Microsoft will raise the prices globally for Microsoft 365 business and government plans starting July 2026
Price increases are largest for small-business and frontline-worker plans but more moderate for enterprise plans.
Microsoft says the changes reflect the addition of more than 1,100 new features, including AI tools and enhanced security.
Microsoft 365 has grown to be one of the most extensively utilized productivity platforms worldwide, with myriad businesses and governmental agencies alike relying on a collection of tools that range from staples like Word and Excel to Teams, cloud storage, and cutting-edge security services. What was once just a standard bundle of office software has turned into a complete digital workplace solution further enhanced by AI.
Over the past decade, Microsoft has greatly expanded Microsoft 365’s capabilities. The switch to hybrid and remote work increased demand for collaboration tools, cloud services, and automated workflows, driving an exponential need for these services. In response, Microsoft continues to add new features to address those needs, developing AI-infused applications for writing, analytics, communications, and security. The company states that its more than 1,100 new features-including support for generative AI, improvements to real-time collaboration, and upgrades in data protection-represent just how deeply invested the platform has been in the continuously evolving landscape.
The global AI boom has reshaped Microsoft’s broader strategy, too: it has placed itself at the forefront of AI-driven workplace transformation by investing billions in cloud infrastructure and machine-learning capabilities. Microsoft 365 has become a key plank in this strategy as the main vehicle for delivering AI-powered features to businesses and governments.
Meanwhile, Microsoft is up against increasing competition from alternative productivity ecosystems, most notably Google’s Workspace. While Google has targeted price and simplicity as its areas for aggressive competition, Microsoft has banked heavily on its deep enterprise security, compliance frameworks, and application integrations to make the case for a premium pricing model. The 2026 price hikes reflect Microsoft’s high degree of confidence in the continued value being placed upon these advanced capabilities by customers.
Historically, Microsoft has been very conservative when it came to increasing the price of its enterprise software. The last major commercial increase occurred in 2022; the 2025 adjustments to consumer plans marked a wider monetization shift. As AI development costs rise and the organizational dependence on cloud services accelerates, Microsoft is trying to bring subscription pricing in line with growing product complexity and demands on infrastructure.
While large enterprises and government clients may absorb the increases due to long-term contracts and operational reliance on Microsoft tools, smaller businesses may face more difficult budget choices. Some may reevaluate their software stack, others may opt to keep Microsoft’s services due to the platform’s compatibility, security, and feature depth. The hike in price in July 2026 reflects the effort of Microsoft in repositioning Microsoft 365 not just as a productivity suite but as an AI-driven, cloud-native workplace platform, which is an essential component of the modern digital enterprise.
