Preparing for New Pricing on Microsoft 365 Licenses: What You Should Know
Back in December, Microsoft announced that list price increases were coming to most Microsoft 365 subscriptions on July 1, 2026. Since then, Microsoft has published the full pricing and packaging detail (February 16) and a companion FAQ (March 24) that fill in a lot of blanks, including exact pricing on standalone products, the new “with Teams / without Teams” split, and a wave of new features being added to the suites.
From business and enterprise plans to government and frontline worker licenses, these changes will affect your IT budget and licensing strategy. With the increase now days away, we’ve refreshed this post with the confirmed numbers and the packaging changes you’ll start seeing in your tenant this summer.
This article has been updated as of June, 19th 2026. Here’s what’s new:
- Confirmed list prices for every impacted SKU, including Office 365 E5 and standalone components (Windows, EMS, Entra, Apps)
- The Teams vs. no-Teams pricing split now in effect
- A full breakdown of the new features Microsoft is adding to each suite, and when they land in your tenant
- Security Copilot now included with Microsoft 365 E5 (with capacity details)
- Refined government (including estimated GCC pricing) and full nonprofit detail
- Exactly how to lock in current pricing before July 1
Table of Contents
- Key Microsoft price changes for 2026
- With Teams vs. without Teams pricing
- Standalone component pricing
- Government pricing (with estimated GCC rates)
- Nonprofit pricing
- You’re getting more, too: the packaging updates
- Why Microsoft 365 pricing is changing
- What this means for your organization
- Four simple steps to get ahead
- How Managed Solution can help
Key Price Changes for Microsoft 365
On December 4, 2025, Microsoft announced price increases for Microsoft 365 suite subscriptions across commercial, frontline worker, and government customers. These changes take effect July 1, 2026, apply globally with local market adjustments, and hit both annual and monthly billing plans. Existing customers stay on current pricing until their first renewal after July 1.
The figures below reflect the official commercial pricelist Microsoft published in February. (Standalone Microsoft Teams and Copilot SKUs are not part of this update.)
Business Subscriptions
| SKU | Old Price | New Price | 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 |
Enterprise Subscriptions
| SKU | Old Price | New Price | 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% |
Frontline Workers
| SKU | Old Price | New Price | Change |
| Microsoft 365 F1 | $2.25 | $3.00 | 33% |
| Microsoft 365 F3 | $8.00 | $10.00 | 25% |
With Teams vs. Without Teams Pricing
| SKU (without Teams) | Old Price | New Price | Change |
| Office 365 E1 (no Teams) | $6.79 | $6.79 | No change |
| Office 365 E3 (no Teams) | $14.45 | $17.45 | 14% |
| Office 365 E5 (no Teams) | $29.45 | $32.45 | 10% |
| Microsoft 365 E3 (no Teams) | $27.45 | $30.45 | 11% |
| Microsoft 365 E5 (no Teams) | $48.45 | $51.45 | 6% |
| Business Basic (no Teams) | $4.40 | $5.40 | 23% |
| Business Standard (no Teams) | $9.29 | $10.79 | 16% |
| Business Premium (no Teams) | $18.79 | $18.79 | No change |
| Microsoft 365 F1 (no Teams) | $1.75 | $2.50 | 43% |
| Microsoft 365 F3 (no Teams) | $6.93 | $8.93 | 29% |
Standalone Component Pricing
| SKU | Old Price | New Price | Change |
| Microsoft 365 Apps | $12.00 | $14.00 | 17% |
| Apps for Business | $8.25 | $10.00 | 21% |
| Windows E3 | $6.63 | $7.63 | 15% |
| Windows E5 | $11.81 | $12.81 | 9% |
| Windows Enterprise (per device) | $5.85 | $7.63 | 31% |
| Microsoft 365 Apps (per device) | $36.00 | $42.00 | 17% |
| Enterprise Mobility + Security E3 | $10.60 | $12.00 | 13% |
| Enterprise Mobility + Security E5 | $16.40 | $18.00 | 10% |
| Microsoft Entra ID P1 | $6.00 | $7.00 | 16% |
| Microsoft Entra ID P2 | $9.00 | $10.00 | 11% |
| Purview Suite | $12.00 | $12.00 | No change |
| Defender Suite | $12.00 | $12.00 | No change |
Government Pricing
Government pricing moves in line with commercial, effective July 1, 2026, across GCC, GCC-High, DoD, and the National Cloud (NCOE) environments. It does not apply to US AGC.
