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What Microsoft Didn’t Say About Its M365 Price Increase
Microsoft has set the stage for another major shift in M365 pricing—one that many enterprises will underestimate unless they zoom out and look at the full sequence of changes. The newly announced M365 price increase (effective July 1, 2026) may appear modest at first glance, but when stacked on top of Microsoft’s November 2025 restructuring, the real budget impact is far more dramatic.
If you haven’t reviewed NPI’s full analysis yet, read this bulletin now for a more detailed breakdown.
A Second Wave of Pricing Pressure
Microsoft confirmed that it will raise commercial M365 pricing globally in July 2026. This isn’t related to November’s retirement of the long-standing price waterfall. That change is already in effect and quietly forced large customers into Level A pricing overnight.
Without volume-based discounts, many organizations saw immediate increases between 13% and 17%, depending on the SKU. The July 2026 increase arrives on top of that reset, creating a compounding effect many customers aren’t prepared for.
For a deeper look at how these increases stack across F3, E3, and E5, download the full bulletin.
Why This Matters: The “Floor and Ceiling” Just Changed
What makes this moment so consequential isn’t just the addition of another round of higher per-user pricing. The structure of Microsoft’s commercial pricing has fundamentally shifted. A few realities now dominate the landscape:
1. Renewal costs are heading sharply upward
Even if headcount stays flat, renewal numbers will rise meaningfully. Budget owners should expect their FY25–FY27 planning cycles to absorb double-digit increases.
2. Discounts tied to scale are gone
Microsoft’s old model rewarded large deployments with lower per-user pricing. That mechanism has been removed. Everyone pays the same rate—regardless of size, maturity, or long-standing customer status.
3. E5 and Copilot will be pushed harder
With pricing flattened and higher baselines set, Microsoft has every incentive to lean into premium SKUs and Copilot. Expect more bundling, stronger cross-sell motions, and targeted discounting designed to steer customers toward consolidation.
4. Planning complexity increases materially
Budgeting can no longer be done in isolation. The November 2025 and July 2026 changes must be modeled together to understand true cost exposure. Multi-year agreements may look more appealing—but only if negotiated carefully.
Click here to see the pricing progression from October → November → July and the total impact across licensing levels.
What Enterprise Customers Need to Do Now
This moment calls for proactive planning. Enterprise customers should:
- Build new multi-year renewal cost scenarios immediately
- Reassess Copilot deployment strategies given higher baselines
- Validate F3/E3/E5 mappings to eliminate costly misalignment
- Review security tooling for redundancy as Microsoft pushes E5
- Engage Microsoft early—discount cycles may take longer
These steps are not optional if the goal is to mitigate the cumulative impact of two consecutive structural pricing moves.
Latest M365 Price Increase Signals New Era for Microsoft Pricing Behavior
When viewed on their own, each price adjustment is notable but not alarming. Combined, they represent a reset; one that raises both the floor and ceiling of Microsoft’s commercial licensing model.
If enterprises want to avoid being caught off guard, they need to understand these shifts in context and recalibrate their licensing strategy well before July 2026.
Need help assessing the impact of these pricing changes? NPI’s Microsoft licensing and cost optimization experts can help. Contact us.
