Microsoft 365 licensing is the per-user subscription model that defines how much an organization pays for Microsoft's productivity, security, and collaboration plans. The first major price adjustment since 2022 took effect on July 1, 2026, and the actual impact on renewals often exceeds the advertised percentage per plan. Here, we treat the adjustment as a case of software cost governance.
The difference is crucial. The number Microsoft communicates is per SKU — 8,33% in Microsoft 365 E3, for example. The number that reaches the CFO is different: the combined cost over the actual mix of licenses, plus Azure, Copilot, and the pressure of consolidation. Those who confuse the two are negotiating with incorrect information. Those who separate the two transform a price increase into a governance decision.
What changes in Microsoft 365 licensing in 2026?
The price adjustment took effect on July 1, 2026, for new purchases and renewals. Existing customers retain the current price until their contract renewal date—making the renewal date, not the announcement, the important event. Package updates (new features added to suites) began rolling out throughout 2026, with 30 days' notice in the Message Center before appearing for tenants.
The price increase covers Office 365 E3, Microsoft 365 E3 and E5, Business plans, Frontline plans (F1 and F3), and standalone components such as Windows E3/E5, Enterprise Mobility + Security (EMS), Entra, and Microsoft 365 Apps. Standalone SKUs of Microsoft Teams and Copilot were excluded from this adjustment. CSP (Cloud Solution Provider) promotions for E3/E5 and Copilot packages remain active and should be checked in the Partner Center before making any channel decisions.
Microsoft's official pricing tables
The values below are the tables published by Microsoft, in US dollars, per user/month, for the annual commitment for commercial customers. The first table covers suites with Teams; the second, variants without Teams.
Suites with Teams
| Flat | Current (US$) | New (US$) | Variation |
|---|---|---|---|
| Microsoft 365 F1 | 2,25 | 3,00 | +33,33% |
| Microsoft 365 F3 | 8,00 | 10,00 | +25,00% |
| Microsoft 365 Business Basic | 6,00 | 7,00 | +16,67% |
| Office 365 E3 | 23,00 | 26,00 | +13,04% |
| Microsoft 365 Business Standard | 12,50 | 14,00 | +12,00% |
| Microsoft 365 E3 | 36,00 | 39,00 | +8,33% |
| Microsoft 365 E5 | 57,00 | 60,00 | +5,26% |
| Microsoft 365 Business Premium | 22,00 | 22,00 | No change |
Suites without Teams
| Flat | Current (US$) | New (US$) | Variation |
|---|---|---|---|
| Microsoft 365 Business Basic | 4,40 | 5,40 | +22,73% |
| Microsoft 365 Business Standard | 9,29 | 10,79 | +16,15% |
| Office 365 E3 | 14,45 | 17,45 | +20,76% |
| Microsoft 365 E3 | 27,45 | 30,45 | +10,93% |
| Microsoft 365 E5 | 48,45 | 51,45 | +6,19% |
A clarification is needed regarding Office 365 E3 without Teams: the actual variation is 20.76%, although Microsoft's own table presents it rounded to 14%. This is the type of detail that only appears when comparing value to value, and not when only reading the advertised percentage.
Why the "per SKU" number is misleading
Isolated percentages say little about the cost of renewal, because what matters is the organization's actual mix of licenses. A predominantly Microsoft 365 E3 network, with some E5 presence and a tail of Frontline, tends to see an increase of between 11% and 18% in the Microsoft 365 tier alone. When incorporating Azure consumption growth, any Copilot expansion, and consolidation pressure, renewals often reach the CFO's desk at around 20% to 25% over the previous period — according to analysis by the consulting firm SAMexpert on recent renewals.
Microsoft frames the move as an adjustment per SKU — 8,33% at E3. Adding Azure, Copilot, and consolidation pressure, the renewal usually lands at 20% to 25% over the previous period. It is this combined number, and not the percentage per SKU, that reaches the CFO. (Analysis: SAMexpert)
There are two evident patterns in the price adjustment curve. First, the largest percentage increases are concentrated in the Frontline plans (F1 and F3) and in small and medium-sized suites—precisely where sublicensing is most common, with part of the workforce allocated to the cheapest possible plan. Second, the smallest increase falls on Microsoft 365 E5, consistent with the shift of the installed base towards consolidated suites with built-in security and AI-ready capabilities. Maintaining Business Premium at US$$ 22.00, while Office 365 E3 rises to 13%, is a channel positioning decision, not a concession to the customer.
