Microsoft’s Microsoft 365 commercial pricing update takes effect on 1 July 2026, with packaging changes rolling out through summer 2026. If you have not reviewed your licences yet, now is the right moment. The increases are not uniform, Business Premium has no listed price increase, and existing customers only move to the new pricing at their first renewal after 1 July 2026.
Here is what is changing and what to do before the window closes.
What Is Actually Changing
Microsoft announced the update on 4 December 2025. The company said the changes reflect new AI, security and management capabilities added to Microsoft 365, including Copilot Chat enhancements, Copilot Chat Analytics, expanded Defender protection and additional Intune capabilities.
The table below summarises the main commercial plans UK SMEs are most likely to use. Microsoft publishes the headline pricing in USD, while UK prices depend on local pricing, currency and reseller terms.
| Plan | Headline change from 1 July 2026 | Notes |
|---|---|---|
| Microsoft 365 Business Basic | 16% increase | $6 to $7 per user/month for suites with Teams |
| Microsoft 365 Business Standard | 12% increase | $12.50 to $14 per user/month for suites with Teams |
| Microsoft 365 Business Premium | No listed increase | Remains $22 per user/month for suites with Teams |
| Microsoft 365 E3 | 8% increase | $36 to $39 per user/month |
| Microsoft 365 E5 | 5% increase | $57 to $60 per user/month |
| Office 365 E1 | No listed increase | Remains $10 per user/month for suites with Teams |
Standalone Teams and Copilot SKUs are not part of this pricing update. Existing customers do not move immediately on 1 July. They move to the new pricing at their first renewal after that date.
The Business Premium Point
Business Premium seeing no listed price increase is the most useful part of this announcement for many SMEs. Business Standard is rising, but Business Premium is not, which narrows the gap between the 2 plans.
Business Premium already includes the desktop Office apps, Exchange, SharePoint, OneDrive, Teams, Microsoft Defender for Business, device management through Intune, and Entra ID P1. That matters because insurance, compliance and security questionnaires increasingly ask about endpoint protection, conditional access, device control, MFA and user risk.
If your team is currently on Business Standard, this is the time to run the numbers. As a managed it support services company london businesses trust, we are running that comparison for clients now.
Read the advantages of Microsoft 365 Copilot alongside is your business using Microsoft 365 Copilot yet for context on what Copilot adoption can mean day to day, and key features of Microsoft 365 Copilot for business for a practical feature breakdown.
What to Do Before 1 July
Three moves carry most of the weight.
First, run a licence audit now. Check how many users are on Business Basic when they regularly need desktop apps. Check how many are on Business Standard when Business Premium’s security features would serve them better. Also check whether some users could move down to a lighter plan. Mismatched licences cost money in both directions. An Office 365 assessment is the structured version of this exercise.
Second, review renewal dates. Customers with renewals before 1 July 2026 can renew or upgrade and keep pre-increase pricing until their next renewal after 1 July 2026. If your renewal sits close to the deadline, speak to your reseller before assuming the new pricing is unavoidable.
Third, check your billing and end-of-term settings. Microsoft’s Extended Service Terms enforcement is now in effect for eligible CSP subscriptions, meaning businesses need to be clear whether a subscription is set to renew, cancel or move into an Extended Service Term. Do not leave this to chance. Diarise renewal dates and make sure finance and IT are aligned. This is exactly the kind of operational tidiness that good IT service management should catch before it becomes an invoice problem.
The Bigger Picture
The pricing update does not arrive in isolation. Microsoft 365 licensing sits alongside your Microsoft 365 backup posture, which matters regardless of plan tier. Many businesses still assume Microsoft 365 automatically covers every recovery scenario. It does not. The risks around retention, accidental deletion and ransomware still need a proper backup strategy, and the same applies to common cloud backup mistakes. Our cloud backup company work covers this as part of the same conversation.
The security features bundled into Business Premium also connect directly to the controls your insurer and clients now ask about. Password best practices, Microsoft Intune, endpoint hardening steps, and why EDR matters are all part of a well-configured Microsoft 365 environment. Anti-phishing controls and endpoint security for remote teams complete the picture, and our anti phishing company work shows how Microsoft security tools and external testing reinforce each other.
If you are still moving devices from Windows 10 to Windows 11 after Microsoft’s October 2025 end-of-support date, the licence review should sit alongside that wider infrastructure work. The same applies if you are consolidating systems with the help of our platform migration company. We cover this across geographies through our european it services and it services global practices. Dark web monitoring services london rounds out the security layer for Microsoft 365 tenants. The full range of services and our consulting team can help you plan the whole move.
FAQs
When do existing customers move to the new prices?
Existing customers move to the new pricing at their first renewal after 1 July 2026. New subscriptions and renewals from that date use the updated pricing.
Is Business Premium worth upgrading to before the deadline?
For many SMEs currently on Business Standard, yes. The price gap has narrowed, and Business Premium includes security and device management features that are increasingly useful for compliance, insurance and client assurance.
What if we do nothing?
You will usually pay more at renewal if your plan is in the affected set. The risk of doing nothing is not just cost. It is also missing the chance to right-size your licences before the new pricing locks in.
Are Copilot licences increasing too?
No. Microsoft’s July 2026 commercial pricing update does not apply to standalone Copilot or standalone Teams SKUs. Any future changes to those products would be announced separately.
The Sensible Next Step
Before 1 July, check your licence mix, renewal dates, billing commitment and security requirements. For many businesses, the right answer will not be simply accepting the same licences at a higher price. It will be removing unused licences, upgrading some users to Business Premium, downgrading others where appropriate, and aligning Microsoft 365 licensing with backup, endpoint security and device management.
If you would like help running the licence review or planning an early renewal, speak to Northern Star and we will help you get the most from the platform before the July deadline.
