Microsoft 365 Price Increase: What You Can Do

Last updated March 6, 2026.

Microsoft has increased the price for its Microsoft 365 business licensing in 2025. Whether you work with a provider for M365 managed services or handle everything yourself, you need to understand how price increases may affect you—and what your options are.

In this article, we’ll give you everything you need to know.

Key takeaways:

• Microsoft licensing can get confusing. It’s important to understand which package you’re using.
• How you pay (monthly vs. annually) will determine your pricing.
• Microsoft is increasing prices due to their investment in Copilot, their AI tool that’s integrated to M365.
• Upgrading to Windows 11 has no effect on M365 pricing.

Is my price increasing for Microsoft 365?

If you have an annual contract for affected Microsoft products, and you pay monthly (Annual/Monthly or A/M billing model), you experienced a 5% price increase that was effective April 1, 2025.

If you pay annually for your annual licensing (Annual/Annual or A/A billing model), your price is not affected.

If you have a month-to-month commitment billed monthly (M/M billing model), you won’t see a price increase, although you’ll continue to pay 20% more than the annual price.

All Microsoft products with annual subscriptions and monthly billing plans are affected. This includes product categories such as:

• Microsoft 365
• Office 365
• Enterprise Mobility + Security
• Windows 365
• Microsoft Dynamics 365 Services
• Microsoft Power Platform
• And others

For a deep dive on this, see Microsoft’s documentation on pricing updates for annual subscriptions.

How are Teams Phone licenses affected?

Standalone Teams Phone licenses are increasing in price for the first time since the solution was launched in 2017. It’s understandable that Microsoft would raise the price of Teams Phone, given how much innovation they’ve poured into the product in the last eight years.

If you have Teams Phone licenses under a standalone arrangement (not part of Microsoft 365 of Office 365 annual subscriptions with annual billing), you experienced a price increase effective April 1, 2025.

If you purchased your Teams Phone licenses through a Microsoft 365 or Office 365 subscription with A/A billing, you didn’t experience a price hike.

Here are the main increases you should know about.

• Teams Phone Standard: These licenses will increase 25% from $8 per user per month ($96/year) to $10 per user per month ($120/year).
• Teams Phone Standard for Frontline Workers: These licenses will increase 25% from $4 to $5 per user per month.

These are the most common license types, but you may have other types. Get the full picture here (scroll down to “Which Teams Phone products will have updated pricing?”).

Why is Microsoft increasing the price of M365?

Microsoft continues to invest in expanded features, functionality, and security for Microsoft 365. These days, much of that investment is reflected in Microsoft Copilot, the company’s market-leading AI tool that’s fully integrated into your Microsoft environment.

As Microsoft explained in a partner update, “the increasing security and compliance demands associated with Copilot” are driving the pricing change.

Copilot is an incredible tool, and beats ChatGPT in terms of data security and integration into your Microsoft environment. Learn more here: Microsoft Copilot vs ChatGPT.

Will upgrading to Windows 11 affect my Microsoft 365 pricing?

Upgrading to Windows 11 has no affect on M365 pricing.

Microsoft 365 is a cloud-hosted application that’s fully compatible with Windows 11.

If you’re going to change how you pay for Microsoft 365 (see below), you can undergo that transition before, during, or after upgrading to Windows 11. The initiatives are separate.

Learn more here: Windows 10 End of Life Options.

Is the price increase worth it?

If your organization runs on Microsoft 365, it’s complex and challenging to migrate to an alternative. You’re already using one of the top productivity suites in the world, and the pain of migrating is not worth it in most cases.

We encourage our clients to focus on why M365 pricing is going up.

The benefits of Copilot are significant when the tool is implemented properly. You get:

• Increased productivity
• Robust analysis of complex internal data
• Rock-solid data security (compared to ChatGPT)

Can you just turn on Copilot and start using it?

Technically, yes.

But things will go better if you take the time to prepare. Learn more here: Microsoft Copilot Requirements.

Now, there are ways around this price increase.

Let’s unpack that.

How can I avoid the price increase for Microsoft 365?

There are several options for avoiding this price increase.

If you’re on the A/M billing model (annual subscription paid monthly), you can transition to the A/A model when your current contract is up.

Whatever billing model you’re using, if you’re currently paying MSRP for Microsoft 365, talk to us. We are a Microsoft Gold partner offering exclusive pricing for M365. You can save a significant percentage off MSRP when switching to us as your license provider. In fact, most companies save $20-200k per year.

Contact us to learn more.

The takeaway: Get M365 licensing that works for you

When you’re dealing with a large company like Microsoft, it can be tough to understand what you’re paying and why. Unfortunately, Microsoft licensing gets complex, especially if not all your licenses are on the same billing model. Here at Corsica Technologies, we can help you optimize your Microsoft licenses in terms of user count, billing model, and discounted pricing. Contact us today to get started.