Microsoft 365 Price Increases and Mailbox Storage Changes in 2026

What Microsoft 365 Customers Need To Know About The 2026 Changes

Microsoft has confirmed a number of pricing and licensing changes across Microsoft 365 Business and Enterprise plans, with changes due to take effect from 1 July 2026 for new purchases and renewals.

Across many Microsoft 365 licences, pricing is expected to increase by approximately 8-17%, depending on licence type. At the same time, Microsoft is increasing mailbox storage limits across Microsoft 365 Business Basic, Standard and Premium plans from 50GB to 100GB per user.

While annual pricing adjustments from Microsoft are fairly typical, this year’s changes are particularly notable because the gap between Microsoft 365 Business Standard and Business Premium continues to narrow.

For many organisations, the key consideration is no longer simply the cost of Microsoft 365 licensing, but whether their current licence mix still reflects the tools, security controls, and management capabilities they are already paying for elsewhere.

What’s Changing From July 2026?

Microsoft’s pricing changes will apply to new purchases and renewals from 1 July 2026 onwards.

Microsoft has indicated the following approximate increases across key Microsoft 365 and Office 365 licences from July 2026:

• Microsoft 365 Business Basic: approximately 16-17%

• Microsoft 365 Business Standard: approximately 12%

• Microsoft 365 Business Premium: currently expected to remain unchanged

• Office 365 E1: currently expected to remain unchanged

• Office 365 E3: approximately 12%

• Microsoft 365 E3: approximately 8%

• Microsoft 365 F1 / F3 licences: potentially higher increases depending on licence type

Alongside these pricing changes, mailbox storage for Microsoft 365 Business Basic, Standard and Premium licences will increase from 50GB to 100GB per user.

Existing customers will remain on their current pricing until their next renewal date.

Why This Matters

For many businesses, these changes are about more than just increased licensing costs.

Microsoft continues to expand the security, device management, compliance, and AI functionality included within Microsoft 365, particularly within Business Premium.

As the pricing gap between Business Standard and Business Premium narrows, the additional value included within Premium becomes increasingly relevant, especially for organisations already investing in separate third-party security or device management tooling.

• Business Premium now includes capabilities such as:

• Advanced security and threat protection

• Device management through Microsoft Intune

• Conditional access and identity controls

• Endpoint security and compliance features

• Expanding AI and management functionality across the Microsoft platform

For some organisations, this may create an opportunity to simplify tooling, improve security coverage, or reduce overlap between separate products and services already being purchased elsewhere.

Comparing Microsoft 365 Business Licences

As the pricing gap between Microsoft 365 Business Standard and Business Premium continues to narrow, more organisations may find it worthwhile reviewing the additional functionality included within Premium licences.

While Business Basic and Standard remain entirely suitable for many organisations, particularly those with lighter requirements, Business Premium includes a broader range of security, device management, and compliance capabilities alongside the core Microsoft 365 productivity tools.

Below is a quick overview of some of the key differences between Microsoft 365 Business plans:

For organisations already using separate endpoint security, device management, or compliance tooling, these changes may also create a useful opportunity to review whether their current licensing structure still reflects how those services are being delivered and managed across the business.

Microsoft 365 Mailbox Storage Changes

Microsoft is also increasing mailbox storage from 50GB to 100GB per user across Microsoft 365 Business Basic, Standard and Premium licences.

For many organisations, this is a practical improvement that may reduce the need for additional mailbox storage or archiving licences that were previously introduced to work around storage limits.

However, larger mailboxes also increase the amount of business data being retained over time.

The additional mailbox capacity is ultimately a positive change for organisations that rely heavily on Outlook and email-based workflows. Larger mailboxes support longer-term data retention, reduce pressure on users to manually archive or delete emails, and can improve auditing and historical record keeping.

However, organisations should also consider the wider impact on backup storage and retention requirements as mailbox sizes grow over time. While most users are unlikely to fill an additional 50GB immediately, mailbox data naturally accumulates over the long term, particularly in businesses with high email usage or large attachment volumes.

As mailbox sizes continue to grow, it is important for organisations to review:

• Retention and archiving policies

• Backup and recovery processes

• Long-term data management practices

• Compliance and governance requirements

The goal should not simply be to store more data, but to ensure that data remains manageable, secure, and aligned with operational and compliance requirements.

What Organisations Should Review Before Renewal

Although there is no immediate action required, these changes do create a good opportunity for organisations to review their licensing strategy ahead of future renewals.

Areas worth reviewing include:

1. Your current licence mix

Many organisations continue renewing the same licences year after year without reassessing whether they still reflect how teams work today.

With the pricing gap between Standard and Premium reducing, this may be a good opportunity to review whether additional security, management, or compliance capabilities now represent better overall value.

2. Existing third-party tooling

If your organisation already invests in separate security, endpoint management, or compliance tools, it may be worth reviewing whether some of these capabilities are now included within Microsoft 365 Business Premium.

3. Future budgeting and renewals

While existing customers will retain current pricing until renewal, organisations should still factor expected increases into future budgeting and renewal planning ahead of July 2026.

4. Email retention and storage management

With mailbox limits increasing to 100GB, this is also a sensible time to review how email data is retained, archived, protected, and managed across the business.

Final Thoughts

Microsoft’s 2026 licensing changes reflect the continued expansion of Microsoft 365 beyond productivity applications alone.

As Microsoft continues building more security, management, compliance, and AI functionality into the platform, organisations may benefit from reviewing whether their current licensing structure still represents the best fit commercially and operationally.

For some businesses, these changes will simply result in higher renewal costs. For others, they may create an opportunity to simplify tooling, improve security capabilities, and gain better long-term value from their Microsoft investment.

If you would like support reviewing your Microsoft 365 licensing, upcoming renewals, or wider Microsoft strategy, our team would be happy to help.