July 2026, announced by Corporate Vice President Nicole Herskowitz on 4 December 2025 and detailed on Microsoft's licensing page as of 16 February 2026. The headline numbers look scattered: Microsoft 365 E5 rises 5%, Office 365 E3 rises 13%, Microsoft 365 F1 rises 33%, and F1 without Teams rises 43%. Read the same table in dollars and the scatter disappears. Office 365 E3 goes $23.00 to $26.00. Office 365 E5 goes $38.00 to $41.00. Microsoft 365 E3 goes $36.00 to $39.00. Microsoft 365 E5 goes $57.00 to $60.00. That is +$3.00, four times out of four. The eight enterprise SKUs, with and without Teams, all take exactly $3.00. Microsoft says so in a footnote: suites without Teams "will also have an equivalent dollar value increase". Every percentage in the coverage is therefore an artefact of your base price, not a signal about your suite. Existing customers stay on current pricing until their next renewal, packaging changes rolled out from June 2026 and complete by 1 August 2026, and standalone Teams and Copilot SKUs are excluded entirely. This is what to do about it.
What actually changed, in dollars
Here is Microsoft's commercial price table for enterprise suites, with the dollar delta added.
| SKU | Old price | New price | Increase | % change |
|---|---|---|---|---|
| Office 365 E1 | $10.00 | $10.00 | $0.00 | none |
| Office 365 E3 | $23.00 | $26.00 | $3.00 | 13% |
| Office 365 E5 | $38.00 | $41.00 | $3.00 | 8% |
| Microsoft 365 E3 | $36.00 | $39.00 | $3.00 | 8% |
| Microsoft 365 E5 | $57.00 | $60.00 | $3.00 | 5% |
| Office 365 E3 (no Teams) | $14.45 | $17.45 | $3.00 | 14% |
| Office 365 E5 (no Teams) | $29.45 | $32.45 | $3.00 | 10% |
| Microsoft 365 E3 (no Teams) | $27.45 | $30.45 | $3.00 | 11% |
| Microsoft 365 E5 (no Teams) | $48.45 | $51.45 | $3.00 | 6% |
Nine rows, one number. Office 365 E1 does not move at all, and every other enterprise suite moves $3.00 per user per month.
Two consequences fall straight out of that, and neither made the headlines.
First, the Teams carve-out is frozen. Subtract the no-Teams price from the with-Teams price on any row and you get $8.55, before and after. Office 365 E3: $23.00 minus $14.45 is $8.55, and $26.00 minus $17.45 is $8.55. Same for E5, same for Microsoft 365 E3 and E5. The unbundled SKUs Microsoft created for European competition reasons still cost exactly $8.55 less than the bundled ones. If you unbundled Teams to save money, you saved the same money you saved last year, and your percentage increase looks worse only because your base is smaller.
Second, the E3-to-E5 upgrade got cheaper in relative terms. Microsoft 365 E3 to E5 was a $21.00 step at $36.00 and $57.00. It is still a $21.00 step at $39.00 and $60.00. The delta did not move, and E5 is where nearly all the new packaging landed. Hold that thought.
The rest of the table
The flat $3.00 is an enterprise-suite pattern. It does not hold for Frontline, Business or standalones, which is why the percentages there run higher.
