Your Microsoft 365 price increase landed with your renewal quote, and the total is higher than last year. Your team didn’t grow, and your needs didn’t change, but the bill did.

It shows up quietly at renewal, and it multiplies across every seat you pay for.

At ZIA Networks, we review Microsoft 365 setups every day, and here’s what we’ve learned: the quote isn’t final. With a few smart changes to how you buy and assign licenses, most businesses can absorb the increase, and many end up paying less than they did before.

This guide walks you through five simple ways to do it, with real numbers, so you can walk into your next renewal with confidence.

To reduce Microsoft 365 costs after the price hike-

(1) Remove unused licenses.

(2) Match each plan to each role.

(3) Consolidate third-party security tools into a higher plan.

(4) Fix your billing term.

(5) Use features you already pay for before buying add-ons.

The rest of this guide shows you how, with real numbers.

What Is the Microsoft 365 Price Increase?

List prices were increased for most Microsoft 365 commercial subscriptions effective July 1, 2026. The hike applies to Business Basic, Business Standard, Apps for Business, and several Enterprise options. Current users will pay the new price at the next renewal period starting that date.

Based on published sources, the price for Business Basic increased from $6.00 to $7.00 (+17%), for Business Standard from $12.50 to $14.00 (+12%), and Business Premium is priced at $22.00. The prices of Enterprise subscription packages also increased, with E3 increasing from $36 to $39 and E5 from $57 to $60.

Below are the current Microsoft 365 business subscription prices on an annual commitment basis (US list prices):

Prices vary by region and currency, so confirm your exact figures with your reseller or Microsoft partner.

Notice the last row. Premium did not move, which changes the math on which plan is best for you. We will come back to that in Way 3.

Who Feels the Microsoft 365 Price Increase Most?

Those businesses that have multiple Basic and Standard licenses are affected more by the cost hike of the Microsoft 365 price because the percentages seem small per user. Companies on monthly billing, those with orphaned licenses from former staff, and those with mixed plan types see the largest avoidable waste.

It’s easy to shrug off a $1 increase until you multiply it by your headcount and 12 months of billing.  Below is an example that will show how this applies to a 60-member firm.

That is an extra $82.50 per month, or $990 per year, a 14.3% jump for the same people doing the same work.

Now you know the size of the problem. 

Way 1: Cancel the Licenses Nobody Is Using 

An unused Microsoft 365 license is a subscription attached to no real work. Common causes include departed employees, abandoned test accounts, and seasonal staff. Removing them is the fastest and safest way to cut costs, because nobody loses a single feature they actually use.

This is the foundation of any serious Microsoft 365 license optimization effort. It costs nothing but an hour of attention.

Start by exporting your user list from the Microsoft 365 admin center and sorting by last sign-in date. Then hunt for these four groups:

• Former employees whose accounts were never fully closed out.
• Inactive users with no sign-in activity for 60 to 90 days.
• Shared mailboxes that were licensed by mistake. Mailboxes sharing up to 50 GB usually do not require licensing.
• Account duplication due to migration or change of roles.

However, prior to any removals, be sure to transform the mailbox of a former employee into a shared mailbox, which allows you to retain all the information contained in it. Moreover, check whether there is any need for legal hold or retention.

What is it all worth? In our case of sixty people, you will save (6 × $14) + (2 × $7) = $98 per month, which equals $1,176 per year.

This particular clean-up reduces the monthly fee from $660 to $562, which is less than the price of $577.50 that you had been paying before the price increase.

It should become a regular quarterly procedure, since licenses keep leaking in each time someone leaves, joins, or moves.

Way 2: Match Each Plan to Each Role

It is not necessary to place all employees under one plan in the business organization. One advantage that Microsoft 365 offers is flexibility since it is possible to use different plans within a tenant. It is possible to allocate full desktop applications for intensive users and less expensive plans for others.

Many businesses buy one plan for everyone because it is easy. Easy is expensive.

