Microsoft 365 Prices Are Going Up in July

The Price Increase Is Confirmed

Starting July 1, 2026, Microsoft is raising commercial pricing across its Microsoft 365 lineup. Business Basic moves from $6 to $7 per user per month. Business Standard climbs from $12.50 to $14. Enterprise plans follow the same pattern — E3 goes from $36 to $39, E5 from $57 to $60.

That may sound incremental. Multiply it across 200 seats and a full year, and you are looking at thousands of dollars in new spend — before anyone adds a single feature.

Microsoft's rationale is the mandatory inclusion of AI capabilities, primarily Copilot, across commercial plans. Whether your team uses Copilot or not, you are paying for it after July.

The Bigger Problem: You Are Already Paying for Seats Nobody Uses

The price hike is visible. The silent budget drain is not.

Industry data shows that 56% of enterprise Microsoft 365 licenses are inactive, underutilized, oversized, or unassigned at any given time. The average organization pays for roughly 29% more SaaS licenses than it actively uses. Across a mid-sized Philippine company, that translates to hundreds of thousands of pesos in wasted subscription spend — every year — before the July increase ever lands.

Most IT teams know this problem exists. Few have the bandwidth to systematically fix it. License audits fall behind quarterly reviews. Offboarded employees stay provisioned for months. Departments get assigned E3 plans when Business Standard would cover everything they actually do.

When the base price goes up, those inefficiencies compound.

What the July Deadline Actually Means for Your Planning

The increase takes effect on renewal or agreement anniversary after July 1. That means organizations renewing in August, September, or later in 2026 are the ones directly exposed. If your Microsoft agreement renews in that window, you have roughly three months to act.

The right move is not to panic-downgrade licenses and disrupt operations. It is to run a deliberate audit so that when the increase lands, every seat you are paying for is a seat that is earning its cost.

Three things every Philippine IT team should do before July:

1. Pull a full license utilization report. Microsoft 365 Admin Center provides usage analytics broken down by product and user. If someone has not logged into Teams, Exchange, or SharePoint in 90 days, that seat is a candidate for review. Your managed services partner can generate this report and flag the anomalies.

2. Right-size your plan tiers. Not every employee needs E3 or E5. Frontline workers, field staff, and light users often only need email and basic file access — Business Basic or Frontline Worker plans are a fraction of the cost. Map actual usage to the minimum plan that covers each user's workflow.

3. Align your renewal date to your budget cycle. If your current agreement auto-renews in the July–October window, explore whether you can lock in a multi-year term at current pricing before the increase takes effect. This requires a conversation with your Microsoft licensing partner now, not in June.

The Copilot Question

Microsoft is framing the price increase as delivering AI value. Copilot for Microsoft 365 — the AI layer integrated into Word, Excel, Outlook, and Teams — is genuinely useful for specific roles: executives drafting communications, analysts summarizing meeting notes, sales teams writing proposals.

It is not universally valuable across every seat in every organization. Before your July renewal, it is worth identifying which roles would actually benefit from Copilot access versus which roles simply do not have that workflow. Targeted Copilot deployment, rather than blanket activation, lets you control the AI spend while capturing real productivity gains where they exist.

What a Managed Cloud Partner Does Differently

Handling this internally is possible. The challenge is that license optimization is a continuous discipline, not a one-time cleanup. Users get added, roles change, projects spin up and down. A managed Microsoft 365 partner monitors usage on a rolling basis, flags waste before it accumulates, and manages renewals proactively so the next price change does not catch your team off guard.

For Philippine businesses that rely on Microsoft 365 as their core productivity platform, the July increase is a forcing function — a useful one. It makes the cost of doing nothing visible.

Use the next three months to make your licensing position defensible.

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