Microsoft 365 Prices Are Going Up July 1st 2026 — Here's What New Mexico Businesses Need to Know
- Brandon Alsup
- 2 days ago
- 5 min read
If your business uses Microsoft 365 — and there's a good chance it does — your monthly IT costs are about to increase. On July 1st, 2026, Microsoft is rolling out its most significant pricing update since 2022, and it affects most commercial plans. Whether you are a medical practice in Albuquerque, a municipal office in southern Colorado, or a small business in West Texas, this change is worth understanding before it shows up on your bill.
Use our calculator below to estimate changes to your Microsoft licensing costs.
First, a quick reminder: What is Microsoft 365?
Microsoft 365 is the subscription service that powers the digital workday for millions of businesses. It's what gives your team access to Word, Excel, PowerPoint, and Outlook. It includes Teams for meetings and messaging, SharePoint for internal file sharing, and OneDrive for cloud storage. For many organizations, it's also the backbone of email, document collaboration, and increasingly, security and device management. If your staff opens a spreadsheet, sends a work email, or joins a video call — they are almost certainly using Microsoft 365.
What's actually changing on July 1st?
Microsoft announced these pricing changes on December 4, 2025, with the increases taking effect July 1, 2026. Here's a straightforward breakdown of the most common business plans:
Microsoft 365 Business Basic — increases from $6 to $7 per user per month, a 16.7% increase
Microsoft 365 Business Standard — increases from $12.50 to $14 per user per month, a 12% increase
Microsoft 365 Business Premium — remains at $22 per user per month, no change
Office 365 E3 — increases from $23 to $26 per user per month, a 13% increase
Microsoft 365 E3 — increases from $36 to $39 per user per month, roughly 8%
Microsoft 365 E5 — increases from $57 to $60 per user per month
Monthly billing vs. annual billing: the difference matters more now
This is where a lot of businesses quietly pay more than they need to.
Microsoft offers two billing structures: pay month-to-month (no contract), or commit to an annual subscription. Even before July 1st, the monthly option costs more — annual plans typically save 10 to 15% compared to monthly billing.
After July 1st, that gap gets worse. The price increases apply to both payment structures, but the percentage increase compounds on top of the existing monthly premium.
If your business is currently on monthly billing for convenience, you are now paying two premiums: one for the flexibility, and one for the price increase.
The practical question to ask is whether you actually need month-to-month flexibility. For most stable businesses with consistent staff counts, an annual commitment costs less and delivers the same service. If your team size fluctuates significantly — seasonal contractors, high turnover — monthly billing may still make sense for a portion of your licenses. But it's worth doing the math before your next renewal.
What Microsoft says you're getting in return
Microsoft isn't just raising prices. The increases come alongside expanded capabilities including Copilot Chat enhancements, Defender for Office security features, more mailbox storage for Business plans, and new Intune device management capabilities for E3 and E5. HBS -
For most small and mid-sized businesses, the security additions are the most relevant part. Microsoft 365 Defender for Office — which helps identify malicious emails, links, and attachments before they reach your staff — is being added to Office 365 E3 and Microsoft 365 E3. That's a meaningful upgrade for any business that has been relying on basic email filtering.
The honest take: some of these additions will be valuable to your business. Others you may never use. Which brings us to the most important question.
Are you paying for the right licenses?
A price increase is actually useful timing to ask a question many businesses avoid: do your current licenses match what your team actually needs?
Here are a few practical ways to check:
Look at inactive users.
Log into the Microsoft 365 Admin Center (admin.microsoft.com) and navigate to Users > Active Users. Any account that hasn't logged in recently — a former employee, a contractor who finished a project — is a license you're paying for and getting nothing from. Remove those before the price increase kicks in.
Check for mismatched plans.
Not everyone in your organization needs the same license tier. A receptionist who only uses email and basic documents doesn't need the same plan as your operations manager who handles compliance reporting. Downgrading users who don't need premium features reduces your per-seat cost.
Verify your license count against your actual headcount.
It's surprisingly common for businesses to be paying for 40 licenses when they only have 32 active employees. That gap grows invisibly over time as staff turns over and licenses aren't properly decommissioned.
Ask your IT partner to pull a usage report.
If you work with an MSP, they should be able to show you which licenses are assigned, which are active, and whether your current plan tier is appropriate. If they can't answer that question quickly, that's worth noting.
What to do before July 1st
If your Microsoft 365 subscription renews after July 1st, the new pricing will apply at your next renewal. Microsoft
That means now is the right window to take stock.
A few concrete steps:
Find out when your renewal date is. Check with whoever manages your IT — your internal IT staff, your MSP, or your Microsoft billing dashboard directly.
Audit your current license count and plan tiers before that date.
If you're on monthly billing, evaluate whether switching to annual makes sense for your situation.
Ask whether any new features being added — particularly on the security side — replace tools you're currently paying for separately.
A note for Kosh customers
We're already monitoring these changes and will be reaching out ahead of your renewal. If you have questions before then — or if you're not sure what plan you're on or how many licenses you're carrying — reach out. A 15-minute conversation now is worth far more than an unwelcome surprise on your July invoice.
One last thing worth saying plainly:
pricing changes like this tend to sort businesses into two groups. Those who pay the increase because they didn't review their setup, and those who used it as an opportunity to clean up waste, right-size their plans, and come out ahead. A small amount of attention right now puts you in the second group.
For a direct link to Microsoft pricing source:
Disclaimer
The information contained in this communication is intended for limited use for informational purposes only. It is not considered professional advice, and instead, is general information that may or may not apply to specific situations. Each case is unique and should be evaluated on its own by a professional qualified to provide advice specifically intended to protect your individual situation. Kosh is not liable for improper use of this information.