From 1 July 2026, Microsoft 365 will see a significant pricing update. These adjustments reflect the added value of advanced AI features, enhanced security measures, expanded Intune management capabilities, and the integration of Microsoft Copilot. While the date may feel far off, understanding the impact now is essential. Waiting too long could result in unnecessary costs, underutilised tools, and missed opportunities to fully leverage the latest Microsoft 365 innovations.
From 1 July 2026, Microsoft 365 will see a major price update. These changes are driven by significant enhancements: advanced AI features, enhanced security, expanded Intune device management, and the integration of Microsoft Copilot.
Even if the date feels far off, planning ahead is essential. Waiting too long could mean paying more than necessary, underutilising tools, or missing opportunities to leverage the latest Microsoft 365 innovations effectively.
You can now request the recording of our webinar held on 16 March 2026, where we walked through the key questions SMEs are asking about Microsoft 365 Copilot, Business Premium, and the upcoming 2026 Microsoft licensing changes.
In this session, a Microsoft Consultant shared practical insights on:
🔸How SMEs should approach Copilot adoption
🔸 What the 2026 pricing changes actually mean
🔸 Why Business Premium is becoming essential for security and productivity
🔸 How to improve device security with Intune and Conditional Access
🔸 What makes certain AI prompts unsafe - and how to avoid them
🔸 Real Q&A with actionable guidance for UK businesses
Understanding SKUs: The Building Blocks of Microsoft 365
Every Microsoft 365 plan is packaged as a SKU (Stock Keeping Unit) - essentially a bundle that defines which apps, tools, and services are included. Common examples include Business Basic, Business Standard, Microsoft 365 E3/E5, and F1/F3 for Frontline Workers.
Each SKU comes with its own set of capabilities and pricing. Selecting the wrong combination across a team can quickly become expensive, while choosing wisely ensures your business gains access to the latest productivity tools, security features, and AI capabilities - without overspending.
Tip: Frontline Worker SKUs (F1 and F3) are set for the largest percentage price increases, so businesses with many frontline employees should review usage patterns carefully to avoid unnecessary costs.
| Plan / SKU | Current Price (USD) | New Price from 1 July 2026 (USD) | Notes |
|---|---|---|---|
| Business Basic | $6.00/user/month | $7.00/user/month | Includes Teams; largest impact on SMEs |
| Business Standard | $12.50/user/month | $14.00/user/month | Core productivity tools with enhanced security |
| Office 365 E3 | $23.00/user/month | $26.00/user/month | Includes advanced compliance features |
| Microsoft 365 E3 | $36.00/user/month | $40.00/user/month | Adds Intune, more AI capabilities |
| Microsoft 365 E5 | $57.00/user/month | $64.00/user/month | Full suite including Copilot and security enhancements |
| F1 (Frontline) | $4.00/user/month | $5.50/user/month | Largest % increase; careful review needed |
| F3 (Frontline) | $10.00/user/month | $13.00/user/month | Significant impact on organisations with many frontline workers |
Note:
Prices include Teams; packages without Teams increase proportionally.
Local market adjustments and currency conversions apply (e.g., GBP for UK businesses).
VAT must be considered in total cost calculations.
Microsoft frames the 2026 price updates as a reflection of substantial enhancements across AI, security, and device management. Understanding these additions helps organisations evaluate the return on investment for each SKU.
Microsoft’s 2026 price updates reflect new capabilities across AI, security, and endpoint management. Here’s what’s changing:
| SKU / Suite | New Capabilities in 2026 | Key Takeaways |
|---|---|---|
| Business Basic | Expanded Teams features, basic AI-assisted productivity | Governance and usage tracking become important |
| Business Standard | Enhanced security policies, AI workflow automation | Opportunity to consolidate standalone security tools |
| Office 365 E3 | Advanced compliance & reporting, granular admin controls | Reduce redundancy in third-party tools |
| Microsoft 365 E3 | Intune device management enhancements, Copilot integration | Endpoint management may overlap existing add-ons |
| Microsoft 365 E5 | Full AI suite (Copilot), advanced security analytics, identity & threat protection | Security Copilot inclusion may influence E3 vs E5 decisions |
| F1 / F3 | Enhanced Teams, mobile-first productivity, AI-assisted task management |
Review frontline workflows and adoption plans
|
1. AI Embedded in Daily Workflows: Copilot Chat Expands Across Microsoft 365 Apps
Copilot Chat will be available across Word, Excel, PowerPoint, Outlook, and OneNote, bringing AI directly into everyday work tasks. Admins gain new controls to monitor, secure, and measure usage, making AI governance a key consideration.
