Microsoft 365 Price Increase 2026: What SMBs Pay Now

Microsoft raised Microsoft 365 business prices on July 1, 2026. Business Basic went from $6 to $7 per user each month, Business Standard from $12.50 to $14, and Business Premium held at $22. Microsoft folded expanded Copilot Chat and an extra 50 GB of mailbox storage into the plans at the same time. Here's what you're actually paying now, why it went up, and where to trim the bill.

Microsoft 365 prices by plan, before and after July 1, 2026 (US list price per user per month)

Plan	Before July 1, 2026	From July 1, 2026	Change
Microsoft 365 Business Basic	$6.00	$7.00	+16%
Microsoft 365 Business Standard	$12.50	$14.00	+12%
Microsoft 365 Business Premium	$22.00	$22.00	No change
Office 365 E1	$10.00	$10.00	No change
Office 365 E3	$23.00	$26.00	+13%
Office 365 E5	$38.00	$41.00	+8%
Microsoft 365 E3	$36.00	$39.00	+8%
Microsoft 365 E5	$57.00	$60.00	+5%
Microsoft 365 F1	$2.25	$3.00	+33%
Microsoft 365 F3	$8.00	$10.00	+25%

Prices and percentages as published in Microsoft's pricing and packaging update, checked September 26, 2026; your bill can differ by billing plan, currency and reseller. Plans sold without Teams rose too: Business Basic (no Teams) to $5.40 and Business Standard (no Teams) to $10.79, while Business Premium (no Teams) stayed at $18.79. Standalone Entra ID P1 and P2 went to $7.00 and $10.00; our Entra ID P1 vs P2 comparison covers which one you need.

What changed on July 1, 2026

The increase hit the two plans most small businesses live on. Microsoft's new price list moved monthly per-user pricing like this, as broken down independently by TrustedTech and Office Watch:

• Business Basic: $6 to $7 (a 16% jump)
• Business Standard: $12.50 to $14 (12%)
• Business Premium: $22, unchanged

On a 25-person team, Business Standard now runs $4,200 a year instead of $3,750. Not catastrophic. But it's the kind of quiet line-item creep that never reverses, so it's worth understanding before your renewal lands.

The rollout started July 1 and finished across billing systems by August 1, 2026. If your renewal date is later in the year, you may not have felt it yet.

Why did Microsoft raise the price?

AI. Microsoft is spreading the cost of its enormous AI buildout across the whole business customer base, and it's doing that by bundling AI features into the base plans instead of selling them separately. Business Basic and Standard now include more Copilot Chat and 50 GB of extra mailbox storage. You didn't ask for it, but you're paying for it.

What do you get for the extra money?

Copilot Chat inside the apps you already use, plus the storage bump. Copilot Chat is the assistant tier included in your plan — it works over web data and, with the right setup, some of your own content. It is not the full Microsoft 365 Copilot, the paid add-on that reaches into your email, files, and Teams and bills separately on top of your plan.

So the value depends entirely on whether your team uses Copilot Chat. If they do, the increase buys something real. If they don't, you're paying more for a feature nobody opens. We wrote a fuller take on whether the paid Copilot earns its keep in our Copilot cost breakdown.

Microsoft 365 business plans compared: Basic, Standard, Premium, E3, E5

Price is only half the choice. The plans differ in which apps you get, how big the mailbox is, and how much security and device management comes in the box. Here is the lineup at Microsoft's list prices as of October 2026, per user per month on an annual commitment.

What you get	Business Basic	Business Standard	Business Premium	Microsoft 365 E3	Microsoft 365 E5
List price	$7.00	$14.00	$22.00	$39.00	$60.00
Without Teams	$5.40	$10.79	$18.79	$30.45	$51.45
Who can buy it	Up to 300 users across all Business plans	Up to 300 users	Up to 300 users	Any size	Any size
Office apps	Web and mobile only	Desktop, web and mobile	Desktop, web and mobile	Desktop, web and mobile	Desktop, web and mobile
Mailbox	100 GB, plus a 50 GB archive	100 GB, plus a 50 GB archive	100 GB, plus an archive up to 1.5 TB	100 GB, plus an archive up to 1.5 TB	100 GB, plus an archive up to 1.5 TB
OneDrive storage	1 TB	1 TB	1 TB	1 TB to 5 TB or more	1 TB to 5 TB or more
Identity	Entra ID Free	Entra ID Free	Entra ID P1, including Conditional Access	Entra ID P1	Entra ID P2
Device management	Basic mobile device management	Basic mobile device management	Intune Plan 1	Intune, with Intune Plan 2 and Remote Help added in 2026	Intune, with Endpoint Privilege Management and Cloud PKI added in 2026
Threat protection	Spam and malware filtering, with time-of-click link checks added in 2026	Spam and malware filtering, with time-of-click link checks added in 2026	Defender for Business and Defender for Office 365 Plan 1	Defender for Endpoint Plan 1, with Defender for Office 365 Plan 1 added in 2026	Extended detection and response (XDR) and SIEM capabilities
Teams Phone	Add-on	Add-on	Add-on	Add-on	Included
Compare it with	F1 vs F3 vs Business Basic	Business Premium vs Standard	Business Premium vs E3	Business Premium vs E3	Entra ID P1 vs P2

