Microsoft 365 Price Increases Coming July 2026
What you need to know and how to prepare
On December 4, 2025, Microsoft announced that commercial and government prices for Microsoft 365 will increase globally on July 1, 2026. This includes the flagship enterprise suites Microsoft 365 E3 and Microsoft 365 E5, along with Office 365 E1, E3, E5 and several Business and frontline plans.
For many organizations, this may be the most significant licensing shift since the 2022 commercial price update. The positive news is that the price change arrives with meaningful feature additions around security, endpoint management, and AI. The challenge is making sure your environment is aligned so you are actually using what you are paying for.
As a Cloud Solution Provider with a dedicated Microsoft channel manager, Oakwood helps clients right size their Microsoft 365 investments and prepare for changes like this long before they hit the budget cycle. This overview explains what is changing, who is affected, and practical steps your organization should consider before July 2026.
Who is affected by the July 2026 price change?
The price increase applies to commercial and government customers worldwide. Enterprise suites like Microsoft 365 E3 and E5 are increasing by a smaller percentage than small business and frontline plans. Reported targets indicate:
- Microsoft 365 E3 increasing to about 39 dollars per user per month
- Microsoft 365 E5 increasing to about 60 dollars per user per month
Business plans and frontline plans see larger percentage changes, with several small business SKUs increasing by significant margins.
Suites with and without Teams receive equivalent dollar increases. Nonprofit pricing will adjust proportionally since nonprofit discounts are calculated as a percentage of the commercial list price.
What capabilities are being added to E3 and E5?
Microsoft states that the price increases are tied to continued investment in security, management, AI, and collaboration. They highlight more than one thousand new features released across Microsoft 365, Copilot, Security, and SharePoint.
Here are the additions that matter most for E3 and E5 customers.
Microsoft is rolling advanced email protection from Microsoft Defender for Office 365 Plan 1 into:
- Office 365 E3
- Microsoft 365 E3
This brings stronger phishing detection, malware protection, safe link checks, and modern collaboration security features without requiring a separate add on.
Lower tier plans like Business Basic, Business Standard, and Office 365 E1 are also receiving foundational safe link protections inside email and Office apps.
Several Intune Suite capabilities are being added to Microsoft 365 E3 and E5 to support better device management, support workflows, and analytics.
For Microsoft 365 E3 and E5:
- Intune Remote Help
- Intune Advanced Analytics
- Intune Plan 2
For Microsoft 365 E5 only:
- Intune Endpoint Privilege Management
- Enterprise Application Management
- Microsoft Cloud PKI
This helps IT teams simplify remote support, enforce least privilege, streamline app deployment, and maintain a modern and secure device environment.
Security Copilot is being integrated directly into the Defender, Entra, Intune, and Purview experiences. Microsoft is including Security Copilot access for all Microsoft 365 E5 customers, with usage measured through Security Compute Units. This gives security teams AI driven investigation support, incident analysis, and guided remediation inside the tools they already use.
Copilot Chat now appears directly in Word, Excel, PowerPoint, Outlook, and OneNote. It is gaining deeper awareness of inboxes, calendars, and shared documents. Agent Mode allows users to work iteratively with Copilot to build or refine content inside Office apps.
Admins also gain improved controls for managing access, reviewing usage, and applying governance to Copilot powered experiences.
Are any features being removed?
Microsoft has not indicated that existing E3 or E5 capabilities will be removed as part of this July 2026 change. The update focuses on feature additions and platform improvements, not deprecations.
Other Microsoft licensing changes, such as the shift of on premises servers like Exchange and SharePoint to subscription based editions, are separate updates that follow different timelines.
How organizations should prepare before July 1, 2026
Oakwood is advising clients to treat the next year as a strategic planning window rather than a reactive cost increase.
Start by mapping:
- Which users have E3, E5, Business, or frontline plans
- Which add ons are still in use
- Where there may be unnecessary overlap with third party tools
- Whether Teams included or Teams excluded SKUs are active
As a CSP, we can pull a complete licensing and usage inventory across divisions or global regions.
The new pricing typically applies at renewal, not mid term. Your organization should:
- Plot each subscription’s renewal month
- Identify which subscriptions renew after July 1, 2026
- Estimate the budget impact based on the new list prices
- Understand how CSP pricing or enterprise agreements affect the timing
This avoids surprises during fiscal planning.
Microsoft introduced three year subscription terms for Microsoft 365 E3 and E5 in CSP. There are also promotional discounts available for certain upgrades and term conversions.
For some organizations, locking in a longer term agreement before the July 2026 change may reduce overall cost.
Because E3 and E5 are gaining more integrated security and management features, there is an opportunity to:
- Consolidate point solutions
- Reduce redundant security tools
- Shift certain E5 users to E3 if their needs allow
- Move certain E3 users to E5 if Security Copilot or advanced Intune features justify the value
A right sizing exercise can offset some or all of the price increase.
If you are using E5, Security Copilot becomes part of your standard experience. This requires planning around:
- SOC workflows
- Investigation and reporting processes
- Data hygiene and naming conventions
- Training for analysts and security leaders
For productivity, Copilot Chat and Agent Mode will be more visible across Office apps. This impacts:
- Data governance
- Access control
- Change management and user readiness
- Content retention policies
With a long runway to July 2026, organizations have time to conduct a comprehensive licensing and configuration review that covers:
- Licensing and SKU alignment
- Security posture and Defender configuration
- Device management and Intune readiness
- Copilot governance and rollout strategy
- Opportunities for cost savings through consolidation
This is typically the most valuable step because it links the price increase to measurable operational improvements.
Common questions from IT and finance teams
- Does this affect our pricing during an existing multi year agreement? New list pricing usually applies at renewal, so an existing multi year term may not change until its commitment ends.
- Is this driven solely by Copilot adoption? No. While Copilot is a major part of the Microsoft 365 roadmap, the 2026 update also includes significant investments in Defender, Intune, Security Copilot, and collaboration features.
- Do we need E5 to get value out of this? No. Microsoft 365 E3 gains notable security and device management upgrades. E5 customers simply receive additional advanced capabilities.
- What about nonprofits? Nonprofit prices will adjust in proportion to the new commercial rates.
How Oakwood can help
As a Microsoft Solutions Partner and CSP, Oakwood guides organizations through the licensing, security, and productivity changes coming with Microsoft 365. Oakwood offers:
- A dedicated Microsoft channel manager who stays current on licensing strategy and available incentives
- Deep skills across Modern Work, Security, and Azure to evaluate Microsoft 365 as part of your larger cloud ecosystem
- Practical planning that aligns costs, features, and organizational readiness
If you want help modeling the pricing impact, simplifying your security stack, or preparing for Copilot and Security Copilot, Oakwood can walk you through a focused Microsoft 365 assessment and create a clear roadmap for the next 12 to 18 months.
Peter Roesselet
If you are unsure how Copilot Business fits into your current Microsoft licensing, renewal timeline, or eligibility, Peter Roesselet can help. Peter is Oakwood’s dedicated Microsoft Channel Manager, with years of experience guiding organizations through Microsoft’s complex licensing models, CSP programs, and AI transformation planning. He is not just licensing-savvy, he is a translator of Microsoft strategy into practical choices that work for your organization. Whether you want help evaluating Copilot Business, aligning your renewal window, or planning a pilot, Peter is a great place to start.
