Microsoft raised prices, but what are you actually paying for?

Microsoft 365 Price Increase: What Changed on 1st July, and Why the Headline Figure Undersells the Real Impact

On 1st July 2026, Microsoft increased prices for both new purchases and renewals of its M365 services across various plan tiers, from Business Basic to the comprehensive suite of commercial offerings. Depending on the licence type, businesses may see their IT costs hike by as much as 33%.

Although price increases can be uncomfortable, this update represents the perfect opportunity to reassess your current Microsoft 365 (M365) spending and usage by shifting the conversation with your finance director to the value of your current M365 licences.

Because the real question isn’t simply how your business will handle the increased costs, but whether you have a clear picture of what you are actually getting and using for the money you are already spending.

In this article, we will explore the implications and challenges Microsoft 365 price increases represent for businesses and provide insights on how to assess and better manage your M365 expenditures.

The Real Challenge Isn’t the Price Rise; It’s What You Are Missing About Your M365 Environment

For many businesses, this price increase wasn’t only a matter of higher costs. It has acted as a much-needed “wake-up call,” highlighting underlying issues within their M365 environments.

For example, the rapid deployment of Microsoft 365, accelerated by the shift to remote and hybrid work models, led many businesses to provision licenses at scale without the necessary governance framework. As a result, such businesses now lack visibility into how their licenses are truly utilised.

3 Critical Areas Where You May Be Losing Value

Here are three key areas where businesses typically lose value from their M365 expenditures:

• Underutilisation. Many licences allocated to users include an extensive set of tools and features that your workforce might not be aware of. For example, some employees may not leverage the real-time collaboration features offered by SharePoint, OneDrive, and Power BI. That means you could be paying for tools that could streamline processes and increase productivity, but your staff has never used them.
• Duplication. Businesses frequently purchase third-party tools for features already available within their Microsoft stack. For instance, a department might subscribe to a separate collaboration tool when they could do the job at no additional cost using Microsoft Planner or SharePoint.
• Misconfiguration. M365 licenses come packed with a wealth of features that often remain unused due to incorrect setup. Consider M365 high-tier plans. They include advanced security features such as identity protection and threat monitoring tools. If you have invested in such licences without configuring or enabling those features, you are leaving your business vulnerable to cyber threats. Moreover, you are also wasting money on capabilities you aren’t leveraging.

Many IT leaders suspect such inefficiencies within their M365 environment, but they struggle to prove it. That’s largely due to the lack of granular, cross-tenant visibility necessary to quantify waste and build a solid business case to present to their finance stakeholders.

That’s why, if you enter your renewal negotiations without comprehensive data on your users’ current M365 use, you risk paying inflated prices. Your decision will be based on incomplete information.

Underutilisation: The Licenses You Are Paying For That Nobody Is Using

Underused M365 licences are arguably the most visible and significant waste of resources within an M365 environment. They are ongoing expenses with hardly any benefit, and they often stem from several common scenarios:

• Inactive accounts. Employees who have left the business may still have active accounts (e.g., traditional email, shared mailboxes, or Copilot Chat). In this case, you are effectively paying for services that nobody is using. By deactivating these accounts, you will not only save money but also streamline your user management base.
• Unnecessary access. M365 licenses assigned to contractors or temporary workers may still be active even after those individuals are gone or no longer require access to critical data and applications. A regular access review will help you reduce costs and enhance your data security.
• Static seat counts. Imagine you have increased your M365 seat counts during periods of rapid growth or restructuring and never reviewed the licences to align them with current headcount. You have unknowingly accumulated unused licences. A simple audit will help you shrink costs by aligning your licences with current headcount.
• Users unfamiliar with enhanced features. According to CoreView, 44% of M365 licenses are either underutilised or oversized, leading to significant loss in investment value. Many users typically access only a fraction of the features included in their plans. For example, most employees rely solely on standard email and basic file storage, neglecting advanced productivity, collaboration and security tools available in higher-tier plans.

The Costs

From a financial perspective, every unused or underused seat renewed after the Microsoft 365 price increase deadline will add to your expenses.

On the other hand, CoreView found that by simply identifying and better managing unused licences, the average business could reduce M365 costs by 14%.

Effective license management and regular usage audits do more than improve your bottom line. They empower you to maximise the potential of M365, ensuring that investments align with your business’s evolving needs and goals.

So, consider when you last conducted an M365 usage audit. Would you be able to use that data to provide your Chief Financial Officer (CFO) with the percentage of M365 licenses that are truly generating a return on investment (ROI)?

Duplication: When Microsoft Already Offers What You Are Paying For Elsewhere

Duplication is the second major source of hidden waste in M365 environments. Businesses often subscribe to third-party software that includes features already available in M365, resulting in unnecessary expenses. Examples include:

• Video conferencing and collaboration tools. Your teams may subscribe to platforms like Zoom, Slack, or Webex for video calls and meetings, even though Microsoft Teams already offers the same functionalities.
• Project management software. Project teams might use tools like Trello or Asana alongside Microsoft Planner, which provides integrated task management features as part of the M365 suite.
• Document management platform. Departments might pay for standalone solutions like Box or Dropbox, even though SharePoint and OneDrive already offer robust file sharing and collaboration features. All without the hassle of juggling multiple logins.
• Security add-ons. Several businesses purchase separate security solutions for identity management or endpoint protection. That happens because they are unaware that M365 features (e.g., Azure Active Directory and Microsoft Defender) are already included in their packages and can meet those needs.

