If you run Microsoft 365 for an Australian business, there's one date worth putting in your calendar: 1 July 2026. That's when Microsoft's new pricing comes into effect across most of the popular Business and Enterprise plans. The reason I'm writing this now, rather than in July, is that there's a window between today and the end of June where you can do something about it, and for a lot of organisations that window is worth real money.
Here's the part people tend to miss. The increase doesn't hit you the moment the calendar ticks over to July. It applies at your next renewal on or after 1 July. So if you renew before 30 June, you lock in today's pricing for another full term, twelve months, or up to 36 months on some plans. That single decision is where the savings sit.
Let me walk through what's actually changing, what it does to a real bill, and what I'd do between now and the end of June.
What Microsoft is actually changing
Microsoft confirmed the increases back in December 2025 (official announcement). Most of the everyday Business and Enterprise plans are going up, some more steeply than others.
Two plans you might have expected to rise didn't. Business Premium and Office 365 E1 are both staying exactly where they are. Hold that thought, because Business Premium holding flat while Business Standard climbs changes the maths in a way that's worth money to a lot of SMBs. I'll come back to it.
The USD increases below are confirmed. The AUD figures are my best read as at May 2026, because Microsoft hasn't published localised Australian pricing for this change yet.
USD pricing (confirmed)
| Plan | Current USD /user/mo | From 1 July 2026 | Change |
|---|---|---|---|
| Microsoft 365 Business Basic | $6.00 | $7.00 | +16.7% |
| 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% |
| Microsoft 365 F3 | $8.00 | $10.00 | +25% |
| Microsoft 365 E3 | $36.00 | $39.00 | +8.3% |
| Microsoft 365 E5 | $57.00 | $60.00 | +5.3% |
Indicative AUD pricing (ex-GST, annual)
| Plan | Indicative current AUD | Indicative from July 2026 |
|---|---|---|
| Business Basic | ~$9.00 | ~$10.50 |
| Business Standard | ~$18.70 | ~$20.94 |
| Business Premium | ~$32.90 | ~$32.90 (flat) |
| Microsoft 365 E3 | ~$56.80 | ~$61.53 |
| Microsoft 365 E5 | ~$85.30 | ~$89.79 |
| Microsoft 365 F3 | ~$12.00 | ~$15.00 |
These AUD figures are indicative only and accurate as at May 2026. Microsoft hasn't published official localised AUD pricing for the July change, so treat the table as a guide to the direction and rough size of the move rather than a quote. We confirm exact CSP pricing when we put numbers in front of you.
One more thing worth knowing if you pay monthly. Month-to-month billing already costs you roughly 20% more than an annual commitment, before any of this. Moving those seats to an annual term before 30 June is a saving you can make regardless of the list price change.
What this does to your bill
The list price tells you very little on its own. What matters is your licence mix and your seat count, so here are two realistic examples in indicative AUD.
A 50-seat tenant on Business Standard goes from roughly $11,200 a year to roughly $12,600. Not catastrophic, but it's $1,400 you weren't spending, and it repeats every year.
A 200-seat tenant on Microsoft 365 E3 feels it more. Annual licensing climbs by around $11,400, from about $136,300 to about $147,700. At that size the early-renewal decision is no longer a rounding error.
If you want your own numbers rather than mine, the Microsoft 365 pricing calculator lets you enter your actual seat counts and see your current spend next to your post-July spend side by side. It takes a couple of minutes.
You're getting more for the money, too
This isn't purely a price grab, and it's worth being fair to Microsoft on that. They've tied the increases to a genuine set of new inclusions that roll out alongside the change:
- Mailbox storage doubles to 100 GB on all Business plans, up from 50 GB.
- Defender for Office 365 Plan 1 is now included with Microsoft 365 E3 and Office 365 E3, where it used to be a paid add-on.
- Microsoft 365 E5 gets a Security Copilot allocation (400 Security Compute Units per 1,000 licensed users).
- Copilot Chat is embedded across plans as a baseline AI assistant.
- Intune Suite gains additions on E3 and E5, so more endpoint management lands without a separate add-on.
