Microsoft 365 price increase 2026: what to do now

Microsoft raised list prices on several Microsoft 365 plans again in July 2026. If your renewal falls anywhere in the next twelve months, that increase is about to show up on your invoice, multiplied by every seat you currently pay for. And here is the uncomfortable part: most organizations are not paying for seats they need. They are paying for seats nobody uses, seats on the wrong plan, and seats nobody remembered to cancel when someone left.

A price increase does not create waste. It just makes existing waste more expensive. A tenant with 8 percent unused E3 licenses was mildly wasteful last year. At the new list price, that same 8 percent is a bigger number on a bigger invoice, and it is one of the few cost levers you can actually pull before renewal, because most of the rest of the bill is fixed by the vendor.

This is not a doom piece about Microsoft pricing. It is a practical response plan: what to check, in what order, before your next renewal conversation, so the increase lands on a lean tenant instead of a bloated one.

Why this price increase matters more than the last one

Microsoft has adjusted list prices before, and organizations absorbed it without much drama. Two things make the 2026 increase worth a proper look rather than a shrug.

First, licensing costs compound. If your Microsoft 365 spend is already the largest or second-largest line item in your IT budget, a percentage increase on a large base is a large absolute number. A five percent increase on a 500-seat E3 estate is a real five-figure sum, not rounding error.

Second, most organizations have accumulated licensing debt over several years of hybrid work, reorganizations, and rushed onboarding. Nobody sat down and designed the current license allocation. It grew, seat by seat, decision by decision, and nobody went back to clean it up. A price increase is a forcing function to finally look at that debt, because the cost of ignoring it just went up.

The seats that quietly cost you money

A few patterns show up in almost every tenant we look at:

• Leavers who still hold a license. The account is disabled or the person is gone, but the license assignment was never revoked.
• Over-licensed users. Someone on E5 who only uses email and Teams, because E5 was the default onboarding template three reorganizations ago.
• Duplicate or legacy add-ons. A Power BI Pro or Visio license assigned during a pilot that ended a year ago.
• Dormant accounts. Users who have not signed in for months but still count as a paid seat every renewal cycle.

None of these are dramatic on their own. Together, across a few hundred seats, they add up to a meaningful chunk of your license bill, and now that chunk is more expensive.

Step 1: find out what you actually have

You cannot fix what you cannot see, and the Microsoft 365 admin center only tells you part of the story. It shows how many licenses you bought and how many are assigned. It does not tell you whether an assigned license is actually being used.

That distinction lives in Entra ID sign-in activity, specifically the signInActivity property available through Microsoft Graph. It records the last interactive and non-interactive sign-in per user. Cross-reference that against your assigned licenses and you get a real picture: who is holding a license and genuinely using it, and who is holding a license that has not been touched in months.

Build this into a habit rather than a one-off exercise. A 90-day inactivity window is a reasonable starting point: long enough to cover extended leave and sabbaticals, short enough that you are not carrying dead seats for a full year.

What to pull together before renewal

At minimum, before any renewal negotiation, you want:

1. Total licenses purchased, per SKU, from your contract.
2. Total licenses assigned, per SKU, from the admin center.
3. Real usage per assigned license, from Entra sign-in activity.
4. A list of leavers whose licenses were never reclaimed.
5. Contract end dates and auto-renewal terms, so nothing renews silently.

This is not a big-bang IGA project. It is a spreadsheet-level exercise that most IT teams can run in an afternoon, once they know where to look.

Step 2: match the plan to the person

Once you know who is using what, the next question is whether they are on the right plan. This is the part organizations skip most often, because reassigning licenses feels riskier than leaving things alone. It usually is not.

A simple rule of thumb: if someone has not touched an E5-only feature (advanced compliance, Defender for Office add-ons, Power BI, whatever justified the upgrade) in 90 days, they probably do not need E5. Move them down, and reassess if their role changes.

Signal	Likely action
No sign-in for 90+ days	Reclaim the license entirely
Active, but only using mail and Teams	Downgrade from E5/E3 to a lighter plan
Leaver, account disabled	Reclaim immediately, do not wait for renewal
Duplicate add-on from a finished pilot	Cancel the add-on
Growing team, no waste found	Leave as is, plan for renewal growth

Doing this by hand, per user, does not scale past a few dozen people. Doing it as an ongoing policy, tied to real usage data, does.

Step 3: stop the leak at the source

Cleaning up existing waste is a one-time win. Stopping new waste from forming is the part that actually protects you from the next price increase, and the one after that.

The root cause of most license waste is manual, ad hoc assignment. Someone joins, IT copies a colleague's access "to be safe," and the license comes along for the ride even if the new hire's role does not need it. Someone leaves, and the offboarding checklist has a line item for license removal that gets missed under deadline pressure.

Attribute-based access automation fixes this at the source. When access and group membership are driven by a person's department, job title, and location rather than by whoever set up the last similar account, the license assignment tends to follow the same logic instead of drifting. Fewer manual group and role changes means fewer stray licenses accumulating in the background.

How ServiceChanger fits into this

ServiceChanger is a Microsoft-native access automation platform built for Entra ID, on-prem Active Directory, Intune, and Microsoft 365. Two parts of it are directly relevant to a price-increase response plan.

The license module reads real sign-in activity from Entra ID, keeps a registry of your contracts and seats, and flags unused licenses, over- and under-utilized plans, and contracts approaching their renewal date. It gives you the insight and the right-sizing recommendation, the "here is what to look at before renewal" list, without you having to build Graph queries by hand every quarter. The actual license assignment and revocation stays a Microsoft admin action, ServiceChanger's job is to make sure you know exactly what to change and when.

The access automation core (ABAC) is what prevents the waste from reappearing. Group and role membership in Entra ID and on-prem AD is assigned automatically from attributes like department and job title, with a self-service portal for anything that needs an owner's approval. That keeps access, and the licenses attached to it, aligned to who someone actually is in the organization, instead of drifting further with every manual change.

FAQ

Does the Microsoft 365 price increase 2026 apply to every plan? Microsoft has adjusted list prices across several commercial plans, but the exact percentage and which SKUs are affected vary by agreement type and region. Check your specific contract and Microsoft communication rather than assuming a flat increase across the board.

How much can license cleanup realistically offset the increase? It depends on how much waste your tenant has accumulated. Organizations that have never run a formal cleanup often find a meaningful share of assigned seats are unused or over-provisioned. Even a modest cleanup can offset a good part of a price increase; the exact number depends on your starting point.

Does ServiceChanger change my Microsoft licenses for me? No. ServiceChanger reads real sign-in activity from Entra ID, tracks your contracts and seats, and reports which licenses are unused, over-utilized, or expiring. The actual assignment or revocation of a license SKU is done in Microsoft, by your team.

Is this only relevant right before renewal? No, though renewal is when the cost becomes visible. License drift happens continuously as people join, move, and leave. Running the check quarterly, or automating access so drift does not accumulate in the first place, keeps the bill predictable year-round.

Next step

A price increase is a good moment to see exactly what you are paying for. The ServiceChanger license module shows you unused seats, over-licensed users, and upcoming contract dates based on real Entra ID activity, so your next renewal starts from a clean baseline. Book a demo or read more about identity and access management and browse the licenses and Microsoft 365 topic pages.