Did Microsoft 365 Price Increase Again in 2026? Calculate ROI
Did Microsoft 365 price increase again in 2026? Yes, from July 2026, plan prices hike. Ranging from 4% to 20% for most enterprise/SMB products.
This news puts many IT teams in a frenzy at the start of a new year, especially when budget plans are being made for the annual software renewals.
It’s not any one particular plan that is going to get costlier; the price is increasing across the board. So, even if you operate a small team and use a personal/family license, you will have to increase your budget.
While it’s true that you can’t control vendor pricing, we can follow something similar to what happened last time M365 plans became costlier in April 2025. You are not alone.
This is because. I am going to give you the exact strategies that my own organization is going to adopt. Here we will see how to audit your environment, optimize storage, and consolidate resources to keep your 2026 IT budget in check.
The Current State of Microsoft 365 Pricing & What’s Changing in 2026
The question did Microsoft 365 price increase is more relevant than ever. So, here is a tabular pricing table to compare the Microsoft 365 plans:
| Plan | Price Shift (Per User) | Key Change |
| Business Basic | $6.00 to $7.00 | +16% (Adds Copilot Chat) |
| Business Standard | $12.50 to $14.00 | +12% (Adds Copilot in Apps) |
| Business Premium | $22.00 | No Change (Best Value) |
| O365 E3 | $23.00 to $26.00 | +13% (Adds Defender Security) |
| M365 E3 | $36.00 to $39.00 | +8% (Adds Intune Help) |
| Microsoft 365 E5 | $57.00 → $60.00 | +5% (Adds Security Copilot) |
Just knowing the pricing isn’t the whole game. You must also understand how exactly you pay for the plan. Microsoft gives you 3 options. Understand them with Microsoft 365 E3 as an example:
| Your Choice | The “Penalty” | New Monthly Cost (M365 E3) | The Dark Strategy (Why) |
| 1. Annual (Pay Upfront) | None (Base Price) | $39.00 | Cash Flow. Microsoft gets 100% of your money on Day 1 to invest/report to shareholders immediately. |
| 2. Annual (Pay Monthly) | ~5% Financing Fee* | $40.95 | Interest. You are effectively taking a “loan” from Microsoft for the year. They charge you interest for the privilege of paying slowly. |
| 3. Monthly (Flexible) | +20% Premium | $46.80 | Pain. They make flexibility so expensive that you are forced into the Annual contract (Option 1 or 2) to stop the bleeding. |
Microsoft is bundling previously premium add-ons (Defender security, Intune management tools, and Copilot chat) directly into the base subscription and using it to justify the price increase.
Some organizations dont use these services and may want to shift elsewhere. However, cloud migration is still difficult, and you can’t perform an Office 365 to G Suite Migration without ample preparation. Not to mention the cost of changing services might not be worthwhile.
So instead, see what you need to do to minimise costs.
Four Strategic Ways to Offset Rising Licensing Costs
Did Microsoft 365 increase in price before? Yes. In April of 2025, Microsoft did something similar. So we can revisit our strategy and adapt it to the new cost updates.
No amount of support contacts will get Microsoft to reduce the prices just for you. Instead, plan out a strategy that can lower your billing amount.
You don’t always have to downgrade your plan. There are ways to remain on the same subscription, not lose any functionality or app access, but still cut costs.
The secret is to stop paying for the waste. Many organizations don’t audit regularly, and as a result, end up paying for licenses that no one uses.
In case you are someone who is not using M365 right now or planning to outmaneuver the cost increase by switching to a different, lower-cost plan, I have you covered.
Strategy 1. Move in Now and Lock in Annually for ROI
If you are analysing did Microsoft 365 price increase and after that realize that your current infrastructure is too expensive to maintain, it is time to consolidate.
Moreover, running two separate environments, one on cloud and one on-premises, no longer offers the same advantage it used to in the initial days of the cloud. So, follow our guide to migrate from Hosted Exchange to Office 365 to unify your users.
The SysTools Exchange Migrator is the go-to software available as a free demo. You can try out the software today.