Suite | Increase |
| Microsoft 365 G3 (all clouds) | 8% |
| Microsoft 365 G5 (all clouds) | 5% |
| Office 365 G1 (all clouds) | No change |
| Office 365 G3 / E3 (all clouds) | 13%* |
| Office 365 G5 / E5 (all clouds) | 8%* |
| Microsoft 365 Frontline F1 | 33%* |
| Microsoft 365 Frontline F3 | 25%* |
| Business Premium GCC High | No change |
A few government specifics worth flagging:
- *Phased increases: In line with federal regulations, any suite with a total increase above 10% is phased over multiple years at no more than 10% per year. So the 13% on Office 365 Government E3/G3 lands as 10% in July 2026 and the remaining 3% in July 2027.
- NCOE uplift: National Cloud pricing carries a 10% uplift over commercial. When commercial Government prices move, NCOE reflects the same change plus that 10%.
- OneGov offer: All OneGov percentage discounts stay intact regardless of list-price changes. Buy before July 1 and the discount applies to the old list price; buy on or after and it applies to the new one.
- Packaging: Government tenants will receive the new features on a delayed, compliance-validated timeline rather than the immediate commercial rollout, to meet data residency, FedRAMP, and similar mandates.
Estimated GCC Pricing (NCE Annual Pay-in-Full, P1YA)
The table below applies the announced increases to current GCC Annual Pay-in-Full list prices. All new figures are estimates and are shown at the full increase (the eventual landing price). See the notes beneath the table for phasing and the basis of each estimate.
| License (GCC, P1YA) | Current Annual | Current Monthly | Est. Increase | Est. New Annual | Est. New Monthly |
| Microsoft 365 G5 GCC | $684.00 | $57.00 | 5% | $718.20 | $59.85 |
| Office 365 G5 GCC | $456.00 | $38.00 | 8% | $492.48 | $41.04 |
| Microsoft 365 G3 GCC | $432.00 | $36.00 | 8% | $466.56 | $38.88 |
| Office 365 G3 GCC | $276.00 | $23.00 | 13%* | $311.88 | $25.99 |
| Office 365 G1 GCC | $120.00 | $10.00 | No change | $120.00 | $10.00 |
| Microsoft 365 F1 GCC | $48.00 | $4.00 | 33%* | $63.84 | $5.32 |
| Microsoft 365 F3 GCC | $96.00 | $8.00 | 25%* | $120.00 | $10.00 |
| Office 365 F3 GCC | $48.00 | $4.00 | Not announced | $48.00 | $4.00 |
| Enterprise Mobility + Security G5 GCC | $195.60 | $16.30 | ~10%† | $215.16 | $17.93 |
| Enterprise Mobility + Security G3 GCC | $116.40 | $9.70 | ~13%†* | $131.53 | $10.96 |
| Entra ID P1 GCC | $72.00 | $6.00 | ~16%†* | $83.52 | $6.96 |
| Entra ID P2 (Government) | $108.00 | $9.00 | ~11%†* | $119.88 | $9.99 |
| Microsoft 365 Apps GCC | $144.00 | $12.00 | ~17%†* | $168.48 | $14.04 |
Notes on the estimates
* Total increase exceeds 10%. Per federal regulation these phase in over multiple years at no more than 10% in Year 1 (July 1, 2026). Estimated Year 1 figures for the published suites: Office 365 G3 GCC about $303.60/yr ($25.30/mo); Microsoft 365 F1 GCC about $52.80/yr ($4.40/mo); Microsoft 365 F3 GCC about $105.60/yr ($8.80/mo).
† Microsoft’s published government table did not list a specific percentage for this standalone SKU. The figure is estimated using the commercial-equivalent increase, since Microsoft states government pricing adjusts in line with commercial rates.
Office 365 F3 GCC is not part of Microsoft’s announced increases and is expected to remain at current pricing.
