Microsoft 365: Smarter Tools, Bigger Costs Ahead

Microsoft is set to roll out significant updates to its Microsoft 365 suite, aiming to better support workplaces in an AI-driven world. These changes come with a catch: higher prices starting in 2026. Workplaces today face more security risks, increased tech demands, and the need to use AI responsibly. To address these challenges, Microsoft is enhancing its Microsoft 365 apps. Word, Excel, PowerPoint, Outlook, and OneNote will get smarter features. IT teams will also receive stronger tools to manage AI use, ensuring safer and more confident adoption of new tech. Security is another focus area. Microsoft is expanding protections and adding features to help tech teams diagnose device issues, prevent problems, and manage apps more efficiently. Higher-end plans, like Microsoft 365 E5, will include tools to control access to sensitive information and keep AI use within safe limits. Alongside these upgrades, Microsoft is raising prices for its commercial and government subscriptions. The company attributes these increases to its significant investments, including over 1, 100 new features released across Microsoft 365, Security, Copilot, and SharePoint in the past year. Price changes include Microsoft 365 Business Basic rising from $6 to $7 per person per month, and Business Standard from $12. 50 to $14. Business Premium remains at $22. Office 365 E1 stays at $10, while Office 365 E3 will increase from $23 to $26. Microsoft 365 E3 will rise from $36 to $39, and Microsoft 365 E5 will move from $57 to $60. Frontline worker plans will also see price hikes, with Microsoft 365 F1 rising from $2. 25 to $3, and Microsoft 365 F3 increasing from $8 to $10. Microsoft recently addressed reports claiming it lowered sales growth targets for certain AI products. The company clarified that these reports misrepresented how its sales quotas work and emphasized that overall AI quotas have not been cut. This clarification helped the stock recover from early losses. Additionally, Microsoft is investigating a bug that has prevented customers from downloading Microsoft 365 desktop apps since November 2. The issue was traced to a service update that disrupted license checks, and a fix is being tested before rollout. Updates are also in progress for issues affecting Excel attachments in the new Outlook client and other Microsoft 365 installation problems. Despite these challenges, Microsoft continues to perform well, gaining over 14% year-to-date, although it lags behind the NASDAQ Composite Index’s 22% returns.