If your Microsoft 365 license renewal lands anywhere in the second half of 2026, you have a decision to make before July 1st.
In December 2025, Microsoft announced commercial pricing updates to their licenses that are scheduled to take effect July 1, 2026 across most Microsoft 365 SKUs. The good news: if you’re an existing customer, you stay at your current pricing until your next renewal. The catch: that means the timing of your renewal could carry real budget consequences if you don’t plan accordingly.
Now before we go any further, it’s important to call out 2 things:
- Given that many of Boyer’s clients/blog subscribers are active Dynamics 365 clients: This is not an increase to Dynamics 365 license SKUs i.e. Sales, Customer Service, or Business Central. (Business Central clients already lived through the cloud BC price increase that took effect November 1, 2025.)
- While it says “Commercial” pricing, this increase will impact nonprofit organizations as well. Nonprofit pricing is adjusted in line with commercial pricing, as it is tied to commercial rates through a fixed percentage discount.
Ok, if you’re still reading, then let’s get to what you NEED to know.
The headline list-price changes, per user per month (USD) are as follows:
- Microsoft 365 E3: $36 → $39 (+8%)
- Microsoft 365 E5: $57 → $60 (+5%)
- Office 365 E1: unchanged at $10
- Office 365 E3: $23 → $26 (+13%)
- Office 365 E5: $38 → $41 (8%)
- Business Basic: $6 → $7 (+17%)
- Business Standard: $12.50 → $14 (+12%)
- Business Premium: unchanged at $22
- Frontline (F1/F3): up 25%–43% depending on bundle
A few SKUs are deliberately not in this round: standalone Microsoft Teams, standalone Microsoft 365 Copilot, and Office 365 E1. Per-device SKUs (M365 Apps per device, Windows Enterprise per device) are seeing some of the largest increases, in the 17%–31% range.
One detail worth pausing on is what we highlighted in green above, which is that Business Premium pricing isn’t changing.
At $22 per user per month, it’s now an even stronger value proposition for Business Premium relative to Business Standard. This is especially true for small and mid-sized organizations that need real security and device management without jumping to enterprise licensing. The math for this upgrade has rarely been more compelling.
On a more exciting note, Microsoft is also adding capabilities to existing tiers at no extra cost over the summer. For example, Defender for Office Plan 1, Intune Plan 2, and Security Copilot capacity rolling into every E5 tenant plus everyone gets Copilot Chat Enhancements!
So while you might end up paying more, you are getting more bang for your buck. Whether the additions are valuable to you depends on what you’re already running for endpoint security and device management.
Which segues nicely into another way Microsoft is adding a ton of value when it comes to their AI Business Solution offerings: the Microsoft 365 E7 license.
What is the Microsoft E7 License?
Judson Althoff – CEO, Microsoft Commercial Business announced the E7 license on March 9, and it was officially rolled out for public purchase on May 1st. Branded “The Frontier Suite,” this is the first new top-tier enterprise SKU Microsoft has launched since E5 debuted back in 2015. That alone tells you something, because Microsoft doesn’t just casually add a new enterprise license tier.
E7 lists at $99 per user per month* and bundles four components into a single SKU:
- Microsoft 365 E5 — the full productivity, security, and compliance foundation (Defender, Purview, Intune, enterprise identity)
- Microsoft 365 Copilot — embedded AI across Word, Excel, PowerPoint, Outlook, and Teams
- Microsoft Agent 365 — a governance platform that treats AI agents like digital employees, with identities, access controls, lifecycle management, and audit trails
- Microsoft Entra Suite — identity governance extended to cover both human users and AI agents
The strategic story Microsoft is telling with E7 is that AI is no longer just a tool sitting alongside your team. It’s becoming an active participant for how work gets done. Agents need identities. They need permissions. They need oversight. And in regulated industries especially, they need an auditable governance layer. E7 is Microsoft’s bet that enterprise customers are ready to license, govern, and scale AI agents the same way they license, govern, and scale people.
After the July price increase, buying those four components à la carte would have run roughly $117 (USD) per user per month. E7 at $99 saves about $18 per user per month — call it 15%. CSP partners like Boyer can layer an additional promotional discount through December 31, 2026, bringing the effective price down further for organizations buying through that channel.
*This pricing includes E7 + Microsoft Teams; it’s $90.45 USD per user/per month for E7 without Microsoft Teams
When Does E7 Actually Make Sense?
E7 is a strong fit if you’re already running E5 plus Copilot, and you’re actively building or deploying AI agents — through Copilot Studio, Microsoft Foundry, or both. If your security team needs governance over agent identities, and your IT team is tired of managing E5, Copilot, Entra Suite, and Agent 365 as separate line items, E7 simplifies your stack and saves you money in the process.
E7 is probably overkill if any of these are true:
- You’re not on E5 yet. Jumping from E3 to E7 is a major budget swing, and many of the E5 capabilities you’d be paying for would sit unused.
- Copilot adoption inside your organization is still limited or experimental.
- Your AI agent roadmap is genuinely 24–36 months out. Agent 365 is available as a $15-per-user standalone — easier to add later than to pay for now.
- You’re a larger organization (5,000+ seats). A mixed-tier deployment, with most users on E3 or E5 and a smaller power-user cohort on E7, is almost always more cost-effective than a blanket upgrade.
The textbook overspend pattern with E7 is buying it organization-wide to unlock features only 15% of users will meaningfully touch. Microsoft will happily sell you the bundle. A good advisor will tell you whether you actually need it.
What to Do Between Now and July 1
Pricing updates take effect July 1, 2026, and existing customers will remain on current pricing until their renewal date. (Admins should have received at least 30 days notice in Message Center before packaging changes become available in their tenant.) The full list of pricing changes can be found here, but if your Microsoft renewal lands between July 2026 and the end of the year, the most valuable thing you can do this quarter is have a real conversation about your license stack.
Here are a few recommended moves:
Don’t separate Teams from your suite to save money. The math on splitting Teams off changed with this update, and in most cases the bundled SKU is now the better value.
Inventory what you’re actually using. Export your license assignments, flag inactive seats, and identify users on higher tiers than their role requires. License cleanup alone typically offsets a meaningful portion of any price increase.
Consider an early renewal. Renewing before July 1 lets you lock in current pricing for the full term — up to three years on the right agreement.
Decide your Copilot and AI agent posture deliberately. If you’re committed to the Microsoft AI stack, the E7 conversation is worth having. If you’re not yet, lean into the additional security and management capabilities Microsoft is layering into existing tiers and avoid paying for a platform shift you’re not ready to use.
How Boyer Can Help
Microsoft licensing is notoriously easy to get wrong, and the cost of getting it wrong is climbing. As a Microsoft Solutions Partner with triple designation across Business Applications, Modern Work, and Support Services, Boyer & Associates works with organizations to model their actual usage against the new pricing. We can help you identify the licensing structure that best fits where your business is heading and lock in terms before the July deadline.
If your renewal is on the horizon — or if you’re trying to figure out whether E7 belongs in your 2026 plan — a 30-minute conversation with us now can save you a year of regret later. Contact us today.