| SKU | Old price | New price | Increase | % change |
|---|---|---|---|---|
| Microsoft 365 F1 | $2.25 | $3.00 | $0.75 | 33% |
| Microsoft 365 F3 | $8.00 | $10.00 | $2.00 | 25% |
| Microsoft 365 F1 (no Teams) | $1.75 | $2.50 | $0.75 | 43% |
| Microsoft 365 F3 (no Teams) | $6.93 | $8.93 | $2.00 | 29% |
| Microsoft 365 Business Basic | $6.00 | $7.00 | $1.00 | 16% |
| Microsoft 365 Business Standard | $12.50 | $14.00 | $1.50 | 12% |
| Microsoft 365 Business Premium | $22.00 | $22.00 | $0.00 | none |
| Microsoft 365 Apps | $12.00 | $14.00 | $2.00 | 17% |
| Windows E3 | $6.63 | $7.63 | $1.00 | 15% |
| Windows Enterprise (per device) | $5.85 | $7.63 | $1.78 | 31% |
| Enterprise Mobility + Security E3 | $10.60 | $12.00 | $1.40 | 13% |
| Enterprise Mobility + Security E5 | $16.40 | $18.00 | $1.60 | 10% |
| Entra Plan 1 | $6.00 | $7.00 | $1.00 | 16% |
| Entra Plan 2 | $9.00 | $10.00 | $1.00 | 11% |
| Apps for Business | $8.25 | $10.00 | $1.75 | 21% |
| Purview Suite | $12.00 | $12.00 | $0.00 | none |
| Defender Suite | $12.00 | $12.00 | $0.00 | none |
Frontline is where the pain concentrates, and it is worth being precise about why. F1 rises $0.75. In a retail chain or a hospital running 20,000 frontline licences, $0.75 a month is $180,000 a year. The 43% headline on F1 without Teams is real, and it is also 75 cents.
The unchanged rows matter too. Office 365 E1 at $10.00, Business Premium at $22.00, the Purview Suite and the Defender Suite at $12.00 did not move. E1 holding at $10.00 while E3 goes to $26.00 widens the E1-to-E3 gap from $13.00 to $16.00, which changes the calculus for any population you have been over-licensing out of habit.
What you get for the $3
Microsoft's position is that the price follows the packaging. From the announcement: Microsoft is "adding the enhanced email security features of Microsoft Defender for Office 365 Plan 1 to Office 365 E3 and Microsoft 365 E3", plus Intune Remote Help, Intune Advanced Analytics and Intune Plan 2 to Microsoft 365 E3 and E5. Microsoft 365 E5 additionally gets Microsoft Security Copilot, Intune Endpoint Privilege Management, Enterprise Application Management and Microsoft Cloud PKI. Office 365 E1, Business Basic and Business Standard get URL time-of-click protection. The Business suites get 50GB more email. Every suite gets Copilot Chat enhancements, which Microsoft defines as "inbox and calendar awareness and access to Word, Excel, and PowerPoint agents", and Copilot Chat Analytics.
Microsoft's framing came with an analyst endorsement in the announcement post. "The latest AI and security capabilities in Microsoft 365 demonstrate Microsoft's sustained commitment to helping organizations stay ahead of the latest innovations and evolving threats," said Dion Hinchcliffe, VP and Practice Lead, CIO, at Futurum.
Whether $3.00 is fair depends entirely on whether you were already buying the add-ons. If you pay separately for Intune Plan 2 or Defender for Office Plan 1 today, this update is a discount with extra steps: the add-on folds into the suite and you cancel a line item. If you do not use them and will not deploy them, you are paying $36 a year per user for capability you will not turn on. Microsoft is not shy that the direction is bundled AI and security; it says it shipped "more than 1,100 features across Microsoft 365, Security, Copilot, and SharePoint" in the year before the announcement, and that over 430 million people use Microsoft 365 apps.
The one thing $3.00 does not buy is Copilot. Standalone Microsoft 365 Copilot SKUs are excluded from this update entirely. Copilot Chat is not Microsoft 365 Copilot, and the enhancements landing in your suite are the chat tier. If your board thinks the price rise bought the Copilot rollout, correct them before budget season, not after. We looked at where the paid Copilot agents actually landed in our note on Microsoft Copilot sales and service agents reaching GA.
The renewal timing is the whole game
The pricing update took effect on 1 July 2026, but Microsoft's licensing page is explicit that "existing customers remain on current pricing until renewal". That single sentence is worth more than every percentage in this article.
Your increase does not land on 1 July. It lands at your next renewal after 1 July, which means the length of the term you sign now decides how long you hold the old rate. A three-year Enterprise Agreement signed before your renewal date locks pricing in a way a monthly CSP subscription does not. The spread between a customer who renewed in June 2026 on a three-year term and one who renews monthly is the full $3.00 for up to three years, on identical licences.