Think about what each group actually does all day:

• Business Standard suits employees whose jobs depend on the installed Office apps rather than just a web browser.
• Field or warehouse staff who check email, join Team calls, and open documents in a browser may be perfectly served by Business Basic.
• Contractors or occasional users may only need web access to a few tools.
• Executives and admins with access to sensitive data may justify a higher tier for security reasons (see Way 3).

If 12 of your 30 Standard users do not use the desktop applications, switching them to Basic results in a savings of $7 per seat per month, which is 12 × $7 = $84 per month, or $1,008 annually.

Here are a few things to consider before downgrading any users:

• Ask first. Check real usage in the admin center reports, then confirm with team leads.
• Check license caps. Business plans are designed for organizations up to 300 users. Beyond that, you move into Enterprise plans with different pricing.
• Watch the “Apps” trap. Apps for business rose 21.2%. If those users also need email, a suite like Standard may now be the better value than apps plus a separate mail solution.

The goal is not to strip features away. The goal is to stop paying for features nobody touches.

Way 3: Consolidate Security Tools With Microsoft 365 Business Premium

Microsoft 365 Business Premium stayed at $22 per user per month, while Standard rose to $14. The difference is now $8. If you pay for endpoint security, device management, or advanced email security separately, then Premium will do the same job while saving you money.

This is the least known approach for reducing Microsoft 365 expenses since it means paying more for the license to save money overall.

The Business Premium version offers the security and management capabilities missing from Standard. As indicated by the partnership comparison below, among the additional capabilities of Business Premium over Standard are the following:

This is how you can check whether Business Premium justifies its cost. Sum the costs you incur for per-user per-month licensing of tools competing with Business Premium:

The third-party price estimates provided above are just hypothetical. Use the actual invoices you have. If your actual bundle costs more than $8 per user, Premium wins on price alone.

There is another benefit which does not appear on the invoice – reduced number of suppliers. Just one bill, just one admin console, and only one point of backup in case of problems. That reduces support time and tool sprawl. 

Premium is not automatically right for everyone. When you have nothing in terms of regulated data, remote device, and no plans to manage laptops centrally, Standard may be enough. However, if you find yourself purchasing duplicate security solutions, crunch the numbers before renewing next time.

Way 4: Fix Your Billing Term and Renewal Date

How you decide to finance your subscription to Microsoft 365 can be as important as what kind of subscription you opt for. Annual subscriptions paid every month come with a slight premium of roughly 5%. Aligning all licenses to a single renewal date also prevents small, scattered purchases from drifting upward at list price.

This is the least glamorous tactic and one of the most reliable.

Review your billing period.  Should you have signed up annually but pay every month, you could be overpaying by approximately 5%, just because of the ease of it all. At $7,920 per year, that adds up to an extra $396. Moving to annual payments eliminates this cost.

Co-term your licenses. Many companies end up with five or six renewal dates because they added seats at different times. That makes budgeting messy and makes it easy to miss a window. Ask your partner to align everything to one date.

Remember the timing of new acquisitions. Licenses bought now will be issued at the new rates, regardless of when your other renewals are. Plan your headcount-based acquisitions taking this into consideration.

Consider the duration of the license. While a longer duration protects you against any possible list price increases in the future, it is true only if there is little fluctuation in your headcount.

One honest caveat: Microsoft’s billing rules and partner programs change often. Confirm the current terms in writing with your reseller before you act.

Way 5: Use What You Already Pay For Before Buying Add-Ons

Microsoft added features to several plans alongside the price change. Before buying a new tool or paid add-on, check whether your current plan now covers the need. Reported additions to Basic and Standard include extra email storage, time-of-click link protection, and expanded Copilot Chat.

According to a publicly available article, users on Basic and Standard plans will get an additional 50 GB of email storage, URL click-protection at time of click, and Copilot Chat improvements. The rollouts are phased, so check your tenant for availability. 

To be clear, these additions do not erase the cost. As one analysis put it, for Basic and Standard clients the honest message is that you get useful additions, but this is still primarily a price increase. We agree with that framing. The point is to avoid paying twice. 

