M365Clarity · Licensing
Microsoft is raising prices on seven Microsoft 365 plans on 1 July 2026 — four days away. The increases range from 5% on M365 E5 to 33% on M365 F1. For existing customers, the new prices apply at your next renewal after that date — not immediately. But any new subscription or licence added from 1 July onwards will be billed at the higher rate.
This post covers exactly what changed, what the new prices are in GBP, and the three things worth doing before your next renewal.
| Plan | Old (£/user/month) | New (£/user/month) | Change |
|---|---|---|---|
| Microsoft 365 Business Basic | £4.90 | £5.90 | +20% |
| Microsoft 365 Business Standard | £10.30 | £11.60 | +12% |
| Office 365 E3 | £24.50 | £27.90 | +14% |
| Microsoft 365 E3 | £28.10 | £31.40 | +12% |
| Microsoft 365 E5 | £46.20 | £48.70 | +5% |
| Microsoft 365 F1 | £2.25 | £3.00 | +33% |
| Microsoft 365 F3 | £8.00 | £10.00 | +25% |
| Microsoft 365 Business Premium | £19.40 | £19.40 | No change |
| Office 365 E1 | £6.00 | £6.00 | No change |
| Office 365 E5 | £38.00 | £38.00 | No change |
GBP prices are indicative based on Microsoft's published percentage increases applied to current UK list prices. Microsoft applies currency harmonisation separately and exact local pricing may vary slightly. Standalone Microsoft Teams and Microsoft 365 Copilot licences are not affected by this update.
If your renewal falls after 1 July 2026: you will pay the new rates at your next renewal. If you are on a multi-year agreement, your current price is locked until the end of your term.
The percentage increases look modest in isolation but scale quickly. A 100-user organisation on Microsoft 365 Business Standard goes from £12,360 to £13,920 per year — an additional £1,560 annually before any licence waste is accounted for. At 200 users on M365 E3, the increase is approximately £7,800 per year.
Frontline plans see the steepest percentage rises despite the small absolute amounts. Microsoft 365 F1 at 33% and F3 at 25% are significant for organisations with large frontline workforces, where seat counts in the hundreds or thousands make the per-seat increase add up fast.
Business Premium is the notable exception. It stays at £19.40 per user per month while Business Standard rises to £11.60 — narrowing the gap between them to £7.80. For organisations that were already considering upgrading from Standard to Premium for the additional security and device management features, the value calculation has shifted materially in Premium's favour.
Gartner estimates that organisations waste 25-30% of their SaaS spend on unused or underutilised licences. That figure is consistent with what licence audits typically uncover in Microsoft 365 tenants. Users who left, roles that changed, projects that ended — licences often outlast the need for them. At the new prices, every unused seat costs more to carry. A Business Standard seat that was costing £10.30 per month now costs £11.60. Across ten unused seats, that is an additional £156 per year on seats no one is using.
The Microsoft 365 admin centre shows sign-in activity for all users. Any account that has not signed in for 90 days is a candidate for review. Do not remove licences automatically — check with the user's manager first — but the 90-day threshold is a reliable starting point for identifying waste.
The price increase narrows the gap between adjacent plan tiers. Business Standard at £11.60 and Business Premium at £19.40 are now £7.80 apart — the closest that gap has ever been. For organisations that have been on the fence about upgrading for the additional Intune, Defender for Business, and Conditional Access capabilities, the upgrade cost is lower relative to what you get.
In the other direction, E3 organisations that are not using the advanced compliance, analytics, or security features included in their plan may find that right-sizing to E1 for some users saves meaningful money even at the new E1 price. The question is always whether the features justify the tier, not whether the tier is prestigious.
The renewal date is the most important variable in your licence cost calculation. A renewal date within 60 days means you need to act now. A renewal date further away means you have time to audit properly before committing to new rates. Either way, knowing the exact date lets you plan the audit and negotiation timeline correctly.
Microsoft framed the July 2026 increase as reflecting expanded value in the suites. Several previously paid add-ons are being folded into base plans. Microsoft Defender for Office 365 Plan 1 is being included in Office 365 E3 and Microsoft 365 E3 from August 2026 — that was previously available as a separate add-on at around £2 per user per month. Intune Remote Help and Intune Advanced Analytics are being added to M365 E3 and E5. Security Copilot capacity (400 SCUs per 1,000 users per month) is being included in E5 and E7.
For organisations that were already purchasing these add-ons separately, the maths on the increase may be neutral or even favourable. For organisations that were not using them, the increase is a straight cost rise.
M365Clarity scans your tenant and shows you inactive users, unassigned licences, over-licensed users, and potential savings — with AI analysis ready for the July 2026 price changes. Free to try.
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