Microsoft 365 Licensing Price Changes: What Covenant Clients Need to Know

by | Dec 16, 2025 | Blogs, CSP

As a proud Microsoft partner, Covenant Technology Partners is committed to keeping our clients informed about important updates that impact your business technology investments. Microsoft has announced significant changes to Microsoft 365 commercial pricing and packaging, effective July 1, 2026. Here’s what you need to know—and how Covenant can help you prepare.

What’s Changing?

Microsoft is increasing prices across most Business, Enterprise, and Frontline Worker (FLW) subscription plans. These changes reflect the addition of new features, especially AI-powered tools, enhanced security, and improved device management. The price increases vary by SKU, with some plans seeing double-digit percentage jumps.

Key Price Updates:

  • Enterprise (E3/E5):
    • Office 365 E3: $23 → $26 (+13%)
    • Microsoft 365 E3: $36 → $39 (+8%)
    • Microsoft 365 E5: $57 → $60 (+5%)
    • New features: Enhanced security (Defender for Office 365 Plan 1), Intune Plan 2, Endpoint Privilege Management, Enterprise App Management, and Microsoft Cloud PKI.
  • SMB (Business Basic/Standard):
    • Business Basic: $6 → $7 (+16%)
    • Business Standard: $12.50 → $14 (+12%)
    • New features: 50GB email storage, SafeLinks Lite protection.
  • Frontline Worker (F1/F3):
    • F1: $2.25 → $3 (+33%)
    • F3: $8 → $10 (+25%)
    • New features: Intune Remote Help, Advanced Analytics.

Why the Change?

Microsoft is bundling more value into each license, including AI-powered Copilot Chat, advanced security features, and improved device management. These updates are designed to help organizations stay productive, protected, and prepared for the future.

What Should You Do Next?

  1. Review Your Licensing Mix:
    Audit your current licenses to identify unused or over-licensed seats.
  2. Plan Renewals Strategically:
    Consider renewing before July 2026 to lock in current pricing.
  3. Evaluate Feature Adoption:
    Decide which new features (AI, security, management) are most valuable for your organization.
  4. Consult with Covenant:
    Our team can help you map out the best strategy for your Microsoft 365 environment, ensuring you maximize value and minimize unnecessary costs.

How Covenant Technology Partners Can Help

  • License Optimization: We’ll help you audit and right-size your Microsoft 365 licenses.
  • Security & AI Enablement: Our experts can guide you in deploying new security and AI features.
  • Renewal Planning: We’ll help you time your renewals and upgrades for maximum savings.
  • Training & Change Management: Covenant provides user training and support for new Microsoft 365 capabilities.

Final Thoughts

While the upcoming price increases may impact your budget, they also bring significant new value to Microsoft 365. Covenant Technology Partners is here to help you navigate these changes and ensure your organization is ready for the future of work.

Contact us today to schedule a licensing review or learn more about how these updates affect your business.