Prices from Microsoft's business plans page, enterprise plans page and July 2026 pricing and packaging update; mailbox sizes from Exchange Online limits; features from Microsoft's plan pages and its business plan comparison. All checked October 7, 2026. The items marked "added in 2026" come from the July 2026 packaging update, which finished rolling out by August 1, 2026. Microsoft no longer sells E3 and E5 with Teams to new customers: a new customer buys the no-Teams suite plus Teams Enterprise at $8.55, which comes to the same $39.00 and $60.00.

Frontline plans and Business plans with Copilot

Plan	List price, as of October 2026	What it is for	Compare it with
Microsoft 365 F1	$3.00 ($2.50 without Teams)	Frontline staff who need Teams and shared files, with no mailbox	F1 vs F3 vs Business Basic
Microsoft 365 F3	$10.00 ($8.93 without Teams)	Frontline staff who also need a 2 GB mailbox and web and mobile Office apps	F1 vs F3 vs Business Basic
Microsoft 365 Business Standard with Copilot	$23.50 ($20.30 without Teams)	Business Standard with Microsoft 365 Copilot in Word, Excel, PowerPoint, Outlook and Teams	Business with Copilot FAQ
Microsoft 365 Business Premium with Copilot	$32.00 ($28.80 without Teams)	Business Premium with Microsoft 365 Copilot built in	Business with Copilot FAQ
Microsoft 365 Copilot Business add-on	$21.00, or $18.00 for the first year on annual plans bought July 1 to December 31, 2026	Adds Copilot to a Business plan you already have	Is Copilot worth it?

Frontline prices from Microsoft's July 2026 pricing update; Copilot prices from its business plans page, both checked October 7, 2026. Copilot Business is sold only to existing customers on an eligible Business plan.

Should you switch plans or absorb it?

Look at Business Premium first. It didn't move — it's still $22 — which quietly makes it the best value in the lineup right now. Premium bundles Business Standard's apps with real security: Defender for Business, Intune device management, conditional access, and data loss prevention. That's the security stack most small businesses need and buy piecemeal anyway.

Run the math. If you're on Standard at $14 and separately paying for endpoint protection and MDM, Premium at $22 often costs less than the sum of the parts — and it consolidates the bill and the management. We break the two plans down side by side in Business Premium vs. Standard. If the increase has you pricing the alternative, compare Google Workspace vs Microsoft 365 prices tier by tier.

How to keep the Microsoft 365 bill down

Three moves cover most of it.

Right-size your licenses. Most companies pay for accounts that left months ago or for Standard where a frontline worker only needs Basic. A license audit almost always finds money. Do it at renewal.

Commit annually. Annual commitment pricing beats month-to-month. If your headcount is stable, lock it in.

Consolidate, don't stack. If you're buying M365 plus a separate antivirus, a separate MDM, and a separate backup tool, price out Business Premium against that pile. Fewer vendors, one login, usually less money.

None of this requires a new contract or a migration. It's an afternoon of license cleanup and one honest look at what you actually use. That's the kind of review that lives inside a managed Microsoft 365 agreement — someone watching the licensing so the bill doesn't drift.

Written by Latoya Reed, who leads cloud and Microsoft 365 services at The NetSys Group. NetSys has delivered managed IT, cybersecurity, and cloud services since 1998, serving businesses across NY, NJ, CT, PA, and Southwest Florida.

Frequently asked questions

How much did Microsoft 365 go up in 2026?

Business Basic rose from $6 to $7 per user per month, and Business Standard from $12.50 to $14, effective July 1, 2026. Business Premium stayed at $22. The changes rolled out through August 1, 2026, and apply as your subscription renews.

Is Copilot now included in Microsoft 365 Business plans?

Copilot Chat, the assistant tier, is now bundled into Business Basic and Standard along with 50 GB more mailbox storage. The full Microsoft 365 Copilot — the one that reads your email, files, and Teams — is still a separate paid add-on billed on top of your plan.

Can I avoid the price increase?

You can't opt out of list pricing, but you can lower the bill: audit licenses and drop unused accounts, right-size users onto the cheapest plan that fits, and commit annually instead of monthly. Many businesses cut more than the increase added.

Is Business Premium worth it now?

For most small businesses, yes. Premium held at $22 while Standard rose to $14, and it adds Defender, Intune, and conditional access. If you're buying security tools separately on top of Standard, Premium usually costs less and consolidates everything under one license.

Want a second set of eyes on your Microsoft 365 licensing before your renewal? Book a complimentary review and we'll show you exactly where the bill can come down.