Bigger mailboxes, higher prices, and a quiet reshuffle of what’s included. Here’s what actually changed on 1 July — and the add-on licences you may now be able to cancel.
Published: 2 July 2026
On 1 July 2026, Microsoft changed both the price and the contents of most Microsoft 365 plans. The announcements are spread across blog posts, message-centre notices and licensing documents, and most of the coverage is either Microsoft’s own marketing or licensing-consultant jargon. Here’s the plain-English version: what changed, who it affects, and what’s actually worth doing about it.
The headline change for SMEs: mailboxes on Microsoft 365 Business Basic, Business Standard and Business Premium are doubling from 50GB to 100GB per user.
That sounds like a storage footnote. It isn’t — it’s a billing change in disguise. Until now, when a user hit the 50GB ceiling, the standard fix was to buy them an Exchange Online Plan 2 licence, which carried a 100GB mailbox. Plenty of businesses have a scattering of these add-ons, bought over the years one full mailbox at a time, and long since forgotten.
If the only reason a user holds Exchange Online Plan 2 is mailbox size, that spend is now redundant. Worth knowing before you cancel, though: Plan 2 also carries a handful of features the Business plans don’t — unlimited archiving and legal hold among them. If a mailbox is under a retention or litigation-hold requirement, check before you cut. If it was purely about space, cut away.
The July increases hit most plans: at Microsoft’s list prices, Business Basic rose from $6 to $7 per user per month, Business Standard from $12.50 to $14, Microsoft 365 E3 from $36 to $39 and E5 from $57 to $60. Those are US dollar list prices — UK pricing follows the same shape with currency adjustment, and what lands on your invoice depends on your agreement and partner.
The notable exception is Business Premium, which didn’t move. Given it was already the strongest-value plan for most SMEs — the security and device-management features are what the Basic and Standard plans lack — standing still while everything around it rose makes the case for it stronger, not weaker.
One detail that matters more than the percentages: if you’re on an annual term (most businesses are, under Microsoft’s New Commerce Experience), the new pricing doesn’t hit mid-term — it applies at your next renewal. So the practical question isn’t “what happened on 1 July” but “when do we renew, and is our plan mix right before that date locks in another year”.
Microsoft 365 E3 (and Office 365 E3) gain a meaningful set of inclusions: Microsoft Defender for Office 365 Plan 1 — the layer that adds serious phishing, malicious-link and attachment protection to Exchange Online — plus Intune Plan 2, Intune Remote Help and Intune Advanced Analytics, with the Intune capabilities rolling out from October 2026.
The practical translation: things that used to be separate line items are now in the licence. If you’re paying for Defender for Office 365 as an add-on, or for a third-party remote-assistance tool that does what Remote Help does, that’s duplicated spend from the moment the rollout reaches your tenant. This is the recurring pattern of Microsoft licensing — the suite slowly absorbs the add-ons — and the savings only materialise if someone actually goes looking for the overlap.
E5 receives everything E3 does, plus three pieces of the Intune Suite that were previously paid add-ons: Endpoint Privilege Management, Enterprise Application Management and Microsoft Cloud PKI — and Microsoft Security Copilot is being added to E5 over the coming months.
Endpoint Privilege Management deserves a plain-English explanation, because it addresses one of the most common real-world weaknesses we see: users with permanent local admin rights on their laptops, usually granted years ago so one awkward application would install. Standing admin rights are a gift to malware. EPM replaces them with just-in-time elevation — the user requests, the specific action is approved, and nobody walks around with permanent admin. If your business is on E5, this is a genuinely significant security capability arriving without a new invoice.
Worth being clear the other way, too: these three did not come to E3. An E3 organisation that wants Endpoint Privilege Management still needs the Intune Suite add-on or a move to E5 — which is exactly the kind of comparison worth doing properly at renewal rather than by rule of thumb.
Every commercial plan — Business and Enterprise — now includes Microsoft 365 Copilot Chat with awareness of your inbox and calendar, plus agents in Word, Excel and PowerPoint, and URL safety checks in email and Office apps.
This is real capability arriving free, and worth switching on thoughtfully rather than universally. Copilot’s access follows the user’s access — so if your file permissions are a mess, Copilot becomes a very efficient way for staff to find documents they were never meant to see. Tidy governance first, clever assistants second. (We’ve written more about that on our practical AI page.)
Audit your add-ons. List every Exchange Online Plan 2, Defender for Office 365, and remote-assistance or privilege-management tool you pay for separately, and check each against what your plans now include. This is where the money is.
Check your renewal date. The price rises land at renewal, not mid-term. If your renewal is close, get the plan mix right first — upgrades, downgrades and add-on cancellations are cheapest to sort before you lock in another year.
Revisit the E3 vs E5 maths if you’re Enterprise. The gap narrowed in capability terms and changed in price terms. The answer differs by business; the point is that last year’s decision is out of date.
If you’re on Business Premium, smile. Same price, bigger mailboxes, more Copilot — and if you’re on Basic or Standard because nobody ever reviewed it, the July reshuffle is a good prompt to check whether Premium’s security features are worth the step up. For most SMEs we assess, they are.
The quiet story of every Microsoft licensing update is the same: the suites keep absorbing the add-ons. The savings are real — but only for businesses where someone actually reads the changes and walks the licence list. That’s the job.
Not sure what your tenant is actually licensed for — or paying for twice? Our Microsoft 365 service includes exactly this kind of licence housekeeping, or start with a free health check and we’ll look for you.
The savings only land if someone walks the licence list. That’s exactly what our Microsoft 365 service does — or start with a free health check.