The Microsoft 365 price increase is now confirmed. On 4 December 2025, Microsoft announced a global price and packaging update for Microsoft 365 commercial suites, and the new pricing takes effect on 1 July 2026. Existing customers keep their current rate until renewal.
The increase is not uniform. Some plans rise by 5%, others by 33% or more. A handful of suites, including Microsoft 365 Business Premium, see no price change at all. Standalone Microsoft Teams and Copilot SKUs are excluded from this update.
What is changing in the Microsoft 365 price increase
Microsoft is bundling additional security and management capabilities into existing suites rather than selling them as separate add-ons. The price increase reflects the added value, not a straight rate hike. New capabilities rolling out from June 2026 include Microsoft Defender for Office 365 Plan 1, Intune Remote Help, Intune Advanced Analytics, Intune Plan 2, and Copilot Chat enhancements across most suites. If AI is on your roadmap, our guide on Copilot and Purview readiness explains what to prepare first.
Below are the new AUD prices effective 1 July 2026, based on Microsoft’s Australian pricing. Prices shown are for annual commitment unless noted. Monthly commitment prices are typically 15 to 20 percent higher.
Business suites
| Plan | Current price (AUD/user/month) | New price from 1 July 2026 | Increase |
|---|---|---|---|
| Microsoft 365 Business Basic | $9.00 | $10.44 | 16% |
| Microsoft 365 Business Standard | $18.70 | $20.94 | 12% |
| Microsoft 365 Business Premium | $32.90 | $32.90 | No change |
Enterprise suites (with Teams)
| Plan | Current price | New price | Increase |
|---|---|---|---|
| Office 365 E1 | $15.00 | $15.00 | No change |
| Office 365 E3 | $36.30 | $41.02 | 13% |
| Office 365 E5 | $60.00 | $64.80 | 8% |
| Microsoft 365 E3 | $56.80 | $61.34 | 8% |
| Microsoft 365 E5 | $85.30 | $89.57 | 5% |
Frontline suites (with Teams)
| Plan | Current price | New price | Increase |
|---|---|---|---|
| Microsoft 365 F1 | $3.40 | $4.52 | 33% |
| Microsoft 365 F3 | $10.40 | $13.00 | 25% |
Standalone components
| Product | Current price | New price | Increase |
|---|---|---|---|
| Windows E3 | $10.50 | $12.08 | 15% |
| Windows E5 | $18.70 | $20.38 | 9% |
| Microsoft 365 Apps | $18.96 | $22.18 | 17% |
| Enterprise Mobility + Security E3 | $16.75 | $18.93 | 13% |
| Enterprise Mobility + Security E5 | $25.90 | $28.49 | 10% |
| Entra Plan 1 | $9.48 | $11.00 | 16% |
| Entra Plan 2 | $14.22 | $15.78 | 11% |
| Apps for Business | $13.04 | $15.79 | 21% |
Source: Microsoft 365 Pricing and Packaging Updates, February 2026. AUD prices are based on Microsoft’s Australian list pricing for annual commitment. Monthly commitment prices are higher. Exact figures may vary by CSP partner and existing agreement terms.
Which organisations are affected
The update applies to commercial, government, and nonprofit customers purchasing through any channel: direct from Microsoft, Enterprise Agreement, or CSP. The percentage increase is the same across channels. What differs is the base price you are paying now.
If you are on a CSP promotional rate or first-year discount, that promotion ends at its natural term. The Microsoft price increase then applies on top of the reversion to standard pricing. For organisations on annual billing, the new rate hits at your next annual renewal. For monthly billing, it hits at the next monthly cycle on or after 1 July 2026.
Three actions to take before 1 July
- Audit your licence position. Identify unused, duplicate, or over-provisioned licences. A typical mid-size organisation has 15 to 20 percent wastage. Removing waste before the increase is immediate savings.
- Lock in annual billing if you are on monthly. Annual commitments typically include a 15 to 20 percent discount versus monthly. If your renewal falls before 1 July, you secure 12 months at the old rate.
- Review your Copilot rollout plan. Copilot is excluded from this price increase, but at $44.90 per user per month it is still the highest ticket add-on. Finalise your user list before any renewal so you are not paying for seats that sit idle. Before you switch it on, read our key considerations before activating Microsoft Copilot.
Direct versus CSP: does the channel matter
The channel affects service and flexibility, not the list price. Microsoft sets the price. What varies is what happens around it:
| Factor | Direct from Microsoft | Tier-1 CSP |
|---|---|---|
| Pricing | Microsoft list price | Same wholesale price, no markup |
| Contract term | Annual or monthly | Monthly with annual option |
| Licence review | Self-managed | Quarterly optimisation included |
| Support path | Microsoft support portal | Direct escalation plus local team |
| Billing | Separate Microsoft invoice | One invoice for licences and services |
A Tier-1 CSP buys at the same wholesale rate Microsoft sells at. If you are buying through a reseller chain, there are margin layers between you and that wholesale price. For more on how licensing works through partners, see our guide on M365 licensing for MSPs and CSPs.
What if I renew after 1 July
You pay the new rate. There is no grandfathering for existing subscriptions. The only exception is multi-year Enterprise Agreements with fixed pricing clauses, and even those typically contain scheduled uplift terms.
FAQ
1 July 2026 for all new subscriptions and renewals. Existing subscriptions transition at the next billing cycle on or after that date.
If your renewal date falls before 1 July 2026, you lock in the current rate for the next term. For annual plans, that is 12 months at the old price.
No. Increases range from 5% (Microsoft 365 E5) to 33% (Microsoft 365 F1). Some plans, including Microsoft 365 Business Premium, have no increase.
No. Standalone Microsoft Teams and Copilot SKUs are excluded from this update.
Yes. Most suites gain additional capabilities including Defender for Office 365 Plan 1, Intune Remote Help, and Copilot Chat enhancements. The price increase reflects the added value.
Lock in your rate before 1 July
The window to act is narrow. If your renewal falls after 1 July, you pay the new rate. We can audit your licence position, identify immediate savings, and lock in the best possible pricing before the deadline.
Call 1300 386 228 or request a licence audit online. Most organisations we review find 15 to 25 percent savings in the first audit.
