Microsoft 365 Price Increases: What July 2026 Actually Means for Your Business
A few months back I was working with a twelve-person construction firm on their Microsoft 365 setup when the owner asked me something I've been hearing a lot lately: "Should we be worried about these price increases coming in July?"
He'd gotten the email from Microsoft. Business Basic going from $6 to $7.25 per user per month. Business Standard from $12.50 to $15. Business Premium from $22 to $26.70. The numbers felt significant enough that he was wondering if it was time to look at alternatives.
I told him what I tell every client who asks: the price increase is real, but the decision isn't just about the monthly bill.
How Much Will the Price Increase Actually Cost Your Business?
Let me show you what these increases look like in real dollars for businesses of different sizes.
For a 10-person team on Business Standard, you're looking at an extra $25 per month, or $300 per year. A 25-person team sees an increase of $62.50 monthly, $750 annually. A 50-person organization faces an additional $125 per month, $1,500 per year.
Those aren't trivial amounts, especially for smaller businesses watching every line item. But they're also not the kind of increases that should drive a platform decision on their own.
The construction firm I mentioned? They're on Business Premium for twelve users. Their increase works out to $56.40 per month, or about $677 per year. Meaningful money, but not enough to justify the disruption of switching platforms unless there were other reasons to move.
Should You Switch to Google Workspace Instead?
This is where most businesses get the comparison wrong. They look at Google Workspace pricing — $6 per user per month for Business Starter, $12 for Business Standard, $18 for Business Plus — and think they've found a simple solution.
The problem is that Google Workspace and Microsoft 365 aren't equivalent products. Google's Business Standard plan gives you Gmail, Drive, Meet, and the basic productivity apps. Microsoft's Business Standard includes all of that plus SharePoint, Teams with advanced features, and access to desktop versions of Office applications.
To get comparable functionality from Google, you'd need Business Plus at $18 per user per month. That's only $3 less than Microsoft's new Business Standard pricing of $15. For that $3 savings, you'd be taking on the cost and complexity of migrating your entire digital infrastructure.
I've run migrations in both directions. The hidden costs — data migration, user training, workflow rebuilding, integration replacement — typically run between $2,000 and $8,000 for a small business, depending on how deeply integrated they are with their current platform. For most organizations, that migration cost eliminates any savings from lower monthly pricing for at least two years.
What These Price Increases Actually Reflect
Microsoft isn't raising prices because they can. They're raising them because the platform has become significantly more capable over the past two years.
Copilot integration across the entire suite. Advanced security features that used to require separate licenses. Power Platform capabilities that were previously add-ons. SharePoint Premium features. Teams Premium functionality included in standard plans.
The construction firm I mentioned has been using Microsoft 365's project management capabilities to track job sites and coordinate with subcontractors. They've automated their invoice processing through Power Automate. Their field teams use Teams on mobile to share photos and updates in real time. None of that was possible at this price point three years ago.
When you're already getting value from these advanced features, the price increase feels like paying for capabilities you're actually using. When you're still just using Outlook and Word, it feels like paying more for the same thing.
The Real Question You Should Be Asking
Instead of "Should we switch because of the price increase?" the better question is "Are we getting enough value from our current subscription to justify the new pricing?"
If you're a typical small business using maybe 20% of what you're paying for, the price increase might be the push you need to either optimize your current Microsoft 365 setup or move to a simpler solution that better matches your actual usage.
If you're using SharePoint for document management, Teams for internal communication, Power Automate for workflow automation, and Planner for project tracking, the price increase is probably justified by the value you're already extracting.
The construction firm fell into the second category. They'd built their entire operational workflow around Microsoft 365. The price increase was annoying, but switching platforms would have meant rebuilding everything they'd spent two years perfecting.
What About Smaller Plans?
Microsoft 365 Business Basic, which includes web versions of Office apps and basic Teams functionality, is going from $6 to $7.25 per user per month. For businesses that truly only need email, calendar, and basic file sharing, this might still be the right choice.
But I rarely see businesses stay on Basic for long. The moment you need to edit a complex Excel file on your desktop, or you want to use SharePoint for document management, or your team starts collaborating in Teams channels, you're looking at upgrading to Standard anyway.
The pricing gap between Basic and Standard is widening — from $6.50 to $7.75 per month. That makes the upgrade decision more expensive, but it also makes it clearer. If you need desktop Office applications or advanced collaboration features, Standard is still the right choice. If you genuinely don't, Basic remains viable.
How to Prepare for July 2026
First, audit what you're actually using. If you're paying for Business Premium but only using email and basic file sharing, you're probably overpaying even at current prices. If you're on Business Premium and wondering whether the security investment is justified, this breakdown of all three plans walks through the math.
Second, if you're considering a platform switch, factor in the full cost of migration, not just the monthly subscription difference. Include data migration, user training, workflow rebuilding, and the productivity loss during transition.
Third, if you're staying with Microsoft 365, this might be a good time to ensure you're getting full value from your subscription. The price is going up regardless — you might as well make sure you're using what you're paying for.
The construction firm decided to stay with Microsoft 365 and use the price increase as motivation to finally implement the automated timesheet system we'd been discussing. If they were going to pay more, they wanted to get more value in return.
Frequently Asked Questions
When exactly do the new prices take effect? July 1, 2026 for new subscriptions. Existing subscriptions will see the new pricing on their next renewal date after July 1.
Can I lock in current pricing by renewing early? Microsoft typically allows annual subscribers to renew early at current pricing, but check with your account representative or reseller to confirm the specific terms for your subscription.
Are there any plans that aren't increasing? Microsoft 365 Apps for Business (formerly Office 365 Business) is staying at $8.25 per user per month. This plan includes desktop Office applications but no email hosting or collaboration tools.
Accurate as of April 2026. Microsoft updates its products and pricing regularly. For readers accessing this content after July 2026, verify current Microsoft 365 pricing as rates may have changed since publication.
J. Scott Clark is the President and CEO of The 365 Collective, Inc., a Microsoft 365 consulting and training firm serving small and mid-sized businesses across healthcare, finance, construction, engineering, publishing, and retail.
Most of the tools your team needs are already in your subscription. The question is usually just whether anyone has taken the time to set them up. If you want a hand configuring it to fit how your business actually works, feel free to reach out.