Microsoft To Hike Microsoft 365 And Office Subscription Prices From July 2026

Microsoft announced on January 8 that prices for its Office and 365 commercial subscriptions worldwide will increase starting July 1, 2026, to reflect recent enhancements to security and artificial intelligence features of their productivity tools. It marks the first major price revision since 2022 – just when competition from Google Workspace is intensifying further.

Microsoft reports that businesses today face increasing IT complexity, cyber threats and the demand to implement AI-powered workflows. Their price changes seek to support investments made in these areas.

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Revised Microsoft 365 Pricing: What’s Changing

The price increases will vary across plans, with smaller businesses and frontline worker subscriptions seeing the sharpest jumps.

Microsoft 365 Business Basic will increase by 16.7 percent, rising to $7 per user per month. Business Standard will see a 12 per cent hike, moving to $14 per user per month. Enterprise customers will experience more moderate increases. Microsoft 365 E3 will go up by 8.3 percent to $39 per user per month, while Microsoft 365 E5 will increase by 5.3 percent to $60.

Frontline worker plans are facing the steepest hikes. Microsoft 365 F1 will rise from $2.25 to $3, while the F3 plan will move from $8 to $10 per user per month. Government and public sector plans will see similar increases, though the rollout timeline may vary depending on local regulations.

Microsoft also confirmed that versions of Microsoft 365 purchased without Teams, along with nonprofit plans, will see equivalent percentage increases.

Why Microsoft Is Raising Prices

Microsoft claims it has added over 1,100 new features since their last major pricing update in 2022 across Microsoft 365, with AI integration becoming a key focus across Word, Excel, PowerPoint, Outlook and OneNote as Copilot Chat is implemented across these applications – creating tools designed to help users write faster while analysing data more easily, managing emails efficiently and creating presentations more efficiently.

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Security has been another major investment area. Microsoft has rolled out stronger phishing and malware detection, improved link verification and expanded device management through Microsoft Intune. New tools such as Remote Help, Endpoint Privilege Management and Advanced Analytics are now part of the platform. Security Copilot agents are also being integrated to help organisations identify risks and protect sensitive data.

Impact on Businesses

Microsoft acknowledged that small businesses and frontline worker plans will feel the impact most. However, the company argues that the price hike reflects the platform’s evolution from a basic productivity suite into a security- and AI-driven work ecosystem. For organisations heavily invested in Microsoft 365, the coming months will likely involve reassessing costs against the growing reliance on AI-powered tools.