Microsoft has confirmed price increases across its Microsoft 365 commercial plans, effective 1 July 2026. If your subscription renews after that date, you’ll be paying more - in some cases significantly more. Updated pricing landed from our reseller partner about a week ago.
Here’s what’s changing.
What’s going up
The increases affect the plans most commonly used by SMEs:
- Microsoft 365 Business Basic up 17% to £5.70/user/month
- Microsoft 365 Business Standard up 13% to £11.30/user/month
- Microsoft 365 Frontline F1 up 33% to £2.40/user/month
- Microsoft 365 Frontline F3 up 24% to £8.10/user/month
I should have warned you to sit down for those last two!
Frontline licences are typically used for shift workers and light users, so the absolute cost is low, but 33% is 33%, which may come as a shock to companies with many mobile workers, for example.
A number of Enterprise plans are also increasing, it seems from around 5-13%.
Microsoft’s justification is the volume of new features that have been added to the platform - AI tools, enhanced security, additional storage, Copilot integration.
Whether you’re using any of those features is a different question.
Our view, for what it’s worth…
Most clients would prefer a consolidated mailbox in Outlook, and sensible menu navigation across the Office Suite over more AI integration.Most IT support organisations would rather Microsoft spent their time thinking about naming conventions: two versions of Outlook? Genius. Stick “(Classic)” after one of them and that’ll stop any confusion; three (at the latest count) versions of Copilot? Of course, why not?
What isn’t going up
Notably, Microsoft 365 Business Premium is not changing in price, holding at £17.70/user/month. That’s worth paying attention to.
Business Premium sits above Standard in the licensing stack and includes Intune device management, Defender for Business, Azure AD Premium, and the full suite of advanced security features. It’s always been the plan we’d recommend for most businesses on security grounds alone.
With Standard rising 17% and Premium holding steady, the price gap between the two has narrowed considerably — and for some businesses, the maths now points clearly at Premium.
What to do before 1 July
Check your renewal date. If your subscription renews before 1 July 2026, you may be able to lock in current pricing for another 12 months.
Audit your licences. Price rises are a good prompt to check you’re not carrying licences you don’t need.Removing departed staff and that test account you forgot about are the easy wins, but also check you’re using the right licenses: a mailbox-only user on a full Business Standard plan could save about 70% dropping down to an Exchange online plan.
Review what plan you’re on. If you’re on Business Standard and haven’t looked at Business Premium recently, now is a good time. The security tools included in Premium have genuine value for most businesses - and depending on what you’re currently paying for separately (third-party endpoint protection, MDM, for instance), a plan upgrade might cost less overall than staying put.
Think about commitment terms. Monthly flexibility costs a premium of around 20% over annual commitments. If you have a stable headcount and you’re paying month-to-month, switching to annual billing before the price rise locks in both the lower tier price and the annual discount at the same time.
The bigger picture
Microsoft has form here. There was a significant increase in 2022, currency adjustments in 2023, a brief reduction in February 2025 as the pound strengthened, and now this. The direction of travel is pretty clear. M365 is deeply embedded in most businesses and Microsoft knows it - the switching cost is high and they’re not shy about using that.
None of which means you have to just absorb it. A properly audited licence estate and the right plan for each user can be quite effective in softening the impact, especially if you haven’t previously audited.
So are there any practical alternatives?
Honestly? Not many - and we say that as people who’d rather give you a straight answer than just shrug and process your renewal.
In Microsoft’s defence, they are not the only company with a monthly subscription model who will bump that price periodically and they are by no means the worst offender.
Google Workspace is the most credible alternative. It’s mature, comparably-priced, and genuinely good for businesses that live in a browser and don’t have heavy dependencies on desktop Office applications. If your team is largely device-agnostic and you’re not running anything that requires a full Word or Excel install, it’s worth a look. The interface differences can take some getting used to and the migration isn’t trivial, but it’s not impossible either.
Beyond that, the options thin out quickly. There are many, many point solutions - standalone email, separate file storage, third-party collaboration tools - but assembling those into something coherent can cost more in integration complexity than it saves in licence fees. And as we said above those individual suppliers will still almost certainly be increasing their pricing over time too.
The reason we still recommend Microsoft 365 for most small businesses isn’t loyalty to Microsoft. It’s that the platform is genuinely hard to beat when you factor in the integration with everything else, that most people already are familiar with it, the security tooling, the device management capabilities, and relative ease of administration. Retraining a 30-person team to work in a different ecosystem has a real cost that rarely shows up in the comparison spreadsheet.
So our honest position: if you’re already on M365, the price rises are annoying but they’re probably not a reason to leave. The more useful question is whether you’re on the right plan and whether you’re actually getting value from what you’re paying for - and that’s where we can help.
Hayes IT can review your current Microsoft 365 setup, identify any waste, and advise on whether your current plan mix still makes sense given the new pricing. Get in touch if you’d like us to take a look before your renewal comes around.