The right lens: software cost governance
A vendor price adjustment is not an isolated purchasing event; it's a maturity test in software cost governance. The relevant question isn't "how much did Microsoft raise prices," but rather "how much of what we pay corresponds to what we actually use." That answer depends on reliable license allocation data—the same data that underpins the disciplines of... ITAM (IT asset management) and of SAM (Software Asset Management).
The table below contrasts the reactive stance with the mature governance stance in the face of readjustment.
| Dimension | Without asset governance | With governance (ITAM/SAM) |
|---|---|---|
| Allocation view | Manual estimates and spreadsheets | Reliable inventory by user and by plan. |
| Basis of the negotiation | Percentage announced by Microsoft | Blended number over the actual mix |
| Idle licenses | Renewed by inertia | Identified, relocated or deactivated |
| Timing of the renewal | Reactive, under deadline pressure. | Planned against the contract's anchor date. |
| Compliance risk | Exposure in supplier audit | Traceability and evidence of compliance |
The principle is simple: the cleanest discount on any renewal is the license you don't buy. A 33% increase in Frontline only hurts when the Frontline allocation is incorrect—information workers mistakenly on F3, F1 users who could be on a deskless plan, or an oversized E5 in roles that don't consume security resources. Correcting the allocation before negotiating usually returns more value than any negotiated percentage discount on the new list.
What to do before renewal
For organizations undergoing restructuring in the next twelve months, five key steps guide their preparation:
- Review the allocation before trading. Reconciling who uses what against what is licensed is the step that exposes idle licenses and misalignments in the plan. It is the data foundation upon which everything else rests.
- Model the blended number over the actual mix. Microsoft's negotiation team works with a percentage discount on the new list. It is up to the client to understand what that percentage represents in absolute value against their specific system.
- Define the channel position in advance. The choice between Direct, CSP, and Microsoft Customer Agreement for Enterprise (MCA-E) is the framework for the entire negotiation, not a decision to be made in the last few weeks.
- Negotiate protection against future price increases. Price protection clauses for core SKUs during the contract term are no longer a luxury — especially in Copilot and AI commitments, whose price trajectory is the least stable.
- Compare the proposal against market benchmarks. Without a benchmark, the offer is evaluated in the supplier's currency. An alternative channel quote, even without the intention of a swap, is one of the most effective levers for testing the direct price.
Where does the discipline of asset management come in?
All five movements depend on the same condition: reliable and up-to-date data on actual software consumption. That's where the ServiceNow platform, with its ITAM and SAM modules, converts scattered inventory into a single, truthful database—consumption per user, overlap between standalone and suite software, and simulation of renewal scenarios based on real numbers. The Microsoft 365 readjustment is one example; the same governance logic applies to any vendor, as already explored in our analysis of... SAP license management and in the broader context of FinOps and technology financial management.
As a ServiceNow Elite Partner in Brazil, with over 180 certified specialists and more than 1,780 ServiceNow certifications, 4MATT treats software cost governance as a consequence of maturity in asset management—not as a reaction to a price increase. The goal is not only to negotiate better deals in 2026, but to arrive at the next renewal with the data under control.
Frequently Asked Questions
When does the Microsoft 365 price adjustment take effect?
Effective July 1, 2026, for new purchases and renewals. Existing customers retain the current price until their contract renewal date.
Is the increase the same for all plans?
No. The variations range from no change (Business Premium) to +33,33% (Microsoft 365 F1 with Teams). The largest percentages apply to the Frontline plans; the smallest, to Microsoft 365 E5.
Why is the actual cost of renewal higher than the percentage per SKU?
Because the percentage per SKU ignores the actual mix of licenses and doesn't consider Azure, Copilot, and consolidation pressure. The combined effect on the contract often exceeds the advertised number per plan.
How can we reduce the impact of the price adjustment?
Reviewing license allocation before negotiating, modeling the combined number on the actual park, defining channel position in advance, and negotiating price protection for core SKUs.
What is software cost governance?
It is the practice of controlling software spending based on reliable consumption and allocation data, supported by ITAM and SAM disciplines. It allows for decisions based on actual usage, avoids idle licenses, and reduces compliance risk.