Cyber & Physical Security Solutions
Microsoft 365 Pricing & Packaging Changes: What They Mean for Your Organization
On December 4, 2025, Microsoft announced a global pricing and packaging update for most commercial Microsoft 365 plans. New prices took effect July 1, 2026, and new capabilities roll into the suites through August 1, 2026. This change touches your budget, your license mix, and the tools you may be paying for separately today.
A bigger invoice is only half the story
A price increase paired with a packaging change is a moment where your license mix, your add-on spend, and your third-party tooling may no longer line up with what you are actually getting. Capabilities that were once separate purchases are now bundled into the suites — which means some of what you buy elsewhere today may now be redundant. Below is exactly what changed, and what we recommend doing about it.
The Pricing Changes
Commercial list prices, USD, per user per month, annual commitment. No-Teams variants increase by the same dollar amounts.
| Plan (with Teams) | Old price | New price | Change |
|---|---|---|---|
| Microsoft 365 Business Basic | $6.00 | $7.00 | +16% |
| Microsoft 365 Business Standard | $12.50 | $14.00 | +12% |
| Microsoft 365 Business Premium | $22.00 | $22.00 | No change |
| Office 365 E1 | $10.00 | $10.00 | No change |
| Office 365 E3 | $23.00 | $26.00 | +13% |
| Office 365 E5 | $38.00 | $41.00 | +8% |
| Microsoft 365 E3 | $36.00 | $39.00 | +8% |
| Microsoft 365 E5 | $57.00 | $60.00 | +5% |
| Microsoft 365 F1 / F3 (frontline) | $2.25 / $8.00 | $3.00 / $10.00 | +33% / +25% |
Standalone Teams and standalone Copilot licenses are not affected. Nonprofit pricing moves proportionally with its fixed 60–75% discount. Government (GCC, GCC High, DoD) sees the same percentages, with increases over 10% phased over multiple years under federal rules. Standalone components also changed, including Windows Enterprise per device (+31%) and Microsoft 365 Apps (+17%).
Existing agreements keep current pricing
The new rates apply at your next renewal after July 1, 2026 — not mid-term. You have time to plan before the increase lands.
New capabilities arrive regardless of price
Feature additions roll out to all qualifying plans through summer 2026, whether you renewed at the old price or the new one.
The Packaging Changes
Microsoft is folding capabilities into the suites that were previously separate purchases or unavailable at those tiers (rolling out June through August 2026). This is where redundancy — and savings — often hide.
Office 365 E1
- URL time-of-click protection
- Copilot Chat enhancements*
- Copilot Chat Analytics
Office 365 E3
- Microsoft Defender for Office 365 Plan 1
- Copilot Chat enhancements*
- Copilot Chat Analytics
Office 365 E5
- Copilot Chat enhancements*
- Copilot Chat Analytics
Microsoft 365 E3
- Microsoft Defender for Office 365 Plan 1
- Intune Remote Help
- Intune Advanced Analytics
- Intune Plan 2
- Copilot Chat enhancements* & Analytics
Microsoft 365 E5
- All Microsoft 365 E3 additions, plus:
- Microsoft Security Copilot**
- Intune Endpoint Privilege Management
- Microsoft Cloud PKI
- Intune Enterprise Application Management
Frontline & Business
- F1 / F3: Copilot Chat enhancements* & Analytics
- Business Basic / Standard: +50 GB mailbox storage, URL time-of-click protection, Copilot Chat enhancements* & Analytics
- Business Premium: +50 GB mailbox storage, Copilot Chat enhancements* & Analytics
*Copilot Chat enhancements include inbox and calendar awareness plus access to Word, Excel, and PowerPoint agents. **Security Copilot is subject to monthly capacity limits of 400 security compute units per 1,000 paid user licenses, up to 10,000 per month. Government tenants (GCC, GCC High, DoD) receive a subset of these additions on a separate timeline aligned to FedRAMP and data residency validation.
Native email security & Copilot may replace what you buy today
Two additions reshape the security conversation. Because they are now bundled, some of your standalone spend may be doing work Microsoft now includes.
Defender for Office 365 Plan 1 → now in E3
Anti-phishing, anti-malware, and safe-links protection ship natively with Microsoft 365 E3 and Office 365 E3. That overlaps with the pre-delivery filtering many organizations still pay a traditional Secure Email Gateway (SEG) to perform. The question becomes whether the SEG line item is still earning its keep — or whether those dollars are better spent on an advanced, AI-driven email security layer that catches the targeted and AI-powered attacks native filtering still misses.
Microsoft Security Copilot → now in E5
Security Copilot is now a built-in E5 entitlement, with a monthly allocation of 400 security compute units per 1,000 paid licenses (up to 10,000/month). AI-driven investigation, triage, and summarization that used to be a paid add-on are now part of the suite — a strong reason to model an E3→E5 move against add-ons you already buy separately.
ONST Recommendations
We recommend a structured review of your environment, focused on three questions. The outcome is a clear before-and-after picture: what your Microsoft spend looks like at renewal, which existing purchases are now redundant, and whether