Shutdown tracker / Microsoft / Productivity suite pricing
Microsoft 365 just got more expensive. Here is the real math.
Microsoft raised commercial Microsoft 365 and Office 365 prices on July 1, 2026, first announced back on December 4, 2025. Enterprise suites rose 5-13%, Business suites rose 12-16%, and Frontline worker SKUs rose the most - Microsoft 365 F1 without Teams jumped 43%. Large enterprises that also lost Enterprise Agreement volume discounts in November 2025 face a compounded effective increase well above the published percentages.
Key dates
- Dec 4, 2025Microsoft announces the global Microsoft 365 pricing and packaging update
- Nov 2025Enterprise Agreement volume discounts (Levels B-D) are removed - a separate change that compounds with the July increase
- Jun 2026New packaging - Defender for Office 365 P1, extra Intune features - starts rolling out
- Jul 1, 2026New commercial, government and nonprofit pricing takes effect
Why it happened: Microsoft is bundling more into the same subscriptions - Defender for Office 365 Plan 1 into E3, a Security Copilot allocation into E5, and additional Intune management features into both - and pricing the bundle higher. The increase also lands months after Microsoft separately removed Enterprise Agreement volume discounts in November 2025, which compounds the total cost jump for large customers.
New pricing
| SKU | Old price | New price | Change |
|---|---|---|---|
| Microsoft 365 F1 (no Teams) | $1.75 | $2.50 | +43% |
| Microsoft 365 F1 | $2.25 | $3.00 | +33% |
| Microsoft 365 F3 | $8.00 | $10.00 | +25% |
| Office 365 E3 | $23.00 | $26.00 | +13% |
| Microsoft 365 Business Basic | $6.00 | $7.00 | +16% |
| Microsoft 365 Business Standard | $12.50 | $14.00 | +12% |
| Office 365 E5 | $38.00 | $41.00 | +8% |
| Microsoft 365 E3 | $36.00 | $39.00 | +8% |
| Microsoft 365 E5 | $57.00 | $60.00 | +5% |
| Office 365 E1 | $10.00 | $10.00 | no change |
| Microsoft 365 Business Premium | $22.00 | $22.00 | no change |
All prices are per user, per month, in USD, for commercial "with Teams" suites effective July 1, 2026 (the Frontline F1 no-Teams row is shown separately since it drives the steepest headline increase). Source: Microsoft's official pricing and packaging update page.
What to switch to
Google Workspace
Cloud email, Docs/Sheets/Slides and Meet - the closest like-for-like swap with minimal migration friction.
LibreOffice
Free, open-source desktop suite (Writer/Calc/Impress), no subscription, works fully offline.
OnlyOffice
Self-hosted Community edition or paid cloud plans, with strong .docx/.xlsx format fidelity.
Zoho Workplace
A bundled email, docs and chat suite built for small and mid-size teams.
Options listed alphabetically by fit, not ranked - pick by your constraint (price, stack, control). No winner is declared.
How to migrate
- Check your renewal date - agreements finalized before July 1, 2026 kept current pricing for their full term; that window has now passed for new commercial signings.
- Audit your SKU mix and license count - unused seats or over-provisioned tiers (E5 where E3 would do) amplify the increase across every single seat.
- If you already pay separately for Defender for Office 365 P1 or Security Copilot, check whether the newly bundled allocation actually offsets that spend before assuming the increase is a net loss.
- Benchmark Google Workspace, LibreOffice, OnlyOffice or Zoho Workplace against your real usage - full migration is disruptive, but shifting even frontline or light users to a cheaper tier reduces the blended cost.
FAQ
How much are Microsoft 365 prices going up in 2026?
It depends on the SKU. Enterprise suites like Microsoft 365 E3 and E5 rose 5-13% on July 1, 2026, Business suites rose 12-16%, and Frontline worker SKUs rose the most - Microsoft 365 F1 without Teams jumped 43%, from $1.75 to $2.50 per user per month. See the full table above for exact current and new prices, sourced from Microsoft's own licensing page.
Why did Microsoft 365 prices increase in July 2026?
Microsoft bundled more into the same subscriptions - Defender for Office 365 Plan 1 into E3, a Security Copilot allocation into E5, and additional Intune management features into both - and priced the new bundle higher. The increase also lands months after Microsoft separately removed Enterprise Agreement volume discounts in November 2025, which compounds the total cost jump for large customers.
Can I avoid the Microsoft 365 price increase?
Renewing or signing a new Enterprise Agreement, Microsoft Customer Agreement or CSP term before July 1, 2026 locked in the old pricing for that term's full length; that window has passed for commercial subscribers. Going forward, the main levers are auditing your license mix, negotiating at renewal, or moving some or all users to a cheaper alternative like Google Workspace, LibreOffice, OnlyOffice or Zoho Workplace.
What is the cheapest alternative to Microsoft 365?
For a fully free option, LibreOffice covers desktop documents with no subscription at all. For a cloud suite with hosted email, Zoho Workplace starts around $3-4 per user per month, well under every Microsoft 365 SKU. Google Workspace and OnlyOffice sit in between, trading some cost savings for closer Microsoft-format compatibility or tighter Google ecosystem integration.
Sources
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Facts current as of July 2026 - dates come from official announcements (see sources). Always verify against the vendor before making migration decisions.
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