Microsoft 365 Just Got More Expensive. Here’s What to Do

If your business runs on Microsoft 365, and most do, your next renewal is going to cost more than the last one. Microsoft rolled out its biggest commercial pricing update since 2022 on July 1, 2026, and a lot of small business owners haven’t looked at what it means for their bill yet.

Here’s the short version: prices went up, Copilot got folded into the product lineup, and the plan that used to be the “expensive one” isn’t as far ahead of the cheap plan as it used to be. That last part matters more than the price increase itself.

What actually changed

Business Basic goes from $6 to $7 per user per month, and Business Standard goes from $12.50 to $14. That’s a 16-17% jump on Basic and a 12% jump on Standard. Business Premium held at $22 per user per month. No change.

That flat line on Premium is the detail worth sitting with. The gap between Business Standard and Business Premium narrowed from $9.50 to $8.00
. Microsoft didn’t do that by accident. They’re nudging businesses toward the higher tier by making the middle tier look like a worse deal.

On top of the price change, Business Basic, Standard, and Premium all gain 50GB of additional email storage per mailbox and an upgraded Copilot Chat that can see your inbox and calendar. Premium and the higher business-plus tiers also pick up real security features, including URL scanning that
checks links before a user clicks through rather than at send time, which closes a real gap in phishing defense for teams running without a dedicated security layer.

The Copilot piece

Copilot, Microsoft’s AI assistant, used to be a separate add-on that most small businesses skipped because of the price. That changed too. From December 1, 2025, Microsoft permanently reduced the Copilot Business rate from $30 to $21 per user per month for organizations under 300 users, and from July 1 to December 31, 2026, Microsoft is offering it at $18 per user per month on annual subscriptions for existing Microsoft 365 customers.

If you’d rather not manage a separate add-on, Microsoft also sells bundled plans: Business Standard with Copilot at $23.50 per user per month and Business Premium with Copilot at $32 per user per month , and as of this July, those bundles are now permanent offerings rather than promotional pricing, making AI capabilities a built-in part of the Microsoft 365 experience.

That $18-21 range is genuinely reasonable if you have people who would actually use an AI assistant for drafting emails, summarizing meetings, or building spreadsheets faster. If nobody on your team would touch it, don’t buy it just because it’s cheaper than it used to be.

What this costs a real small business

Do the math on your own headcount, not a hypothetical. Both changes land on July 1, 2026. For a 50-person team on Business Standard, that is $900 more per year. A 20-person team on Business Basic is looking at roughly $240 more a year. A 75-person Basic shop is closer to $900. None of these numbers will sink a business on their own, but they add up alongside every other subscription creeping upward this year.

The bigger cost risk isn’t the sticker price. It’s paying for seats and features nobody uses. Common findings include shared mailboxes that have a paid license attached and shouldn’t, departed employees still occupying licenses, and staff assigned Business Premium when they only use Outlook and Teams. That last one is worth checking specifically, since Business Basic runs around $6-7 a seat versus $22 for Premium. If half your team only sends email and joins Teams calls, you may be overpaying by fifteen dollars a head every month.

Microsoft’s own admin center has built-in usage reports that surface this data, so this isn’t a project that requires hiring anyone. It’s an afternoon with your IT provider or whoever manages your Microsoft tenant.

The renewal timing question

Existing customers stay on current pricing until their next renewal event after July 1, which means the increase hasn’t necessarily hit you yet even though the changeover already happened. Check your renewal date in the admin center before you assume you’re already paying the new rate.

If your renewal is coming up in the next few months, ask your Microsoft partner or reseller whether an early renewal locks in the old pricing for a full new term. Some resellers can do this 30-90 days ahead of the actual renewal date. On a 50-seat Standard plan, that’s roughly $900 saved for the year, and the savings compound if you sign a longer term.

But don’t renew early just to save money on a license mix that’s already wrong. If you’ve got unused seats, wrong-tier assignments, or people who left the company still holding a license, fix that first. Locking in the old price on a bloated setup just means you’re overpaying at a discount.

What to do this week

Three things, none of which require a big project:

• Pull the usage report in your Microsoft 365 admin center and look for licenses tied to people who no longer work there or mailboxes that don’t need a full paid seat.
• Check whether your Business Standard users would genuinely benefit from Premium’s security features now that the price gap is only $8, especially if you’re currently paying separately for endpoint protection or device management tools that Premium now includes.
• Find your renewal date and decide, with real numbers instead of a guess, whether renewing early makes sense for your business.

None of this requires becoming a licensing expert. It requires twenty minutes of looking at what you’re actually paying for, which is something worth doing every time a vendor changes its pricing, not just this one.