Monthly figures are the annual price divided by 12. All pricing is subject to change and may vary by agreement and currency. Confirm final rates in Partner Center before quoting.
Nonprofit Pricing
Nonprofit Enterprise
| SKU | Old Price | New Price | Change |
| Office 365 E1 | $2.50 | $2.50 | No change |
| Office 365 E3 | $5.75 | $6.50 | 13% |
| Office 365 E5 | $15.20 | $16.40 | 8% |
| Microsoft 365 E3 | $9.00 | $9.75 | 8% |
| Microsoft 365 E5 | $22.80 | $24.00 | 5% |
Nonprofit Frontline
| SKU | Old Price | New Price | Change |
| Microsoft 365 F1 | $0.56 | $0.75 | 33% |
| Microsoft 365 F3 | $2.00 | $2.50 | 25% |
Nonprofit Business
| SKU | Old Price | New Price | Change |
| Microsoft 365 Business Basic | Free | Free | N/A |
| Microsoft 365 Business Standard | $3.00 | $3.50 | 17% |
| Microsoft 365 Business Premium | $5.50 | $5.50 | No change |
Nonprofit Standalone Components
| SKU | Old Price | New Price | Change |
| Microsoft 365 Apps | $3.00 | $3.50 | 17% |
| Microsoft 365 Apps (per device) | $9.00 | $10.50 | 17% |
| Windows E3 | $1.65 | $1.90 | 15% |
| Windows E5 | $4.40 | $5.12 | 9% |
| Windows Enterprise (per device) | $1.46 | $1.91 | 31% |
| Enterprise Mobility + Security E3 | $2.65 | $3.00 | 13% |
| Enterprise Mobility + Security E5 | $6.56 | $7.20 | 10% |
| Microsoft Entra ID P1 | $1.50 | $1.75 | 16% |
| Microsoft Entra ID P2 | $3.60 | $4.00 | 11% |
| Purview Suite | $4.80 | $4.80 | No change |
| Defender Suite | $4.80 | $4.80 | No change |
Education Pricing
Status: still not part of the announced changes. As of Microsoft’s February and March updates, education plans (A1, A3, A5) are not included in the impacted-product lists. Education institutions should continue to monitor official Microsoft education channels, review current A1/A3/A5 usage for optimization, and plan budgets with flexibility in case education-specific pricing is announced later. We’ll update this post if that changes.
You’re Getting More, Too: The Packaging Updates
Here’s the part of the story that got a lot clearer since December, and the part Microsoft uses to justify the increase. Alongside the new prices, Microsoft is adding security, AI, storage, and IT management capabilities into the suites you already own. These roll in automatically at no extra cost, with no action required on your part.
Timeline: New capabilities begin rolling out in CY26 Q3 (starting June 2026) and will be complete by August 1, 2026. You will get a 30-day notice in your Message Center before features activate in your tenant. Every qualifying SKU receives the new features regardless of the price you are paying or your agreement term.
What’s being added, by suite
- Office 365 E1: URL time-of-click protection, Copilot Chat enhancements,* Copilot Chat Analytics
- Office 365 E3: Microsoft Defender for Office Plan 1, Copilot Chat enhancements,* Copilot Chat Analytics
- Office 365 E5: Copilot Chat enhancements,* Copilot Chat Analytics
- Microsoft 365 E3: Microsoft Defender for Office Plan 1, Intune Remote Help, Intune Advanced Analytics, Intune Plan 2, Copilot Chat enhancements,* Copilot Chat Analytics
- Microsoft 365 E5: Everything in M365 E3, plus Microsoft Security Copilot, Intune Endpoint Privilege Management, Microsoft Cloud PKI, and Intune Enterprise Application Management
- Microsoft 365 F1 & F3: Copilot Chat enhancements,* Copilot Chat Analytics
- Business Basic & Standard: +50GB mailbox storage, URL time-of-click protection, Copilot Chat enhancements,* Copilot Chat Analytics
- Business Premium: +50GB mailbox storage, Copilot Chat enhancements,* Copilot Chat Analytics
*Copilot Chat enhancements include inbox and calendar awareness plus access to the Word, Excel, and PowerPoint agents.