Here's the catch, and it's the thing we run into constantly in our identity and security work: a feature you're now paying for only becomes value once someone turns it on and configures it properly. Defender, Intune and Entra ID controls sit unused in a surprising number of tenants. The renewal is a good prompt to check that the security you're buying is actually switched on.
Why Business Premium is suddenly the one to look at
Back to that plan I told you to hold in mind. Business Premium stays at USD $22 while Business Standard rises to $14, so the gap between them narrows to about $8 per user per month. For that $8 you get Intune, Entra ID P1 and Defender for Business built in, and those are exactly the things smaller businesses tend to bolt on as separate licences.
So if you're sitting on Business Standard and already paying for any of those security add-ons on the side, the move to Business Premium is worth modelling before 1 July. There's a fair chance it costs you less for more.
What I'd do before 1 July
If this were my renewal, here's the order I'd work through it.
Run a licence audit first. Before you renew anything, find out what you're actually paying for. It's common to find somewhere between a fifth and a third of seats either unused or sitting on the wrong plan. Look for:
- Ghost accounts: departed staff and shared mailboxes still carrying full licences.
- People on Business Premium who only need Basic, or the other way around.
- Add-ons you're paying for separately that are now bundled into your plan as part of the July update.
- Monthly seats that could move to annual and drop about 20% straight away.
Then decide whether to renew early. Renewing before 30 June locks in current pricing for the length of your new term. Annual and 36-month terms both qualify, and 36-month terms are available for E3 and E5 through CSP. Run the comparison: a 36-month lock-in at today's rates against a 12-month renewal at July rates will show you the break-even quickly.
While you're at it, look at who you buy through. If you're buying direct from Microsoft, or through a reseller who hasn't picked up the phone to talk you through any of this, the renewal is a natural moment to reassess. Modern 42 is a 100% Australian-owned Microsoft 365 CSP, and we'll do a no-obligation pre-renewal review: we check your tenant, flag the seats worth trimming, and help you work out whether an early renewal stacks up for your situation.
- How to switch your Microsoft CSP partner
- Microsoft 365 CSP services: Canberra | Sydney | Newcastle
FAQ
When do the Microsoft 365 price increases take effect?
The new prices apply from 1 July 2026, but they don't change anything mid-term. They take effect at your next renewal on or after that date. If your annual subscription renews on 15 August 2026, you'll start paying the new rate from 15 August.
How much more will Australian businesses pay?
Microsoft hasn't published official localised AUD pricing yet. The USD increases are confirmed (see the table above), and AUD will move in line with them. Use the pricing calculator to model your own seat count against the indicative AUD rates, and check back once Microsoft publishes the local figures.
Is Business Premium worth it now?
For most SMBs, yes. Premium is holding flat while Standard rises 12%, which narrows the gap to roughly $8 USD per user per month ($14 versus $22). Premium includes Intune, Entra ID P1 and Defender for Business, so if you're on Standard and buying any of those separately, Premium almost certainly works out as better value after 1 July.
Can I lock in current pricing?
Yes. Renewing your annual or multi-year subscription before 30 June 2026 holds today's pricing for the full term. Annual and 36-month terms are available through CSP for eligible plans. Talk to your CSP partner, or get in touch with us and we'll walk through the options for your tenant.
What new features come with the price increase?
The main ones are mailbox storage doubling to 100 GB on Business plans; Defender for Office 365 Plan 1 added to Microsoft 365 E3 and Office 365 E3; Security Copilot (400 SCU per 1,000 users) included with Microsoft 365 E5; Copilot Chat across plans; and Intune Suite additions on E3 and E5. Full details are on the Microsoft licensing news page.
Microsoft doesn't change its pricing often, so when it does it's worth a proper look rather than letting it roll through at your next renewal unchecked. The cost of spending an afternoon on it now is small. The cost of doing nothing repeats every year.
Book a pre-renewal review with Modern 42 and we'll check your licence mix, point out anything worth trimming, and help you make the most of the new inclusions before 1 July.