Run through this checklist before you approve any add-on spend:

• Extra mailbox storage or archiving. Do you need a paid upgrade, or does the larger mailbox solve it?
• Link and attachment scanning. Could built-in time-of-click protection replace a basic third-party filter?
• AI assistants. Should everyone get a paid Copilot license, or would the free Copilot Chat suffice for most people? Pay for the paid version only for those who are going to use it.
• Collaboration tools. Are you purchasing a distinct chat, file-sharing, or meeting solution that can be done via Teams, SharePoint, and OneDrive?

Cancelling an overlapping subscription is pure savings, because the capability stays in your hands.

Which Savings Tactic Should You Start With?

Begin by implementing Way 1, as it costs nothing and carries zero risks. Followed by plan mix, consolidation, billing, and add-ons in the given sequence. The strategies layer on top of each other, and when combined can completely negate the cost rise from Microsoft 365.

Here is a quick comparison to help you prioritize:

Let’s revisit our 60-person example with the first two tactics applied:

• Starting bill after the increase: $660 per month.
• Remove 8 unused seats (Way 1): −$98.
• Move 12 light users from Standard to Basic (Way 2): −$84.
• New monthly bill: $478, which is $99.50 below the pre-increase total of $577.50.

Your numbers will differ, and these figures are a model. But the pattern holds: the hike is a signal to audit, and audits pay.

How to Run a Microsoft 365 License Audit in One Afternoon

You can complete a basic license review in about three to four hours. Export your user and license data, flag inactive and duplicate accounts, compare real usage to assigned plans, then price your options before renewal. Document every change so you can repeat it each quarter.

Here is a simple five-step process:

1. Export your license report from the admin center, including plan, last sign-in, and department.
2. Flag the obvious waste: departed staff, inactive accounts, and unlicensed-eligible shared mailboxes.
3. Check feature usage for borderline users. Are they opening desktop apps, or only using the browser?
4. List your third-party tools that overlap with Microsoft’s built-in security and management features.
5. Build two or three cost scenarios and compare them against your current quote.

Next, speak with someone who is familiar with tenants similar to yours on a daily basis. Another perspective will see licensing issues, like mismatched components and trialware, that the internal team has become too accustomed to noticing.

FAQs

When did the Microsoft 365 price increase take effect?

Microsoft’s new pricing took effect on July 1, 2026. Existing customers keep their current price until their next renewal after that date, when the new rates apply. Licenses you add after July 1 are charged at the new prices regardless of renewal timing.

Which Microsoft 365 plans went up in price?

Business Basic rose from $6 to $7, Business Standard from $12.50 to $14, and Apps for business from $8.25 to $10 per user per month. Enterprise plans such as E3 and E5 also increased. Business Premium stayed at $22.

How can I reduce Microsoft 365 costs without losing features?

Unsubscribe from unused licenses, license plans based on roles, migrate third-party security tools to Business Premium plans, solve billing premium issues, and utilize available options before opting for additional services. This helps save costs without affecting user capability.

Is Business Premium worth it now?

It often is if you pay separately for endpoint protection or device management. With Standard at $14 and Premium at $22, the gap is $8 per user. If your third-party security tools cost more than that, Premium can lower your total spend.

Does the price increase apply to nonprofits and education?

Pricing and discounts for nonprofit, education, and government customers differ by program and region. Ask your Microsoft partner for the exact figures that apply to your organization before assuming the commercial list prices fit.

Your Next Step: Turn the Increase Into a Savings Opportunity

The Microsoft 365 price increase is real, and it is already in effect. But a higher list price does not have to mean a higher bill. Clean licenses, role-based plans, consolidated security, smarter billing, and fewer add-ons can bring your total back down, often below where you started.

Here is your action plan for this week:

1. Export your license report and flag unused accounts.
2. Determine the users who require desktop applications and those who don’t.
3. Add up what you spend on tools that Business Premium could replace.
4. Check your billing frequency and renewal dates.
5. Get a second opinion before you approve your next renewal.

Not sure where the waste is hiding? 

The team at ZIA Networks can review your Microsoft 365 tenant, flag unused and mismatched licenses, and model your savings before your next renewal. Request your free license review today and find out how much of your bill you can take back.