What to consider: AI features will reach more users by default, so governance, data boundaries, and usage tracking are critical. Organisations should plan beyond pilot projects.
2. Enhanced Security Across Core Suites
Microsoft is integrating additional security features into existing suites:
▪️Office 365 E3 and Microsoft 365 E3 now include Microsoft Defender for Office 365 Plan 1, protecting against phishing, malware, and malicious links.
▪️Office 365 E1, Business Basic, and Business Standard gain URL scanning to block known malicious websites.
What to consider: Businesses paying for standalone email protection or link-scanning tools should assess redundancy before renewal.
3. Advanced Endpoint Management: Intune Features Added to E3 and E5
Microsoft 365 E3 and E5 customers will see expanded Intune capabilities, including:
▪️Intune Remote Help
▪️Intune Advanced Analytics
▪️Intune Plan 2
For Microsoft 365 E5 specifically, additional features include:
▪️Intune Endpoint Privilege Management
▪️Enterprise Application Management
▪️Microsoft Cloud PKI
What to consider: Review current endpoint management and privilege setups, as some existing tools may become redundant once these capabilities are included in-suite.
4. Security Copilot Comes to E5
Security Copilot will be included for all Microsoft 365 E5 customers, with a 30-day advance notice before activation. This includes access to Security Compute Units (SCUs) and a monthly capacity scaling model to help teams manage workloads effectively.
What to consider: For security teams, the inclusion of Security Copilot may influence the E3 vs E5 decision. Focus on measurable workflows such as threat triage, investigation, and response to determine the real value.
Small and medium-sized enterprises using Business Basic or Standard licences.
▪️Organisations with Frontline Workers (F1/F3).
▪️Companies operating on monthly subscriptions.
▪️Organisations with unused or over-provisioned licences that could now increase costs.
Without optimisation, licence costs will rise. But these updates also provide opportunities:
▪️Integrate AI tools like Copilot
▪️Strengthen security and compliance
▪️Reduce endpoint and licence sprawl
▪️Improve operational efficiency
The updated prices create a clear cost baseline, but the bigger risk is paying more while keeping the same licence sprawl: unused licences, overlapping security tools, or inconsistent endpoint governance.
A strategic approach should include:
▪️Establishing a current-state licence and usage baseline
▪️Mapping personas to appropriate SKUs
▪️Identifying overlaps in security and endpoint tools
▪️Creating a Copilot readiness and governance plan
▪️Developing a renewal timeline aligned with your agreements
By proactively assessing licences and new features, your organisation can manage costs, improve efficiency, and take full advantage of Microsoft 365 enhancements in 2026.
In How to Prepare for Microsoft 365 Price Increases 2026 & Smart Upgrades |Part 2, we’ll walk through practical strategies to help your organisation:
▪️Optimising current licences
▪️Leveraging Business Premium features
▪️Integrating Copilot for maximum productivity
Taking action now ensures your business navigates the upcoming Microsoft 365 changes smoothly, cost-effectively, and with full access to 2026 enhancements.
The 2026 price updates reflect significant new capabilities - from AI-powered Copilot and enhanced security to expanded Intune management. They offer real value but require careful planning. Organisations that act early can:
To make the most of these updates:
▪️ Review your current licences and usageOr, dive to Part 2 to learn step-by-step how to optimise licences, prepare for Copilot, and align renewals strategically.
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