What Businesses Should Know Before July 2026
Microsoft has announced pricing and packaging updates for select Microsoft 365 subscriptions. Here is what is changing, why it matters, and why Microsoft 365 Business Premium continues to stand out for small and mid-sized businesses.
Microsoft has announced pricing and packaging updates for select Microsoft 365 subscriptions, with new pricing taking effect July 1, 2026.
For existing customers, the updated pricing will generally apply at the next renewal after that date if their subscription is impacted. Microsoft has also shared that packaging updates will begin rolling out in June 2026, with customers receiving Message Center notice before those changes appear in their tenant. You can review Microsoft’s official licensing update here.
That gives organizations time to plan.
And that is really the point.
This update does not need to create panic, but it does create a timely opportunity to review your Microsoft 365 environment, confirm your licensing still matches your business needs, and make sure you are getting full value from the tools you already pay for.
At Covenant Technology Solutions, we see this as less of a pricing conversation and more of a planning conversation.
Microsoft 365 pricing updates begin July 1, 2026
Microsoft is updating pricing for several Microsoft 365 commercial, frontline, enterprise, government-equivalent, and nonprofit plans. These updates are tied to Microsoft’s continued investment in security, AI, device management, and productivity capabilities across Microsoft 365. Microsoft explains more about the added capabilities and pricing update in its announcement, Advancing Microsoft 365: New capabilities and pricing update.
| Microsoft 365 Suite | Current List Price | List Price as of July 1, 2026 |
|---|---|---|
| Business Basic | $6 | $7 |
| Business Standard | $12.50 | $14 |
| Business Premium | $22 | $22 |
| Office 365 E1 | $10 | $10 |
| Office 365 E3 | $23 | $26 |
| Microsoft 365 E3 | $36 | $39 |
| Microsoft 365 E5 | $57 | $60 |
| Microsoft 365 F1 | $2.25 | $3 |
| Microsoft 365 F3 | $8 | $10 |
Microsoft 365 is no longer just email and Office apps
Microsoft has framed this update around the continued expansion of value inside Microsoft 365. In plain English, Microsoft 365 has become much more than email, Office apps, and cloud storage.
For many organizations, Microsoft 365 is now the foundation for secure collaboration, identity, access, device management, data protection, AI-powered productivity, and operational resilience.
- Secure collaboration across teams and locations
- Identity and access management
- Email and Teams protection
- Endpoint and device management
- AI-powered productivity through Copilot experiences
- Data governance, compliance, and business continuity
The right question is not only, “What will this cost?” It is, “Are we getting the full value from what we already own?”
For many SMBs, Business Premium remains the practical sweet spot
One of the most important details in Microsoft’s published pricing update is that Microsoft 365 Business Premium is not increasing in price. It remains listed at $22 per user/month.
For small and mid-sized businesses, that matters.
Business Premium continues to be one of the strongest Microsoft 365 plans for organizations that want productivity, security, and device management in one package. It includes the familiar Microsoft 365 apps and collaboration tools, but it also brings in security and management capabilities that many businesses otherwise try to piece together separately.
Security built into the foundation
Business Premium includes security capabilities such as Microsoft Defender for Business, identity protections, conditional access, and tools that help reduce common cyber risks.
Device and access control
With Microsoft Intune and Entra ID capabilities, organizations can better manage devices, users, and access policies across a modern workplace.
Productivity without overcomplication
Business Premium combines Microsoft 365 apps, Teams, OneDrive, SharePoint, email, security, and management into a practical package for businesses under 300 users.
At Covenant, this has been our perspective for quite some time: Business Premium is often the preferred license for SMBs because it gives businesses a stronger security foundation without overcomplicating the environment.
The biggest risk may not be the price increase
The biggest risk with Microsoft 365 licensing is not always the price increase itself. It is paying for licenses that are not being used well.
Many Microsoft 365 environments grow over time. Users get added. Roles change. Employees leave. New tools are introduced. Security defaults evolve. AI becomes part of the conversation. Before long, the licensing environment may no longer reflect how the business actually operates.
Questions worth asking before your next renewal:
- Are we using the right Microsoft 365 plans for each employee type?
- Are there inactive or underused licenses?
- Are users assigned licenses that no longer match their role?
- Are we paying separately for tools that may already be included in a better-fit license?
- Are our security features actually configured and active?
- Are we prepared for AI tools like Copilot from a permissions, data, and governance perspective?
- Do we know when our renewal happens and how this update may affect our budget?
Better value, not just lower cost
It is natural to focus on price when Microsoft announces a pricing update. But the better question is:
Are we getting the value we should be getting from Microsoft 365?
A lower-cost license that leaves gaps in security, device management, or compliance may not actually save money in the long run. On the other hand, a more complete license that is properly configured can reduce risk, simplify management, and help employees work more securely.
This is especially important as AI becomes more embedded into Microsoft 365.
Copilot and AI-powered tools work best when your environment is already organized, secured, and governed. If permissions are messy, files are overshared, or sensitive data is not classified properly, AI can expose those issues faster than before.
Use this window to get clear before renewal
You do not need to make immediate changes without context. But you should use this window to review, plan, and confirm what applies to your organization.
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Confirm your renewal date
The July 1, 2026 update does not mean every existing customer will see pricing change on that exact date. Existing customers generally remain on current pricing until renewal if their subscription is impacted.
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Review your current licenses
Look at who has what, what is being used, and where there may be waste, duplication, or misalignment.
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Evaluate Business Premium where appropriate
For many SMBs, Business Premium remains one of the most complete and cost-effective ways to combine Microsoft 365 productivity with security and device management.
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Check whether included tools are actually configured
Having security tools included in a license is not the same as having them implemented correctly. Review MFA, conditional access, Defender, Intune, device compliance, and data protection settings.
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Prepare for AI with security and governance in mind
If Copilot or AI adoption is on your roadmap, make sure your Microsoft 365 environment is ready before turning on more AI-enabled capabilities.
Make informed Microsoft 365 decisions without overcomplicating the conversation
At Covenant Technology Solutions, our goal is to help clients make informed decisions about Microsoft 365 licensing, security, productivity, and AI readiness.
We can help you review your current licensing, identify possible waste, evaluate whether Business Premium is the right fit, and determine whether your Microsoft 365 environment is configured to support security, productivity, and future AI adoption.
This is not about selling more licenses. It is about making sure your Microsoft investment is aligned with your business, your people, your risk, and your future.
Ask questions about licensing, renewal planning, or Microsoft 365 optimization.
Understand whether your Microsoft 365 environment is ready for secure AI adoption.
Get a practical snapshot of risk across your environment.
Review Microsoft’s official licensing resource for pricing, packaging, renewal timing, and SKU-specific details.
Read Microsoft’s broader announcement about added capabilities across Microsoft 365, including security, AI, productivity, and management updates.
Need help understanding what this means for your organization?
Connect with your Covenant client advisor or ask us about a Microsoft licensing review. We’ll help you understand what applies, what does not, and what may be worth reviewing before your next renewal.