Why Does Duplication Happen?

This tool duplication often occurs due to:

• Third-party tools procured by individual departments rather than centrally. That leads to a patchwork of solutions that can complicate operations.
• Difficulty in identifying overlaps. Without a structured assessment and thorough feature comparison, detecting duplicate features and tools becomes challenging.
• Resistance to removing familiar tools. Employees may have a hard time transitioning to Microsoft-native tools, even if the alternatives offer similar, if not superior, functionalities.

The Benefits of Addressing Duplication

When you consider the costs of using various parallel tools across the business, these expenses can often exceed the Microsoft 365 price increase itself. Furthermore, rationalising your tool landscape goes beyond simple cost-cutting. It becomes a genuine opportunity that:

• Provides additional funding for key investments. By eliminating redundant tools, you can redirect funds towards more strategic initiatives that drive growth (e.g., new technology investments or user training).
• Reduces complexity and increases productivity. Fewer tools mean fewer systems for employees to learn and manage. Your teams will spend less time navigating various platforms and more time collaborating effectively and achieving their goals. That translated into increased productivity and better user experience.
• Enhances your business’s security posture. A streamlined software environment translates into a reduced attack surface. Simplify your tech stack. It makes it easier to monitor security threats and strengthens your business’s security framework.

Misconfiguration Is Costing You Security and Money. Here Is Why

In 2025, 45% of large businesses surveyed by CoreView experienced at least one security compliance incident due to misconfigured M365 features. That’s why a poorly governed M365 setup is not just inefficient and a financial drain; it’s a significant security risk.

Misconfiguration can arise from various factors, such as rushed deployment, insufficient handover from a previous IT provider, or gradual configuration drift. These factors can leave critical security capabilities tied to your inactive or improperly configured licence, increasing the risk of breaches and cybersecurity incidents.

M365 security features commonly misconfigured or under-utilised include:

• Incomplete conditional access policies. Fragmented permission policies can lead to unauthorised access. For example, if you have a policy that allows access to sensitive data from any device (i.e., personal tablets, smartphones and business laptops), an employee working on a confidential financial report from a public Wi-Fi hotspot could expose that information to the risk of a breach.
• Inactive Microsoft Defender for Business. If you don’t fully enable the capabilities of Microsoft Defender for Business, you are missing out on critical cutting-edge threat protection tools. Features like device control, endpoint firewalls and identity theft monitoring are essential for preventing malware, phishing attacks and ransomware. That means that your business may not be able to thwart malicious attacks that could compromise sensitive employee information.
• Ineffective data loss prevention (DLP) rules. Often, in M365, DLP rules are set to audit mode only and then forgotten. However, this passive approach can result in critical data breaches that could have been prevented. Consider a member of your staff accidentally posting your customers’ National Security numbers and other sensitive information in a third-party group chat. An active Microsoft DLP policy would have immediately blocked the post and alerted administrators, safeguarding your data from potential leaks.
• Vague sensitivity labeling. Many businesses create sensitivity labels but fail to implement them. That lack of enforcement can lead to improper handling of private information, increasing the risk of data leaks. For instance, a user might inadvertently share a document marked as “confidential” with a client.

These aren’t premium add-ons that require additional spending; they are features already included in the existing M365 licenses that you are already paying for. Thus, as compliance requirements heighten by leaving them inactive, you are losing twice:

1. Financially, by paying for features you don’t use.
2. In terms of security, leaving your systems open to vulnerabilities that cyber criminals could exploit.

A Correctly Configured M365 Is Paramount

In March 2026, hackers exploited gaps in M365 and Intune security configurations for endpoint and device management to wipe about 80,000 devices from Stryker Corporation. It was one of the most disruptive cybersecurity incidents in a healthcare company in history. The attack caused massive disruptions to order processing, manufacturing, and shipping, while impacting the business’s global internal network.

This incident clearly underscores the fact that a well-configured M365 environment isn’t a luxury. It’s a fundamental requirement for security and compliance. Proper M365 features configuration helps you mitigate risks and prevent costly financial and reputational consequences.

Unlock the Power of a Secure 365 Assessment Before Your Next Renewal Conversation

Acora’s Secure 365 Assessment is a consultant-led audit that provides the specific, cross-tenant usage data that many IT leaders currently lack. This assessment dives deep into your business’s use of Microsoft 365, detailing:

• Key insight into license usage. Identify which licenses are actively utilised, at what level, and by which user types.
• Redundancies. Spot duplication with third-party tools.
• Engagement metrics. Understand how engaged your teams are with key M365 features included in your licenses.
• Security exposures. Highlight areas where security misconfigurations are leaving your business vulnerable.

As you approach renewal discussions, these insights become invaluable. They empower IT and finance leaders to shift the conversation from last year’s seat count to the actual usage data that matters.

So, instead of viewing this Microsoft 365 price increase purely as a financial challenge, consider it an opportunity for realignment and efficiency. Partner with Acora to transform this potential budgetary challenge into a chance to create a more streamlined, secure and well-governed Microsoft 365 environment that aligns with your long-term business goals.

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