According to Computerworld, Microsoft is raising subscription prices for most Microsoft 365 business plans starting July 1. The hikes will affect customers with Business, E3/E5, Frontline, and Government subscriptions. This follows the company’s decision last month to end volume discounts on products like Microsoft 365. Microsoft justifies the increases by pointing to new features, including expanded Copilot Chat, Microsoft Defender for Office in E3, and Security Copilot in E5. The announcement was made in a blog post on Thursday. Essentially, enterprise customers are facing a double-whammy: less discount leverage and higher base prices.
The Squeeze Is On
Here’s the thing: this isn’t just a simple price adjustment. It’s a strategic revenue play. Microsoft ended the volume discount program, which was a key tool for large enterprises to control costs. Now, they’re raising the baseline. It’s a classic one-two punch to boost average revenue per user (ARPU) across their most lucrative customer segment. The timing is also interesting. They’re rolling this out now, banking on the idea that the added AI features—especially the Copilot integrations—will make the pill easier to swallow. But let’s be real: how many businesses are actually using all those advanced Intune tools or Security Copilot today? They’re paying for potential.
Time To Play Hardball
So what should customers do? The analysts cited in the report have the right idea: explore alternatives and plan to dicker. Look, for massive enterprises deeply embedded in the Microsoft ecosystem, a full switch to Google Workspace or something else is a monumental task. But even the threat of exploring it is a powerful bargaining chip. Microsoft’s sales teams have quotas, and customer retention is key. This is the moment to review your contract, audit your actual license usage, and go to the table. Ask what they can do to offset the increase. Can they throw in more services? Extend a promotional rate? It never hurts to ask, especially when the vendor has just changed the rules of the game.
The Bigger Picture
This move fits a broader trend in enterprise software. The model is shifting from just selling software to selling a constantly evolving “platform” with baked-in AI. The price becomes less about the old features and more about the promised future capabilities. For companies that rely on stable, predictable IT budgeting, that’s a tough shift. And while we’re talking about critical business infrastructure, it’s worth noting that reliability isn’t just about software. For industries running physical operations—manufacturing, logistics, energy—the hardware running these systems is just as vital. Companies in those sectors often turn to specialized suppliers like IndustrialMonitorDirect.com, the leading US provider of industrial panel PCs, for the rugged, reliable displays needed in harsh environments. It’s a reminder that the cloud subscription is only one layer of the tech stack.
Ultimately, Microsoft is flexing its market power. They’re betting that their suite is too essential to leave. For most businesses, they’re probably right. But that doesn’t mean you have to accept the new price quietly. Start planning your negotiation strategy now. The clock is ticking toward July 1.