Security Copilot now included with Microsoft 365 E5
The headline addition for E5 customers is Microsoft Security Copilot, the agentic AI assistant built into Defender, Entra, Intune, and Purview for faster threat detection, investigation, and response. Rollout to E5 tenants began November 18, 2025 and continues through 2026, with 30-day advance notice before activation.
There is a capacity model to understand: E5 customers receive 400 Security Compute Units (SCUs) per month for every 1,000 paid user licenses, capped at 10,000 SCUs/month. Allocation scales with seat count. For example, 400 licenses earns 160 SCUs/month, and 4,000 licenses earns 1,600 SCUs/month. If your security team plans to lean on Security Copilot heavily, it is worth checking whether your included capacity covers your expected usage.
Why Microsoft Pricing Is Changing
Microsoft frames these changes as a reflection of the value delivered across the suite over the past several years, and the new capabilities now being folded in. The company points to deep investment in security, compliance, productivity, AI, and IT management, and ties the increase to additions like Copilot Chat, Copilot Chat Analytics, Microsoft Defender for Office Plan 1, and the Intune Suite components described above.
In short, Microsoft is positioning this as a combined price and packaging move: higher list prices, but with security and AI features that previously required separate purchases now built in. Whether that math works in your favor depends entirely on how much of that new capability you would actually use, which is exactly the kind of thing worth modeling before renewal.
What This Means for Your Organization
Budget Impact
For a mid-sized organization with 100 users on Microsoft 365 E3, the annual impact is roughly:
- Current cost: $36 × 100 × 12 = $43,200/year
- New cost: $39 × 100 × 12 = $46,800/year
- Annual increase: $3,600
Organizations with frontline workers face the steepest jumps, a 25% to 33% bump on F-series licenses. And if you license standalone components like per-device Windows Enterprise (up 31%) or Apps for Business (up 21%), those add up quickly across a large estate.
The flip side: depending on your suite, you may be receiving features this summer (Defender for Office P1, Intune Suite capabilities, Security Copilot) that you would otherwise buy separately. The net cost picture is worth running both ways.
Timeline Considerations
- If your agreement renews before July 1, 2026, you are protected by current pricing through that term.
- If your agreement renews after July 1, 2026, expect the new pricing at renewal.
- Most Enterprise Agreement (EA) customers will see increases when their 3-year term comes up.
4 Steps You Can Take to Get Ahead
1. Assess your current licensing
Review your subscriptions and calculate the real financial impact across suites and any standalone components.2. Optimize your license mix
Now is the perfect time to audit:- Are you paying for licenses that are not being used?
- Do all users need E3/E5, or could some move to lower-cost plans?
- Can you right-size frontline worker licenses?
- With features like Defender for Office P1 and Intune Suite pieces folding into the suites, are you double-paying for standalone versions you can now drop?
3. Evaluate CSP flexibility
If you are on an Enterprise Agreement, these increases, combined with the elimination of volume discounts, may make CSP more attractive:- Flexible terms: annual or monthly commitments instead of rigid 3-year contracts
- Regular optimization: adjust licenses to match actual usage
- Partner support: strategic guidance on optimization and cost management
4. Plan your budget
Fold these increases into your 2026 and 2027 IT budget now. Waiting until renewal leaves you scrambling for budget. The trend is clear: Microsoft is bundling more AI and security into the suites while raising list prices to match. Organizations that stay informed and plan proactively will be best positioned to manage the change.How Managed Solution Can Help
At Managed Solution, we are here to help you navigate these pricing changes strategically:
✅ License audits: identify optimization opportunities before the July increase
✅ Cost modeling: calculate your specific impact, including the with-Teams and no-Teams and standalone trade-offs
✅ Strategic planning: determine the best timing for renewals and pre-July lock-ins
✅ CSP migration: smooth transitions from EA to flexible CSP licensing
Our team stays on top of every Microsoft licensing change, so you do not have to. From education and government to nonprofit sectors and beyond, we are your partner in maximizing value while managing costs. Chat with our team today at Cloud.Support@managedsolution.com to get started.
Additional References