Microsoft 365 Pricing Update 2026: AI and Security Enhancements Take Centre Stage
Microsoft has announced price updates to Microsoft 365, effective 1 July 2026, that will deliver moderate increases across the Business, Enterprise, and Frontline Worker (F-series) plans. The change has been announced alongside significant new capabilities in AI, security, and endpoint management.
This Microsoft 365 pricing update is tied to tangible upgrades, including Copilot Chat embedded in daily apps, Defender protections integrated into more suites, and Intune tools shifting from add-ons to core features. For IT professionals, cybersecurity analysts, and cloud managers, now is the time to conduct a licence health check to avoid paying for unused licenses while maximising real value.
Microsoft’s 2026 Vision for the AI-first Work Culture:
The Microsoft 365 new pricing in July 2026 is positioned as “advancing Microsoft 365” to meet hybrid work, AI adoption, and escalating threats. Pricing rises 5-33% across most Microsoft 365 plans; Business Premium ($22) and Office 365 E1 ($10) remain flat, emphasising their strong value proposition. Microsoft licencing changes in 2026 highlights the following:
The in-suite value explosion. Features that were sold separately, such as Defender for Office 365 Plan 1 or Intune Plan 2, are now included with E3/E5, potentially saving 10-20% on add-ons. But without optimisation of the existing, it’s just higher costs. We will get to this.
A Deep Dive into Category-Wise Feature Upgrades:
1. Enhanced AI Productivity with Copilot Chat:
Copilot Chat evolves from sidebar chats to seamless integration in Word, Excel, PowerPoint, Outlook, OneNote, Loop, and Teams. Queries such as “analyse this Q4 sales data” or “refine this report for executives” help agents draft, summarise, and generate insights without switching apps. New Copilot Chat Analytics tracks adoption, while admin controls enforce data boundaries, sensitivity labels, and DLP.
Impact for cybersecurity teams: Pair with Security Copilot (E5-only) for threat report summaries or playbook generation; aligns with the business’s SOAR interests. Rollout to all major plans (Business Basic/Standard/Premium, E1/E3/E5, F1/F3) means governance can’t wait. Efficiency gains per Microsoft benchmarks are achievable, but only with role-based access.
2. Boosting Baseline Security with Stronger Phishing and Link Defences:
Microsoft Defender for Office 365 Plan 1 lands in Office 365 E3 and Microsoft 365 E3, scanning email/Teams for phishing, malware, and zero-days. SafeLink Lite/URL checks hit Business Basic/Standard and Office 365 E1, blocking malicious sites on click.
This is extremely useful for SMBs, who can get enterprise-grade email protection without additional costs; E3 teams detect attacks much faster. For businesses layering third-party tools, it makes sense to rationalise now, as overlap kills budgets.
E5 Exclusive includes a security Copilot with SCUs (scaling with seats, capped) and power AI triage in Defender/Intune.
3. Stronger Endpoint Security: Intune Supercharged
Microsoft 365 E3/E5 absorb Intune Plan 2 (Remote Help for remote control and Advanced Analytics for compliance trends). Similarly, the plan E5 adds Endpoint Privilege Management (just-in-time admin), Enterprise App Management, and Cloud PKI for certs.
Privilege management curbs ransomware, and Remote Help speeds triage, strengthening cybersecurity efforts. Windows E3 gains Quick Machine Recovery and is future-proof for Azure workloads.
4. Additional Features like Compliance, Identity and Apps:
Note the following changes:
- Entra ID P1/P2: +$1 each; governance for AI agents.
- Microsoft 365 Apps for Enterprise: $14 (+20%); Copilot-ready.
- Purview/Defender Suites: Flat at $12; compliance holds strong.
- Windows E3/E5: Modest hikes with recovery/security APIs.
The Pricing Breakdown: USD Per User/Month (including Teams)
Microsoft 365 Pricing Updates (Effective 1 July 2026)
| Plan | Current Price (USD) | New Price (USD) | Key 2026 Enhancements |
| Microsoft 365 Business Basic | $6.00 | $7.00 | URL checks, Copilot Chat, 50GB mailbox |
| Microsoft 365 Business Standard | $12.50 | $14.00 | URL checks, Copilot Chat, 50GB mailbox |
| Microsoft 365 Business Premium | $22.00 | $22.00 | Copilot Chat Analytics |
| Office 365 E1 | $10.00 | $10.00 | URL checks, Copilot Chat |
| Office 365 E3 | $23.00 | $26.00 | Defender for Office 365 P1, Copilot Chat |
| Microsoft 365 E3 | $36.00 | $39.00 | Defender O365 P1, Intune P2, Copilot Chat |
| Microsoft 365 E5 | $57.00 | $60.00 | Security Copilot, Intune Privilege Management |
| Microsoft 365 F1 | $2.25 | $3.00 | Copilot Chat |
| Microsoft 365 F3 | $8.00 | $10.00 | Copilot Chat |
| Apps for Business | $8.25 | $10.00 | Copilot-ready apps |
| Office 365 E5 | $38.00 | $41.00 | Copilot Chat |
| Windows Enterprise E3 | $6.63 | $7.63 | Quick Machine Recovery, post-quantum security |
| EMS E3 | $10.60 | $12.00 | Intune Remote Help, Intune Advanced Analytics, P2 |
| Entra ID P1 | $6.00 | $7.00 | Agent governance features |
| Entra ID P2 | $9.00 | $10.00 | Advanced identity protection |
Source: Microsoft
How Should Businesses Prepare?
It is noteworthy that businesses are already wrestling with the growing complexity of Microsoft 365. There are layered plans that overlap, AI add-ons popping up everywhere, scattered admin responsibilities, and haphazard insight into who’s tapping which features.
For teams relying on Microsoft 365 for email, teamwork, and data storage, these pricing shifts impact long-term budgeting, smart licence strategies, and daily tenant oversight. Businesses need to optimise the right licences, weed out dormant accounts, sync contract renewals, implement governance tools that track usage patterns and security posture, and keep spending firmly in check.
A Note on What an SKU is:
SKU stands for ‘Stock Keeping Unit, or it is Microsoft’s way of packaging specific product versions. In practical terms, an SKU is a distinct plan, such as Business Basic, Business Standard, Microsoft 365 E3, or Microsoft 365 E5. Each comes with its own feature set and price tag.
Why does this matter now? Knowing exactly which SKUs your organisation holds is mission-critical for cost control amid these pricing changes. One wrong SKU assignment across 100 seats could mean thousands in unnecessary spending, while the right mix unlocks new capabilities without breaking the bank.
Choose Kloudify, Australia, for Optimising Microsoft 365 Licensing:
Kloudify helps organisations manage Microsoft complexities by aligning licenses with real usage, security needs, and business outcomes, driven by detailed analysis. Team Kloudify systematically understands how teams work and analyses feature usage to recommend plans where higher-tier licenses genuinely add value.
The result is a licensing model that reduces waste, improves security coverage, and ensures businesses are paying for what is needed, no more, no less. With deep Microsoft expertise and a practical, transparent approach, Kloudify helps you stay compliant, future-ready, and confident as Microsoft 365 continues to evolve. Do you think our free assessment of your current Microsoft plan will help? We are just a call away.