If your company has recently undergone a merger or acquisition, then the situation is different. You have multiple disjointed Office 365 tenants that need to be combined before the price hikes to get a better negotiation if you buy from a reseller.
With the SysTools Office 365 to Office 365 migration tool, you can perform an Office 365 tenant-to-tenant migration step-by-step. Don’t take my word for it, try it yourself right now.
Download today and centralize licensing before the Microsoft 365 price increase happens.
Getting your infrastructure to the right M365 plan means you can lock in for an annual commitment and pay the current discounted amount even when the price rises for everyone else. However, keep in mind that this price protection applies to the Annual Commitment. If you are on the Monthly Flexible plan, you have zero protection. On July 1, your bill will jump immediately because your “contract” renews every 30 days.
If changing the infra or plans is not something you are planning to do dont worry, there are other means to reduce the price.
Strategy 2. How Did Microsoft 365 Price Increase, Not Break My Budget
It is because I audit my environment and remove inactive users on a timely basis. Many organizations feel they are paying more than they should because they are. In the form of “Ghost Licenses”.
These are the types of subscriptions assigned to employees who are no longer part of the organization. This happens because IT admins are afraid that if they remove the license, they will also lose the account and all the data in it.
That is a misconception. If you keep paying for a full E3 or Business Premium license just to retain an ex-employee’s mail, then sorry, it is a massive waste of money.
You don’t need to do that; instead, a way better strategy that instantly lowers your monthly bill is converting inactive users to shared mailboxes.
Once you do that, you can release the paid licence or reassign it to another active user.
Strategy 3. Save Data Locally and Release Excess
Monitor how many users actually use a particular service with the help of the OneDrive usage report and other resources available to you as the admin.
You can’t expect Shared Mailbox to be the right answer for every scenario. There are compliance requirements and data protection laws that mandate you keep all information for 5 or 10 years. This poses a unique problem for the admins. On the one hand, they are looking to cut costs, but on the other hand, they can’t perform the task that is most likely to reduce costs.
Now, did Microsoft 365 price increase also include the archiving cost? To answer that yes, it did. The cost of cloud storage for archiving has also risen.
For long-term retention without the subscription fee, the most cost-effective approach is to archive old user data to your local infrastructure.
To help you in this, we have the SysTools O365 Backup tool. Use it and create a digital cold storage of all O365 data that is not needed on an immediate basis.
Once you have secured the data locally, you can safely remove the Office 365 subscription from that specific user account and save on billing for the next cycle.
Strategy 4. Did Microsoft 365 Price Increase for Storage? Start Optimizing
Moving everything offline isn’t an ideal solution and may not even be possible for some organizations.
What you can do instead is to reduce the storage overage fees. Microsoft 365 gives organizations the option to buy an in-place archiving feature. You can opt out of it to save a few bucks per account. Which adds up to a significant monthly cost reduction when we talk about thousands of users.
Additionally, if you know how to reduce the large Outlook mailbox size. It can allow you to stay within your current plan’s free limits.
One thing that I often find in user mailboxes is that they get bloated with redundant conversation threads and duplicate attachments.
A quick win for reclaiming space is to remove duplicate emails in Office 365, which often consume gigabytes of unnecessary space.
Final Verdict on Microsoft 365 Price Increase
No doubt did Microsoft 365 price increase announcement happen again in 2026. However, with a plan in place, you can navigate this tricky situation again. Here, I gave you the exact increase in dollar terms so you can plan out clearly. Not only that, but I also revealed what my strategies are to keep costs in control and justify ROI to stakeholders.
Frequently Asked Questions
Q: Should I just switch to Google?
No, Google will also adjust its pricing to match market trends if it has’t already. If you are still not convinced, read why Office 365 is better than Google Apps regarding the current feature-set value.
Q: How can I save money without changing M365 plans?
Focus on “License Hygiene”. By that, I mean to audit your active users, remove redundant data, and archive old user data so you can cancel unused licenses immediately.
Q: Did the Microsoft 365 price increase already happen in 2026?
Not yet, but an announcement has been made, and you will surely see a rise in business licensing costs in the second half of 2026.