Microsoft 365 Price Increase 2026: What UK Businesses Need to Know

Last updated: April 2026

Microsoft reviews its commercial pricing annually. UK SMB customers saw increases on Microsoft 365 Business plans again in 2026, and many only noticed when the first invoice at the new rate landed.

If you're on an annual commitment term, you're protected from mid-term changes — but that protection ends at renewal. Here's what moved, what to do about it, and how to minimise increases in 2027.

What changed in April 2026

Microsoft typically announces commercial price adjustments in the spring, and 2026 was no exception. Most UK Business plans went up again, including Business Basic, Business Standard, Business Premium, Apps for business, Microsoft 365 Copilot and Teams Phone Standard — all quoted ex VAT on an annual commitment, billed monthly.

The figures that matter are Microsoft's UK RRP (retail) prices — what you'd pay buying direct from Microsoft, or from a reseller that matches RRP (which you should expect). We'll confirm your exact per-user cost when you enquire. Get a free quote.

Why this matters

Two reasons.

One: if your last renewal was on 2025 prices and you're coming up for renewal in 2026, expect a noticeable bump. For a typical 10-person firm on Business Standard that adds up to a meaningful extra amount over the year, and more again on Business Premium.

Two: it's a decent predictor of what 2027 will bring. Microsoft hasn't signalled they're stopping annual adjustments. Planning for another 5-8% lift in 12 months is sensible.

Your protection window

If you're on an annual commitment term, your price is locked for 12 months from the start of that term. Microsoft's new pricing applies:

To new seats you add
To your existing seats only from your next renewal

So you have a grace period. Use it.

What to do before your next renewal

1. Audit your licence count

Most firms pay for licences they don't need. Every time you've added a new user but never removed one when someone left. Every time you bought a Copilot licence "to trial" and left it assigned. Every service account, shared mailbox (doesn't need a licence — often given one in error), ex-employee still on the books.

Go into Microsoft 365 Admin → Billing → Licences → Assigned. Compare against your actual active employee list. It's not unusual to find 10-20% of licences are surplus. Cancelling them at renewal saves real money.

2. Right-size the tiers

Not every user needs the same licence. Common pattern we see in audits:

Partners and seniors on Business Premium (correctly)
Junior staff also on Business Premium "because it was easier"
Field staff on Business Premium though they only use Outlook on a phone
Admin / reception on Business Premium though they barely open Excel

Business Basic is fine for email-only roles. Apps for business works if someone already gets email elsewhere. Mixing tiers at renewal can drop your monthly bill by 30-40% without anyone noticing.

3. Move from monthly-term to annual commitment

If your licences are on monthly term (one-month commitment), you're paying roughly 20% more than you need to. Microsoft's headline UK RRPs assume annual commitment. Monthly commitment — which looks flexible but is rarely needed — is ~20% uplifted.

On the same Microsoft 365 Business Standard plan, monthly commitment costs roughly 20% more per user than annual commitment. For 15 users, that's real money wasted on flexibility most firms never use. Switch at renewal.

4. Negotiate the bundle

If you also buy phones or mobiles through a telecoms provider — or are willing to consolidate — the bundle discount with a UK reseller offsets the price increase entirely.

CTN offers 10% off Microsoft 365 licences when bundled with our VoIP or business mobile service. For a 10-user firm on Business Standard, that discount can wipe out the 2026 increase and leave you ahead.

5. Get the 24-month commitment if offered

For customers on stable headcount, Microsoft occasionally offers 36-month commitment pricing that locks in current rates. Worth asking your reseller. Not always available but gives some protection against 2027 increases.

Should I renew early to lock in today's prices?

Occasionally tempting — but Microsoft's annual commitment renews at current Microsoft RRP at renewal, not the price from when you originally bought. So unless you specifically negotiate a longer term, early renewal doesn't help.

What does help: timing your renewal to align with annual commitments' natural end, then auditing and right-sizing at that point.

Other cost-saving levers

Pay annually instead of monthly

Most Microsoft resellers give a small further discount (1-3%) for upfront annual payment vs monthly payment over 12 months. Only worth doing if you're confident in your headcount for the year.

Combine with other Microsoft purchases

If you also buy Dynamics, Power BI, or Azure through Microsoft, consolidating all of them with the same reseller often unlocks volume breaks.

Ask for an Education or Non-profit discount (if eligible)

Schools, academies, universities and registered charities get significantly lower prices from Microsoft (up to 75% discount). If you're not sure whether you qualify, ask.

What's coming in 2027

Speculation but informed by Microsoft's commercial patterns:

Another 5-8% baseline increase is likely in April 2027
Copilot prices may continue to rise as adoption grows (it's currently priced below production cost for Microsoft)
Copilot may become harder to buy without an enterprise tier (E3/E5)
Business Premium's security inclusions likely to expand further, making the Standard → Premium upgrade more attractive

FAQs

Did Microsoft announce the 2026 price increase?

Microsoft typically announces commercial price adjustments ahead of the effective date through Partner Center and the Microsoft 365 Admin Message Center. Many customers miss the announcement because it appears in a part of admin most people never check. Your reseller should have flagged it to you in advance — if they didn't, that's a data point.

Can I dispute the price increase?

Not with Microsoft direct — it's their list price. But through a reseller, you have levers: bundle discounts, volume breaks, right-sizing at renewal, and switching resellers if yours is adding a markup on top.

Are all Microsoft 365 plans affected?

Most commercial plans saw increases. Education, Charity (Nonprofit Staff Pricing), and some legacy / grandfathered plans are unaffected or changed differently. Check the specific SKU pricing.

Does the price increase apply mid-contract?

No. Your annual commitment term is fixed for the 12 months from when it started. New pricing applies at renewal.

Will switching reseller reduce my price?

It can. A reseller that matches Microsoft RRP (like CTN) beats a reseller marking up 10-15% over RRP. And a reseller offering bundle discounts (like 10% off when taken with VoIP) beats any reseller not offering bundles. See our guide to switching Microsoft 365 reseller.