Microsoft 365 Price Increase 2026: What It Means for Your Licence Waste

Microsoft has confirmed a global price and packaging update across most Microsoft 365 commercial plans, effective 1 July 2026. If you run or manage a Microsoft 365 tenant, this matters — but probably not in the way most coverage of it suggests.

The headlines focus on the percentage increases. The more useful story for SMBs and MSPs is this: whatever licence waste already exists in your tenant is about to get more expensive too. An audit that was worth doing last year is worth more this year.

What's actually changing

Microsoft announced the update in December 2025. The core principle is straightforward — existing customers keep their current pricing until their next renewal after 1 July 2026. Nothing changes mid-term. New subscriptions and renewals from that date onward move to the new pricing.

Here's the confirmed UK pricing, per user per month on an annual commitment, taken directly from the Microsoft 365 Admin Centre on 4 July 2026:

Previous prices are estimated by reversing Microsoft's published percentage increase against the confirmed current price; they are not independently verified against a prior invoice.

What you get in return

The increase isn't happening in isolation — Microsoft is bundling several previously separate features into the affected plans, rolling out between June and August 2026:

• An extra 50GB of mailbox storage on Business Basic, Standard, and Premium — doubling the current 50GB cap to 100GB
• URL time-of-click protection on Business Basic and Standard — a phishing defence previously limited to Premium and above
• Copilot Chat enhancements across all tiers, including inbox and calendar awareness
• Business Premium and Microsoft 365 E3 additionally gain Microsoft Defender for Office 365 Plan 1 and Intune Remote Help

If you're currently paying separately for any of these — a third-party phishing filter, extra mailbox storage, a basic device management add-on — the bundle may offset some or all of the increase. If you're not using them, you're simply paying more for the same thing you have today.

Why this matters more for waste than for pricing

Here's the part most coverage of this change misses. A price increase doesn't just affect what you're using — it affects what you're wasting too.

If your tenant has 10 disabled accounts still holding Business Standard licences, that waste cost roughly £1,216 a year before 1 July. At the confirmed new price, the same waste now costs around £1,361 a year. Nothing about those accounts changed. The cost of not noticing them simply went up.

This compounds across every category of waste — inactive users, licensed shared mailboxes, unassigned seats, over-provisioned accounts. None of it gets cheaper to ignore. All of it gets more expensive at the same rate your active licences do.

The practical implication: if a licence audit was worth doing before, it's worth more now. The savings from removing waste before your next renewal are larger than they would have been a year ago, simply because the per-seat cost they're calculated against has gone up.

The Business Standard to Premium gap is narrowing

One specific consequence is worth calling out on its own. With Business Standard rising 12% and Business Premium frozen, the price gap between the two tiers shrinks from £7.62 to £6.41 per user per month.

That matters for the right-sizing conversation. Premium includes Microsoft Intune for device management, Microsoft Defender for Business, and Entra ID P1 for conditional access — capabilities many businesses currently buy as separate standalone tools alongside Standard. If your organisation pays for any endpoint protection or device management product outside Microsoft 365, it's worth running the comparison again with the new pricing. The math that justified staying on Standard a year ago may no longer hold.

What to check before your next renewal

• Find your renewal date. Go to Billing > Your products in the Admin Centre. If your renewal falls after 1 July 2026, the new pricing applies at that point regardless of when you read this.
• Run a waste audit before that date. Every inactive account, disabled user with a licence, and unassigned seat you remove now is calculated against today's prices — and the saving from removing it carries forward at the new, higher rate. See our practical guide to finding and eliminating M365 waste for where to start.
• Re-run the Standard vs Premium comparison. With the gap narrowing to £6.41 per user per month, check whether consolidating onto Premium would let you drop any standalone security or device management tools.
• Don't pad your seat count "to be safe." Every committed seat is paid for the full term at the new rate. Buying headroom you don't need is now slightly more expensive headroom.
• Check your billing frequency. Microsoft's monthly-commitment pricing carries roughly a 20% premium over annual. If you're on monthly for flexibility you're not using, switching to annual at renewal is worth modelling.