The packaging timeline runs on its own clock: capabilities began rolling out in June 2026, customers get "at least 30 days notice in Message Center before packaging changes become available in their tenant", and rollout of Defender for Office 365 Plan 1, Intune Remote Help, Intune Advanced Analytics, Intune Plan 2, Intune Privilege Management, Microsoft Cloud PKI and Intune Application Management completes by 1 August 2026. So you may receive the new capability months before you pay for it. That is not generosity, it is the renewal cycle, and it is the window in which to decide whether you want what is arriving.
Watch the Message Center notice specifically. Features that land in a tenant get adopted by users, and capability your staff already rely on is not a thing you negotiate away at renewal. If you intend to decline the packaging, decide before your help desk starts fielding tickets about Intune Remote Help.
The renewal playbook
Six moves, in the order they pay.
Count what you already buy as an add-on. Intune Plan 2, Intune Remote Help, Intune Advanced Analytics and Defender for Office 365 Plan 1 are the four to check, because they are the ones folding into E3 and E5. Every one you are paying for separately is a line item you cancel at renewal, and it can exceed the $3.00.
Re-run the E5 case. The E3-to-E5 delta is unchanged at $21.00, and E5 alone gained Security Copilot, Intune Endpoint Privilege Management, Cloud PKI and Enterprise Application Management. If you priced E5 in 2024 and said no, you priced a different product. Microsoft has quietly made the upgrade more attractive by holding the delta while loading the top tier.
Right-size before you renew, not after. The E1-to-E3 gap widened from $13.00 to $16.00 and E1 did not move at all. Populations that never open a desktop app are now $16.00 a month cheaper on E1 than on E3, and a $3.00 increase on licences nobody uses is the easiest saving in this entire exercise.
Model your frontline estate in dollars, not percent. F1 at $0.75 and F3 at $2.00 look trivial per user and are not trivial at 10,000 seats. Do the multiplication before you accept the 33% headline as a crisis or dismiss it as pennies.
Check the term, then check it again. This is the only lever with a deadline attached. Every month of old pricing you lock is $3.00 per user per month you do not spend.
Do not treat Teams unbundling as a saving lever here. The gap held at $8.55. If dropping Teams did not make sense in 2025 it does not make sense now, and the percentage on the no-Teams rows is telling you about arithmetic, not about strategy.
India-specific considerations
Two things change the shape of this for an Indian buyer.
Microsoft states that the changes "apply globally with local market adjustments" and that pricelist pricing "may vary by country and currency". The tables above are USD. Your India pricelist is not a straight conversion of them, so the correct first step is asking your partner or account executive for the INR pricelist effective at your renewal date rather than converting $3.00 at today's rate and budgeting that. The dollar increase is the signal; your invoice is the fact.
The second is that frontline density in India is the highest-use part of this. Indian operations tend to carry a larger F1 and F3 population than their global headcount share implies, in retail, manufacturing, logistics and hospitals. That is precisely where the percentage increases are steepest, and precisely where licence hygiene is usually weakest. If you audit one thing before renewal, audit your F-SKU assignment list against people who actually work there now.
For teams treating this as part of a wider cost exercise rather than a one-off invoice, the same discipline we set out in cutting cloud spend for Indian teams applies: the saving is in the licences nobody uses, not in the rate card. This is also not an isolated event. Apple's 2026 price rises hit enterprise fleet budgets, AWS repriced EC2 Capacity Blocks upward, and Azure retired reserved VM instances. Vendors are repricing bundled AI across the board, and the agentic FinOps tooling is arriving because the bills got harder to read.
FAQ
When does the Microsoft 365 price increase actually hit my bill?
Not on 1 July 2026. Microsoft's licensing page states that existing customers remain on current pricing until renewal, so the new rate applies at your first renewal after that date. A longer term signed before your renewal holds the old price for longer, which makes term length the main lever available to you.
How much is Microsoft 365 E3 going up?
