Microsoft announced pricing increases across Microsoft 365, Power BI, Teams Phone, and server products — effective July 1, 2026. E3 jumps from $36 to $39 per user per month. E5 goes from $57 to $60. Most plans are looking at increases between 5% and 33%.
But here's what makes this one different from the usual annual price bump.
What Changed
Microsoft is collapsing its Enterprise Agreement discount tiers. If your org was at EA Level B, C, or D — meaning you earned volume discounts by being a bigger customer — those tiers are effectively being reset. Level B orgs face roughly 6% increases. Level C, around 9%. Level D? Up to 12%.
That's on top of the headline price increases.
So if you're a mid-size company that negotiated hard for volume pricing, you're getting hit twice: higher list prices AND smaller discounts. The net impact for some orgs could be 15-20% more than they're paying today.
Oh, and Microsoft is also floating an "E7" tier at up to $99/user/month for advanced AI and Copilot features. Because apparently $60/user/month wasn't enough runway to monetize the AI hype.
The Bigger Picture
This is part of a broader SaaS pricing wave. 73% of SaaS companies raised prices in 2025, with an average increase of 14.2%. SaaS costs per employee hit $9,100 by end of 2025, up from $7,900 in 2023. The industry-wide playbook is the same: bundle AI features, justify the increase, and hope customers are too locked in to leave.
Microsoft's move is notable because they're not just raising prices — they're restructuring how discounts work. That's a quieter, more structural change that won't make headlines the way a sticker price increase does, but it'll hit budgets harder.
The timing isn't accidental either. The White House is hosting Microsoft, Meta, Amazon, and Anthropic today to discuss a "Rate Payer Protection Pledge" — essentially asking tech companies to absorb AI infrastructure costs instead of passing them to consumers. If that pledge has teeth, expect these kinds of price increases to accelerate as vendors look for other places to recover costs.
What This Means for You
If you're renewing an Enterprise Agreement in 2026, your renewal quote is going to look different than you expect. Don't just compare the per-user price — look at what happened to your discount tier. That's where the real increase is hiding.
Start the renewal conversation early. And if you haven't modeled out what a 15-20% increase in Microsoft spend does to your margins, now's the time.
Trish @ StackDrift
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