If you run Microsoft 365, your costs are going up. Microsoft announced the change on 4 December 2025, and it takes effect on 1 July 2026. It’s the biggest shake-up to commercial licensing prices we’ve seen in years. Some plans go up by around 5%. A few frontline licences jump by as much as 43%.
That’s a wide range, and for some businesses it stings more than others. The good news is that it’s manageable, as long as you know which of your licences are affected and you sort it before your next renewal. Here’s what’s changing, what’s confirmed versus what’s still being finalised, and how we’d handle it if you were our client.
One thing to get straight first, because it affects every number below. Microsoft has published the new prices in US dollars, along with the percentage increases. It hasn’t yet confirmed the final pound prices for every plan. So any GBP figure you see floating around at the moment, ours included, is an estimate. We’ve worked it out by applying Microsoft’s confirmed percentages to today’s UK prices. We’ll be clear about which numbers are solid and which aren’t. If someone’s quoting you exact pounds and pence as gospel, they’re guessing.
What’s changing
The update covers most of the Microsoft 365 commercial range. Enterprise, Business and Frontline plans are all in scope, along with a handful of standalone products. Standalone Teams and standalone Copilot are not affected, and a couple of plans aren’t moving at all.
The rules are simple, and they’re worth remembering. New prices kick in on 1 July 2026 for anything you buy or renew from that date. If you’re already a customer, you don’t get moved onto the new rates straight away. You stay on your current price until your first renewal after 1 July 2026. That last point is the whole reason there’s a window to plan around, which we’ll come back to.
Enterprise and Office suites
These are Microsoft’s published dollar increases. The percentages are the reliable bit. Treat the pounds as a rough guide.
Microsoft 365 E3 is going up by about 8% (from $36 to $39). Worth being clear here, because it gets muddled a lot: it’s 8%, not 13%. The 13% figure you’ll see quoted is for Office 365 E3, which is a separate plan.
Microsoft 365 E5 is going up by about 5% (from $57 to $60). That’s the smallest rise in the whole update, and the first time E5 has ever gone up.
Office 365 E3 is going up by about 13% (from $23 to roughly $25 or $26).
Office 365 E5 is going up by about 8%.
Business plans
Business Basic is rising by about 16% (from $6 to $7). Business Standard is rising by about 12%. Business Premium isn’t changing, and neither is Office 365 E1.
Business Premium holding steady is the most interesting call in the whole update. If you’re on Business Standard and you’ve been thinking about moving up to Premium for the better security and device management, the gap between the two just got smaller in real terms. For a lot of smaller businesses, Premium is now the sensible place to be.
Frontline plans (F1 and F3)
This is where it hurts, and it’s the first place to look if you’ve got a big deskless workforce.
F1 with Teams is going up 33% (from $2.25 to $3.00). F1 without Teams goes up by as much as 43%. F3 is up 25% (from $8 to $10), with the no-Teams version a little higher.
These are still the cheapest licences Microsoft sells, so the actual pounds per seat are small. The problem is scale. If you’ve got 500 F1 users, even a rise of well under a pound a month per person adds up to a few thousand pounds a year once you multiply it out. For retail, hospitality, care and logistics, where margins are already tight, that’s a real cost, and a good reason to check that every frontline user is actually on the right licence.
You’ll notice we’re not printing big “thousands a year” headline figures here. That’s deliberate. Until the official UK pounds are confirmed, we’d rather work those numbers out against your real seat counts and your CSP’s actual rates than hand you a figure you might budget around and then have to change.
Why Microsoft says it’s doing this
Microsoft isn’t calling this a price rise. It’s calling it added value, on the basis that it’s bundling new features into the suites. Whether that feels fair depends on how much of the new stuff you’ll use.
E3 customers get Defender for Office 365 Plan 1, which covers advanced threat protection, Safe Attachments and Safe Links, plus a chunk of Intune management tools like Remote Help and Advanced Analytics. If you already pay for any of those as add-ons, the rise partly pays for itself.
E5 customers get Microsoft Security Copilot, along with a few more Intune and security features. If you’re already invested in the Microsoft security stack, that’s a decent uplift for a 5% rise.
Business Basic, Standard and Premium all get an extra 50GB of mailbox storage per user, plus better link protection on the lower tiers. Small, but useful, especially against phishing.
All of this rolls out through 2026 and finishes by 1 August 2026. And here’s the bit people miss: you get these features whether or not you lock in the old pricing. Holding today’s rate doesn’t cost you a single new feature.
The window to plan around
There’s a legitimate, well-trodden way to delay this increase, and it comes down to how Microsoft’s licensing works. Your price is locked for whatever term you sign up to.
If you renew or buy before 1 July 2026, you hold your current price for the full term, usually a year, so you wouldn’t feel the increase until your renewal in 2027. And if you commit to a three-year term on E3 or E5 through a CSP, you can hold today’s price all the way to 2029, which gets you past this increase and the currency tweaks in between.
There’s also a “single seat first” trick some partners use, where you set up a new price-protected subscription with one licence before the deadline and then grow into it afterwards at the locked rate. It can work nicely, but how it behaves depends on your agreement, and it’s not really a do-it-yourself job. It’s the sort of thing we’d set up and time for you so it doesn’t go sideways.
The window does close. After 30 June 2026, anything new is on the new prices, and there’s no going back and locking the old rate once that date’s gone.
How we’d handle it for you
None of this needs panic. It does need a plan. Here’s the order we’d work through.
Start by auditing what you’ve actually got. Every plan, every seat, every renewal date. This nearly always turns up licences that are bigger than they need to be, like an E5 user who’d be fine on E3, or an E3 user who’d be fine on Business Premium. Right-sizing on its own is often enough to soak up the increase.
Then map it against your renewal dates, because your renewal date is what decides when this actually lands on you. If yours falls in the back half of 2026, you’re right in the zone where acting early pays off.
Lock in where it makes sense, by renewing, extending or setting up price-protected subscriptions before the deadline, timed so nobody’s service gets disrupted.
And drop the overlaps. If you’re on E3 and still paying separately for Defender for Office 365 Plan 1 or Intune add-ons, you’re about to pay for them twice. Cancel those at renewal, because they’re in the bundle now.
Nonprofits, education and government
Nonprofits keep the same 60% to 75% discount off commercial prices. But because the commercial price is going up, the amount you pay goes up with it. Same discount, higher starting point.
Education is the good news story. Microsoft has confirmed there’s no change to education pricing in this update. If you’re on A1, A3 or A5, this round doesn’t touch you.
Government pricing is published and is rising in line with commercial. Where a suite goes up by more than 10%, Microsoft is spreading the increase over a few years instead of applying it all at once. If you’re in a GCC or GCC High environment, check the specifics with your account team.
A quick word on currency
This is separate from the July change, but you should know about it. Microsoft reviews exchange rates and adjusts UK prices roughly twice a year, usually around February and again in late summer. Depending on what the pound’s doing, that can push prices up or down on its own, completely apart from the July increase. So your real cost for 2026/27 is the July rise plus whatever the currency adjustment does. Another reason to budget off confirmed figures for your own licences rather than headline estimates.
Where this leaves you
The 1 July 2026 increase is happening. What it costs you, specifically, is still up for grabs. The businesses that come through this well will treat it as a planning job: audit the estate, get people onto the right plans, cut the duplicate add-ons, and lock in current pricing where the timing works. Done properly, most businesses can take the sting out of it.
If you’d like us to run your actual numbers, your seats, your renewal dates, the confirmed rates, that’s exactly the kind of review we’d rather do before July than after. No obligation, and you’ll walk away knowing exactly where you stand.
