The July 1, 2026 Microsoft 365 price increase: what to do before you renew

The July 1, 2026 Microsoft 365 price increase, in plain terms

On March 24, 2026, Microsoft confirmed a global price increase on its commercial Microsoft 365 suites, effective July 1, 2026. For any Québec SMB that pays for M365 licences monthly or annually, that's a hard deadline: depending on when your next renewal lands, you fall on the right or the wrong side of it. Renewals completed before July 1, 2026 lock in current pricing for the full term of the agreement.

The increase touches a wide range of products: Office 365 E3/E5, Microsoft 365 E3/E5, Microsoft 365 Apps, Business Basic and Business Standard, the Frontline F1/F3 SKUs, plus standalone Entra P1/P2 and Windows E3/E5. It does not apply to standalone Teams SKUs or standalone Copilot licences, which follow their own timeline.

Good news for smaller shops: Microsoft 365 Business Premium — the most common suite among SMBs of 30 to 200 employees — stays at its current list price in the table Microsoft published.

By how much: the increase per product

Here are the list-price increases announced by Microsoft and echoed by industry analysts, expressed as a percentage per product:

• Microsoft 365 E3: +8.3%.
• Microsoft 365 E5: +5.3%.
• Office 365 E3: +13%.
• Microsoft 365 Business Standard: +12%.
• Microsoft 365 Business Basic: +16.7%.
• Microsoft 365 F3 (Frontline): +25%; F1: +33%.

Why your bill can climb more than the headline percentage

The list percentage only tells part of the story. For organizations on an Enterprise Agreement, Microsoft removed automatic volume discounts (Levels B, C, and D) back in November 2025. The result: a large enterprise that used to enjoy a built-in discount now pays full list price, and the July increase stacks on top of that. According to independent analyses, the combined effect reaches 15 to 23% for large accounts — well beyond the 5 to 8% headline.

For a typical Québec SMB on CSP (Cloud Solution Provider) rather than an EA, the stakes are different but real: the list-price increase flows through at your next renewal, and any cost indexed to your Microsoft spend (support, certain add-ons) rises mechanically. The public sector and nonprofits aren't spared either: government bodies follow the commercial grid, with multi-year phasing for increases above 10%.

The practical takeaway: don't anchor on the percentage in the news. The only number that matters is the gap between today's bill and your next renewal bill, at the same headcount.

What you pay more for — and what you actually get

Microsoft justifies the increase with new capabilities added to the suites. Some carry real value for an SMB; others are redundant if you already own the equivalent. The main additions shipping by August 1, 2026:

• Microsoft Defender for Office 365 Plan 1 included in E3 and Office 365 E3: Safe Links, Safe Attachments, anti-phishing. Genuine consolidation if you already bought that protection separately; an added cost if you never planned to use it.
• Several Intune capabilities (Remote Help, Advanced Analytics, Intune Plan 2) added to E3 and E5 — useful if you're pushing device management, neutral otherwise.
• For E5: a Security Copilot allocation (400 SCU per 1,000 users/month, capped), Endpoint Privilege Management, Microsoft Cloud PKI.
• For E1, Business Basic, and Business Standard: a URL check (a subset of Safe Links) added at click time.

The real question: are you paying for licences you use?

Before you absorb the increase, ask the right question: does your licence estate match your actual usage? In most of the audits we run at io4, we find seats paid for and never used (departures left unrevoked), users on a pricier suite than they need, and add-ons that overlap with capabilities already included. Every seat you remove or right-size before renewal compounds across the whole term of the agreement.

It's exactly the FinOps reflex we apply on the Azure side, and the same logic applies to licensing: visibility first, optimization second. A price increase is the ideal moment to do this cleanup — the savings from optimization often absorb a good chunk of the increase.

The io4 action plan before July 1

Here's the approach we recommend to our SMB, enterprise, and public-sector clients in the weeks that remain:

• Map your estate: number of licences per suite, active vs. dormant seats, renewal dates. This is the step that pays off the most.
• Model the impact at both prices (current and July 2026) against your real SKU mix, so you can put a number on the decision instead of inheriting it.
• Decide on renewal timing: a renewal before July 1, 2026 locks in current pricing for the full term. Worth weighing if your deadline is near.
• Optimize before you sign: downgrade over-provisioned users, remove unused seats, drop add-ons now redundant with the new inclusions (Defender P1, Intune).
• Check data residency: use the review to confirm your tenant stays hosted in the Canada Central / Canada East regions, a sensitive point under Law 25.

Bottom line: decide now, not on June 30

The July 2026 increase isn't something you have to take lying down. It's a trigger to take back control of your Microsoft spend: audit, optimize, then decide on the right time to renew. SMBs that get on it in June have room to make trade-offs; those who discover the increase on their August bill have already paid it.

If you want a clear read on your estate and the real impact of the increase on your situation, talk to an io4 expert. We run the licence audit and renewal strategy with the same FinOps approach we use on Azure — no jargon, and without selling you seats you don't need.