Microsoft 365 Price Increases and Mailbox Storage Changes in 2026

If your business relies on Microsoft 365, there are two upcoming changes that are worth planning for now rather than reacting to later:

• Pricing is increasing from July 2026
• Mailbox storage is becoming less restrictive across key plans

Microsoft has outlined these updates in its announcement on advancing Microsoft 365. While the detail sits behind that, the practical impact is straightforward. Your costs are likely to rise at renewal, and the amount of data sitting in your environment will continue to grow.

This matters because both directly affect how you budget, how you structure licences, and how you manage risk over time.

What’s Driving These Changes?

Microsoft 365 has moved well beyond being a set of apps like Outlook, Word, and Excel.

For most businesses, it is now the core platform for communication, collaboration, security, and increasingly AI-driven workflows.

At the same time:

• Cyber threats are more frequent and more sophisticated

• Businesses are storing and relying on more data than ever

• AI capabilities are being embedded into everyday tools

Microsoft is responding by building more of this into the core licences themselves.

That includes stronger email protection, additional device and user management capabilities, and deeper integration of AI features. The pricing changes reflect that broader scope, while the shift in storage reflects how email and data usage has evolved in practice.

Microsoft 365 Pricing Changes in 2026

From 1 July 2026, Microsoft will increase pricing across a range of commercial Microsoft 365 plans. These changes apply to new subscriptions and to renewals that take place after that date.

If you are already in a contract, pricing will remain the same until your next renewal.

To give a clearer view of what this looks like in practice, here are some of the confirmed changes:

Pricing shown is Microsoft list pricing and may vary slightly depending on agreement type and region.

Why this matters

Even relatively small per-user increases can have a noticeable impact across a full user base. More importantly, this is happening alongside changes to what is included in each licence, which means the value and purpose of each plan is shifting at the same time as the price.

Microsoft is expanding what is included in these plans, particularly across security, device management, and AI.

More specifically, Microsoft has confirmed that:

• Enhanced email security from Microsoft Defender for Office 365 Plan 1 is being added into Office 365 E3 and Microsoft 365 E3. This improves protection against phishing, malware, and malicious links across email and collaboration tools.

• URL and link protection is being extended to lower-tier plans such as Business Basic and Business Standard, helping prevent users from accessing known malicious websites directly from emails and documents.

• Additional endpoint and device management capabilities are being included through Microsoft Intune. This gives IT teams more control over devices, better visibility of risks, and the ability to resolve issues more quickly.

• Security Copilot capabilities are being rolled into Microsoft 365 E5, introducing AI-driven support for security teams through built-in agents across Defender, Entra, Intune, and Purview.

• Alongside this, Microsoft continues to expand Copilot functionality across core apps, including deeper integration with email, calendars, and document workflows.

Taken together, this means Microsoft 365 is no longer just a productivity suite. It is increasingly a combined platform for productivity, security, and AI-driven operations.

What you should do

The most important step here is to bring planning forward.

Start by reviewing your renewal dates now. If you have agreements due before July 2026, there may be an opportunity to secure current pricing and avoid immediate increases. 

Alongside this, review how licences are actually being used. In most organisations, there is a gap between what people are assigned and what they genuinely need. The goal is not simply to reduce cost, but to make sure licences align with how people work and what the business needs to protect.

It is also worth stepping back and looking at the wider picture. Microsoft is continuing to bundle more capability into its licences, particularly around security and management. In some cases, that creates an opportunity to simplify other tools or reduce overlap, which is often more effective than focusing purely on licence cost.

Finally, build these changes into your 2026 budget now. This avoids being forced into quick decisions later when renewals come up.

Microsoft 365 Mailbox Storage Changes

Alongside pricing, Microsoft continues to increase mailbox capacity and reduce storage constraints across its platform. Many enterprise plans already provide 100GB mailboxes, and the overall direction is clear. Storage is becoming less of a limitation.

For users, this means fewer issues with full inboxes, less need to manually archive emails, and a smoother experience when dealing with large volumes of data.

Why this matters

While this is a practical improvement, it also changes how data accumulates within your business.

Larger mailboxes mean more emails, attachments, and business-critical information being retained over time. Without clear structure, that can quickly become difficult to manage.

More data also increases exposure. If retention policies are unclear or backup processes are not in place, the risk is not just storage related, it becomes operational and compliance-related as well.

What you should do

This is a good opportunity to take control of how email data is managed, rather than simply benefiting from more space.

Start by reviewing your retention policies. Make sure data is being kept for a reason, whether that is compliance, operational need, or audit requirements, rather than just because there is capacity.

Check your backup and recovery approach as well. As the volume of data increases, so does the importance of being able to restore it quickly and reliably if needed.

It is also worth setting clear expectations with users. Larger inboxes often lead to a “keep everything” mindset, which is not always helpful. A simple set of guidelines around what should be retained can make a noticeable difference over time.

If you would like to review your current setup or map out what these changes mean for your business, we can help you work through it and decide what needs to happen now and what can wait.