Microsoft just confirmed that bills are going up for business customers using Microsoft 365. The tech giant plans to increase prices for most of its commercial packages. While nobody likes paying more, Microsoft argues that businesses shouldn’t switch providers because it’s packing these plans with a lot of new value, specifically in Artificial Intelligence and cybersecurity.
The company currently dominates the office software world, boasting over 430 million users. In fact, 90% of Fortune 500 companies run on Microsoft. That level of market dominance gives them confidence that customers will stick around despite the higher costs.
Nicole Herskowitz, a Vice President for M365 and Copilot, explained the logic behind the move. She noted that organizations today face a much more complex landscape regarding digital threats and really need AI tools to stay efficient. To meet those needs, Microsoft is stuffing more “Copilot” generative AI features and stronger security protocols into the bundle.
Here is the breakdown of the changes. Starting July 1, 2026, seven out of nine business plans will cost between 5% and 33% more. This price jump applies globally to all currencies. However, it’s not all bad news. Small businesses using M365 Business Premium and Office 365 E1 will see their prices remain unchanged.
For those paying more, Microsoft is unlocking new features. The E3 plans will now include “Microsoft Defender for Office Plan 1.” This provides users with better protection against phishing attacks and malware in their email and collaboration apps. The high-end M365 E5 plans will include “Security Copilot,” an AI agent that helps IT teams defend against hackers. Other improvements include increasing email storage by 50GB for specific tiers and adding better link-checking tools in Outlook.
Government clients will also pay more. Agencies using government versions of these tools will see increases between 5% and 8%. Furthermore, government Office 365 E3 prices will jump 10% in July 2026, followed by another 3% hike a year later. Microsoft hopes that by announcing this well in advance, companies will have plenty of time to adjust their budgets before the new rates kick in.
