Microsoft (MSFT) Stock: Office 365 Commercial Subscription Prices Rising in 2026

TLDR

• Microsoft raises commercial Office 365 prices effective July 1, 2026, across all business tiers
• Front-line worker plans see largest jump at 33%, with F1 rising from $2.25 to $3 monthly
• Small business plans increase 12-17%, while enterprise subscriptions rise 5-13%
• Price hike follows 1,100+ new features added to Microsoft 365 platform
• First commercial price increase since 2022 as competition with Google intensifies

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Microsoft dropped a pricing bombshell Thursday. Commercial Office 365 subscriptions are getting more expensive starting July 1, 2026.

Microsoft Corporation, MSFT

The increases hit business and government customers across every subscription level. This marks the first commercial price hike since 2022.

Front-line workers get hit hardest. Microsoft 365 F1 subscriptions jump 33% from $2.25 to $3 per user monthly. F3 plans rise 25% from $8 to $10.

Small businesses aren’t spared either. Business Basic climbs 16.7% to $7 from $6. Business Standard increases 12% to $14 from $12.50.

Business Premium holds steady at $22 per month. Office 365 E1 stays at $10 for enterprise customers.

Enterprise Customers See Smaller Increases

Enterprise plans face gentler price adjustments. Office 365 E3 jumps 13% to $26 from $23. Microsoft 365 E3 with Windows rises 8.3% to $39 from $36.

The premium E5 package increases 5.3% to $60 from $57 monthly. Government agencies face similar percentage increases based on local regulations.

Nicole Herskowitz from Microsoft defended the changes. She highlighted over 1,100 new features released across Microsoft 365, Security, Copilot, and SharePoint over the past year.

The company positions these features as added value justifying higher prices. Microsoft rebranded Office 365 to Microsoft 365 in 2020 after launching the original subscription service in 2011.

AI Push Drives Pricing Strategy

Microsoft faces growing competition from Google’s productivity suite. Word, Excel, PowerPoint, and Outlook still dominate but rivals are gaining ground.

The pricing change coincides with Microsoft’s aggressive AI expansion. The company offers Copilot as a separate $30 monthly add-on. Adoption rates vary widely among enterprise customers.

Microsoft raised consumer subscription prices in January 2025. That marked the first consumer increase in over a decade.

The Productivity and Business Processes segment drives nearly 43% of Microsoft’s revenue. The division generated $33.4 billion of the company’s $77.7 billion in fiscal first-quarter revenue.

Microsoft 365 commercial cloud services revenue grew 17% in October. User seats increased 6%, driven primarily by small business, medium business, and front-line worker products.

Many organizations receive discounts off list prices. However, Microsoft has scaled back direct volume deals for certain customer categories.

The $30 Copilot add-on remains separate from all subscription tiers. Some companies have deployed Copilot widely while others remain cautious about expansion.

Government customers will see phased implementation of price increases. Timing depends on specific local regulations and existing contract terms.

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