Microsoft 365 pricing is changing in July 2026 — what it means for your business

Microsoft has announced pricing changes across Microsoft 365, effective 1 July 2026. The changes affect most Business and Enterprise plans at renewal, alongside an expansion of the AI features built into the platform. Here’s a clear, no-jargon breakdown of what’s changing, what it may cost, and how the new AI capabilities actually break down.

What’s changing

Most Microsoft 365 plans are rising between 5% and 33%, depending on the licence. The table below uses Microsoft’s Australian retail list pricing as a reference.

Plan	Current RRP*	Change	Approx. new**
Business Basic	$9.00	~+16%	~$10.44
Business Standard	$18.70	~+12%	~$20.94
Business Premium	$32.90	No change	$32.90
Microsoft 365 E3	$56.80	~+8%	~$61.35
Microsoft 365 E5	$85.30	~+5%	~$89.57

*Microsoft Australian retail list pricing (ex GST), based on an annual commitment. **Approximate, based on Microsoft’s published percentage increases. Final pricing may vary with billing model, agreement and renewal timing.

Importantly, the new pricing applies at each organisation’s next renewal after 1 July 2026 — not immediately.

The AI question: Copilot Chat vs full Copilot

Microsoft is building more AI into Microsoft 365, but there’s an important distinction between the AI that’s included and the full paid Copilot licence.

The key clarification: Most Microsoft 365 business plans include Copilot Chat for baseline AI assistance. The full Microsoft 365 Copilot experience is a separate paid licence and is not automatically included with standard plans.

What’s included: Copilot Chat

Copilot Chat is a secure AI assistant for everyday tasks — a practical entry point rather than the full experience. It covers:

General AI chat for work — asking questions, brainstorming, rewriting text, summarising content you provide, and drafting responses.
Writing support — turning rough notes into clear wording, improving tone, and simplifying content.
Access inside familiar Microsoft apps — available through Microsoft 365, depending on rollout and tenant setup.
A low-friction first step into AI — using it without licensing every user for full Copilot.

What needs the full Microsoft 365 Copilot licence

The paid licence is built for deeper productivity across business data and Microsoft 365 apps:

AI grounded in your data — emails, files, meetings, calendars, Teams, SharePoint and OneDrive, based on each user’s permissions.
Advanced Outlook help — summarising threads, drafting replies with context, and clearing the inbox faster.
Document and proposal creation — Word docs, reports and client-ready content using existing business context.
Meeting productivity — summaries, key points and follow-ups, where the licensing conditions are met.
PowerPoint and Excel support — building presentations, analysing spreadsheets, and turning data into usable outputs.

Side by side

AI capability	Copilot Chat	Full Copilot
General AI chat	Included	Included
Drafting & rewriting	Basic	Advanced + context
Access to emails, files, meetings & Teams	Not automatic	By permission
Meeting summaries & actions	Limited	With right licence
Doc, slide & spreadsheet workflows	Limited	Yes

Copilot availability and functionality can vary with licence, tenant configuration, app rollout, and whether the user holds the full Microsoft 365 Copilot licence.

What this means in practice

Microsoft 365 is becoming AI-enabled by default. Teams will increasingly see AI tools inside the environment they already use.
Included AI is not the same as full Copilot. Copilot Chat is useful, but the full experience requires separate licensing.
Business Premium stands out on value. With no announced increase, it remains a smart option for many businesses already on Microsoft 365.
It’s a sensible time to review licensing. Many businesses have users on licences that don’t match their actual role or usage.

How to prepare

Review your current Microsoft 365 licence allocation.
Identify users who may be over- or under-licensed.
Confirm your renewal date and any early-renewal options.
Decide whether Copilot Chat is enough, or whether selected users would benefit from full Copilot.

A licence review ahead of renewal is the simplest way to avoid paying more than you need to — and to make sure the right people have the right tools before the new pricing takes effect.