Microsoft 365: Pricing Changes in 2026

If you’ve been in IT long enough, you’ve seen this pattern before. A big announcement comes out, it’s wrapped in talk about innovation and “added value,” and then buried underneath all of that is the real headline: prices are going up.

That’s exactly what’s happening with Microsoft 365 in 2026.

Microsoft has announced pricing changes that take effect July 1, 2026, impacting nearly every commercial Microsoft 365 plan. Alongside the price increases, Microsoft is highlighting deeper AI integration, stronger security, and expanded device management. But from an MSP and end-user standpoint, the most immediate and unavoidable impact is cost.

Just like when makeup, phones, or everyday electronics go up in price, customers don’t care about the marketing spin — they care about what’s coming out of their wallet. So let’s talk about this update honestly and practically.

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1. The Pricing Increases Are Real — and They Add Up Fast

First, let’s address the part no one loves: the numbers.

Starting July 1, 2026, Microsoft will increase list pricing across most Microsoft 365 plans. Here’s what that looks like in plain terms (USD per user/month):

Small Business Plans

• Microsoft 365 Business Basic: $6 → $7

• Microsoft 365 Business Standard: $12.50 → ~$14

• Microsoft 365 Business Premium: $22 → $22 (generally unchanged, but now positioned as the “best value” tier)

Enterprise Plans

• Office 365 E3: $23 → $26

• Microsoft 365 E3: $36 → ~$39

• Microsoft 365 E5: $57 → ~$60

Frontline Worker Plans

• Microsoft 365 F1: $2.25 → $3

• Microsoft 365 F3: $8 → $10

On paper, a few dollars per user may not seem dramatic. But MSPs know better. Multiply that increase by 50, 100, or 500 users and suddenly organizations are paying thousands more per year for the same core platform.

And that’s before factoring in Copilot, which is still a separate cost and can add $20+ per user per month depending on the plan.

For many customers, this feels less like “paying for innovation” and more like the slow creep of software costs becoming a fixed overhead they can’t escape.

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2. Microsoft Is Framing Features as Value — But Not Everyone Asked for Them

Microsoft’s messaging focuses heavily on what customers are “getting” for the higher price: AI everywhere, stronger security, and better management tools. And to be fair, some of these features are genuinely useful.

But here’s the disconnect MSPs see every day: not every customer asked for these features, and not every customer will use them.

AI tools like Copilot sound great in demos, but many end-users are still figuring out how — or if — they want to incorporate AI into their daily work. Some love it. Others ignore it completely. Yet everyone pays the higher base price regardless.

This is similar to buying a makeup product where the brand says, “We added premium ingredients,” even though you were perfectly happy with the old formula. You didn’t ask for the change — you just notice the higher price tag.

For MSPs, this creates a challenge: explaining why clients are paying more for improvements they may not immediately feel.

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3. Security Improvements Are Helpful — But They’re Also Becoming Mandatory

One area where Microsoft is genuinely adding value is security. Expanded email protection, better phishing detection, and more built-in safeguards are being included in more plans than before.

From an MSP perspective, this is a double-edged sword.

On the positive side, raising the baseline security level helps protect users who otherwise wouldn’t pay for add-ons. Email remains the biggest attack vector, and improved default protection does reduce risk.

On the other hand, customers often feel like they’re paying more just to stay compliant or safe — not to gain anything new. Security isn’t a “wow” feature to most end-users. It’s expected. So when prices rise and security is the justification, the reaction is often, “Shouldn’t this have been included already?”

This puts MSPs in the position of explaining that yes, security improvements matter — but also acknowledging that the customer didn’t exactly have a choice.

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4. AI and Device Management Benefit IT Teams More Than End-Users

Microsoft is also expanding device and endpoint management capabilities, especially through Intune. These tools give IT teams better visibility, remote troubleshooting, and more control over devices.

From an MSP standpoint, this is great. Better tooling means faster resolution times, fewer escalations, and more proactive support.

But here’s the reality: end-users rarely feel this benefit directly.

Users don’t log in and say, “Wow, my endpoint management is incredible today.” What they notice is when something breaks — or when costs increase.

So while Microsoft positions these enhancements as part of the value story, many customers won’t emotionally connect the higher price with these backend improvements. That gap in perception is something MSPs will need to manage carefully.

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5. The Biggest Impact Is on Planning, Renewals, and Expectations

More than anything, the 2026 Microsoft 365 update forces planning conversations.

MSPs should already be helping clients:

• Review upcoming renewal dates

• Lock in pricing where possible before July 1, 2026

• Reassess which users truly need higher-tier licenses

• Decide whether AI add-ons actually make sense for their workflows

For end-users, expectations also need to be reset. Microsoft 365 is no longer just a productivity suite — it’s an evolving platform with rising costs tied to features many users didn’t actively request.

That doesn’t mean it’s bad. But it does mean organizations should be intentional, not passive, about how they license and deploy it.

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Final Thoughts: Less Hype, More Honesty

At the end of the day, this update isn’t really about AI, security, or management tools — it’s about cost increases becoming the new normal.

Just like makeup, phones, or electronics, software keeps getting more expensive, even when users are satisfied with what they already had. Microsoft 365 in 2026 is another example of that reality.

For MSPs, this is an opportunity to be transparent advisors instead of messengers of bad news. And for end-users, it’s a reminder to question what they’re paying for — and whether they’re actually using it.

The features matter. But the price is what everyone will feel first.