Microsoft 365 E3 goes from $36.00 to $39.00 per user per month, an increase of $3.00 or 8%. The version without Teams goes from $27.45 to $30.45, the same $3.00, which reads as 11% only because the base is lower. Both figures come from Microsoft's own commercial price table.
Why do the percentage increases vary so much between suites?
Because the dollar increase is flat and the bases differ. All four enterprise suites rise exactly $3.00, so Microsoft 365 E5 at $57.00 shows 5% while Office 365 E3 at $23.00 shows 13%. Microsoft confirms in a footnote that suites without Teams take an equivalent dollar value increase.
Does this price increase include Microsoft 365 Copilot?
No. Microsoft states that standalone Teams and Copilot SKUs are not included in this update. What suites receive is Copilot Chat enhancements, defined as inbox and calendar awareness plus access to Word, Excel and PowerPoint agents, along with Copilot Chat Analytics. That is the chat tier, not a Microsoft 365 Copilot licence.
Is dropping Teams still worth it after the increase?
The economics are unchanged. Every enterprise suite without Teams costs exactly $8.55 less than its bundled equivalent, both before and after 1 July 2026, because both took the same $3.00 increase. The higher percentages on no-Teams rows reflect the smaller base price, not a narrowing discount.
Which Microsoft 365 SKUs are not increasing?
Office 365 E1 holds at $10.00, Microsoft 365 Business Premium holds at $22.00, and the Purview Suite and Defender Suite hold at $12.00. E1 staying flat while Office 365 E3 rises to $26.00 widens that gap to $16.00 a month, which is worth checking against users who never open desktop apps.
What new features come with the higher price?
Office 365 E3 and Microsoft 365 E3 gain Microsoft Defender for Office 365 Plan 1. Microsoft 365 E3 and E5 gain Intune Remote Help, Intune Advanced Analytics and Intune Plan 2. E5 also gains Security Copilot, Intune Endpoint Privilege Management, Cloud PKI and Enterprise Application Management. Business suites gain 50GB more email.
Should we move from E3 to E5 now?
Re-run the numbers rather than assume. The E3-to-E5 delta stayed at exactly $21.00 while E5 absorbed Security Copilot, Endpoint Privilege Management, Cloud PKI and Enterprise Application Management. If you rejected E5 on price before this update, you evaluated a materially smaller bundle at the same step cost.
How eCorpIT can help
eCorpIT is a Gurugram-based technology consultancy and a Microsoft partner. We help IT and finance teams turn licensing changes like this into a decision rather than an invoice: reconciling assigned licences against real usage, identifying add-ons that now fold into your suite, modelling the E3 and E5 step at your headcount, and getting your renewal term right before the window closes. Where the answer is to buy less rather than negotiate harder, we will tell you that. If your Microsoft renewal lands in the next two quarters, talk to our team and bring your licence assignment export.
References
- Microsoft 365 Pricing and Packaging Updates, Microsoft Licensing Resources, 16 February 2026.
- Advancing Microsoft 365: New capabilities and pricing update, Nicole Herskowitz, Microsoft 365 Blog, 4 December 2025.
- Microsoft 365 Packaging and Pricing Updates Public FAQ, Microsoft Licensing Resources, accessed 16 July 2026.
- Microsoft 365 E3, Microsoft, accessed 16 July 2026.
- Microsoft 365 E5, Microsoft, accessed 16 July 2026.
- Office 365 E3, Microsoft, accessed 16 July 2026.
- Microsoft 365 enterprise plans and pricing, Microsoft, accessed 16 July 2026.
- Microsoft 365 business plans and pricing, Microsoft, accessed 16 July 2026.
- Microsoft 365 Copilot Chat, Microsoft, accessed 16 July 2026.
- Microsoft Defender for business, Microsoft, accessed 16 July 2026.
- Microsoft 365 Roadmap, Microsoft, accessed 16 July 2026.
- Microsoft 365 Government pricing update, Microsoft, accessed 16 July 2026.
Last updated: 16 July 2026.
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