Microsoft 365 Got More Expensive in 2026: Cheaper SKU Moves (Australia)

Microsoft confirmed price increases on several core Microsoft 365 commercial plans from 1 July 2026. The headlines have been written about a dozen times. What almost none of them tell you is the bit that actually matters: what do you change in your tenant so the rise costs you less? This is a practical guide to the SKU moves we'd make for an Australian business right now — before the new prices land at your next renewal.

A note on numbers up front. Microsoft published the increases in USD (roughly +$1 to +$3 per user per month, depending on plan), and at the time of writing had not posted the final AUD list pricing for every SKU. So every dollar figure below is an indicative AUD list — confirm at purchase, ex GST. The strategy doesn't change either way; the relative gaps between plans are what you're optimising, and those hold.

First, work out what's actually rising

The increases are concentrated on the lower and mid commercial plans. Reporting across Australian partners puts Business Basic up around 16% and Business Standard up around 12%, with the Enterprise E3 and E5 plans seeing more modest rises. Notably, Microsoft 365 Business Premium has been held steady — indicatively around AU$32.90 per user/month (indicative AUD list — confirm at purchase) — while new security and management capability has been folded into it.

That last point is the whole game. When the cheaper plan goes up and the better plan stays flat, the price gap between them narrows. Several of the smart moves below are simply a consequence of that compression.

Move 1: Business Standard → Business Premium (the gap just shrank)

This sounds backwards — moving people to a more expensive plan to save money — so stay with us. Business Standard is rising (~12%) while Business Premium is held. The dollar gap between the two has narrowed to only a few dollars per user per month.

Now look at what you're paying for separately today. If you've bought Microsoft Defender for Business, Intune device management, or Entra ID P1 (conditional access) as standalone add-ons on top of Standard, you are very likely paying more in total than Premium would cost — because Premium bundles all three. After 1 July, with Standard up and Premium flat, that arithmetic tilts further toward Premium.

What we'd actually do: pull a licence report, find anyone on Business Standard who also carries a standalone security or device-management add-on, and model them on Premium instead. In a lot of SMBs this is a net saving and a security upgrade in the same move.

Move 2: The Business Premium vs E3 decision

Business Premium is capped at 300 users; the Enterprise E3 plan has no cap and is the default reflex for larger or 'we're an enterprise now' organisations. But E3 is materially more expensive per seat, and a large share of Australian mid-market tenants under 300 users sit on E3 out of habit, not need.

If you're under 300 seats and your reason for E3 is something you can name — say, a specific compliance or analytics feature E3 carries that Premium doesn't — keep E3 for the users who need it. If you can't name the reason, that's the tell. Premium delivers comparable security tooling for SMBs at a lower seat price, and it's the plan Microsoft chose to protect from this increase.

What we'd actually do: split the user base. The handful who genuinely need an E3-only capability stay on E3; everyone else moves to Premium. Mixed-licence tenants are completely normal and supported — you do not have to put the whole company on one SKU.

Move 3: Reassess your frontline and light-touch users

Every organisation has people the licensing model quietly overpays for: the warehouse and floor staff who need email and Teams on a shared device but never open Excel on a laptop; the casual who logs in twice a month; the shared-mailbox role that doesn't need its own paid seat at all.

Microsoft's frontline (F-series) plans exist precisely for deskless and shift workers and are a fraction of a knowledge-worker seat. Shared mailboxes up to the storage limit don't need a licence. Genuinely external people probably belong as guests, not licensed users. When core-plan prices rise, the cost of having these users on the wrong plan rises with them — so this is the moment to clean it up.

What we'd actually do: tag every active user by how they really work — knowledge worker, frontline, occasional, or shared-function. Map each tag to the cheapest plan that genuinely covers the job. This single pass routinely finds more savings than any clever negotiation, because it stops you paying enterprise prices for letterbox usage.

Move 4: Consolidate the bolt-on add-ons

Tenants accumulate add-ons the way garages accumulate cables. A standalone Defender here, an Entra P1 there, a third-party backup or email-security tool bought before Microsoft's own capability matured. After a few years no single person can tell you the full stack, and some of it now duplicates what your base plan already includes — especially if you're moving people to Premium under Move 1.

What we'd actually do: export the full add-on inventory and line it up against what each user's base plan already entitles them to. Cancel the duplicates. Where an add-on overlaps a Premium-included feature, that's a straight removal. This is unglamorous licence hygiene, but it's found money, and a price rise is the cleanest excuse you'll get to do the audit.

Move 5: Drop the unused Copilot seats

Microsoft 365 Copilot is one of the largest line items per seat in the catalogue — indicatively around AU$33 per user/month for the SMB 'Copilot for Business' offer and around AU$45 per user/month on the enterprise annual commitment (indicative AUD list — confirm at purchase, ex GST). It's also the add-on most likely to be sitting idle, because plenty of organisations bought a block of seats during the launch enthusiasm and never drove real adoption.

Copilot is worth paying for when it's used. The waste is the assigned-but-dormant seat. Microsoft 365 admin centre and the usage reports will tell you who has a Copilot licence and whether they've touched it in the last 30 to 90 days. Reclaim the seats nobody's using and reassign them only to people who'll actually lean on it — that's a real per-seat saving every month, and it makes the seats you keep look far better value.

Put it together: a one-page plan

1. 1Pull a full licence and add-on report for the tenant — every user, every plan, every bolt-on.
2. 2Tag each user by real usage: knowledge worker, frontline, occasional, or shared-function.
3. 3Move Standard-plus-security-add-on users to Business Premium where the maths favours it.
4. 4Re-test every sub-300-seat E3 user against Business Premium; keep E3 only where there's a named reason.
5. 5Route frontline, casual and shared roles to F-series, guest access or shared mailboxes.
6. 6Cancel add-ons that duplicate what the base plan now includes.
7. 7Reclaim dormant Copilot seats and reassign only to active users.
8. 8Time the renewal last, once the target plan mix is locked.

None of this requires you to leave Microsoft 365 or accept a worse stack. The point is that a price rise is a forcing function: it's the cleanest moment to delete the waste that's been quietly accruing in your tenant. Do the audit once, properly, and most Australian businesses can absorb the 1 July increase — and a fair few come out paying less than they did before it.