If you’re like most SMBs, chances are Microsoft licensing already takes up a significant portion of your annual IT budget. So when Microsoft announces another price rise (with just six months’ notice), it naturally creates concern, especially if your organisation has already finalised next year’s financial plans.
But this increase isn’t happening in isolation. Alongside the uplift, Microsoft is rolling out new functionality, capacity upgrades, and security improvements, some of which offer genuine cost-saving opportunities for SMBs — if they act early.
s Babble’s Modern Workplace Product Manager, I’ve been tracking the changes closely and working with UK businesses to understand what the impact will be — and more importantly, how to mitigate any surprises.
This article breaks down what’s changing, what’s new, and the steps SMBs should take well before 1 July 2026 to protect their budgets.
Microsoft has introduced several price rises in recent years, but this latest one comes with the kind of short notice that can make planning difficult (especially for SMBs that lock budgets well in advance). For enterprises, new features can justify some of that increased cost. But the story is a little different for SMBs: there isn’t as much new functionality coming to SMB licences compared with enterprise.
With that said, there are meaningful updates, particularly around email storage and security, that could help offset some of the impact. The key is knowing where those gains are hiding – let’s have a look.
By far, this is the most tangible improvement for SMBs. Business Basic, Business Standard and Business Premium mailboxes will all increase from 50GB to 100GB per user.
For many SMBs, this unlocks a direct saving. Right now, organisations that outgrow the 50GB limit often upgrade users to Exchange Online Plan 2, which includes a 100GB mailbox and costs about £5.98 per user/month.
With Microsoft now doubling mailbox capacity across core business licences, most SMBs no longer need to purchase Plan 2 at all (even after the Business Basic and Standard price rises). This is one of the rare moments where a Microsoft increase may actually help reduce total spend, because it still works out cheaper overall.
Security improvements are also being released for lower-tier plans, including:
For Business Premium users, additional improvements include:
While these may not be as extensive as what’s coming to E3 and E5, they’re meaningful additions for SMBs that have historically had to rely on third-party tools
The uplift varies between 3% and 30%, depending on the licence.
Examples include:
It’s clear Microsoft is nudging customers toward Business Premium. And understandably so, given that it remains the best value SKU for most SMBs because it combines productivity, management, and security into one package.
Learn more about the pricing update here.
Now this is the important part. According to Gartner’s Microsoft 2026 Price Increase Analysis, customers who renew before 1 July 2026 can lock in their existing pricing for another 12 months, and still receive all the new features when they roll out. This gives SMBs budget stability, time to adjust for future increases, and the flexibility to right-size licences before committing to a new term.
If businesses wait until their natural renewal date:
In other words, doing nothing is the most expensive option.
Gartner reports that 40% of organisations lack visibility into how their M365 licences are actually being used.
We see common issues such as:
On the second point, we recently had a customer who exceeded the 300 Business Premium cap. We mapped departmental needs, shifted some users to E3, and rebalanced licences so the organisation retained necessary functionality without overspending.
From working with hundreds of businesses, we see the same issues repeatedly:
1. Auto-renewing without reviewing licences
This is the biggest trap. Licence needs evolve, features change, and Microsoft continuously adjusts SKUs (often without SMBs noticing).
2. Paying for third-party tools already covered by Business Premium
With more security and management tools being added, duplication is increasingly common.
3. Assuming Microsoft licences are “set and forget”
In reality, licensing now changes so frequently that annual reviews are essential. It’s why our mantra for 2026 is: “Renew with intent.”
We are supporting customers through three key areas:
1. Licensing Expertise
Our Microsoft specialists analyse usage, identify overspend, remove duplication, and ensure customers are only paying for what they need.
2. Microsoft 365 Value Service
We are firm believers in ongoing optimisation, not just once a year at renewal. So, we ensure that you’re constantly getting the most value from your M365 environment.
3. Renewal Toolkit
We give organisations everything they need to plan early, model their costs, and make informed decisions — without time pressure.
What makes our support different is simple: we don’t just resell licences, we help you understand them.
Microsoft’s latest price rise is unavoidable, but the financial impact doesn’t have to be.
Doing nothing leads to unnecessary cost increases, duplicated tools, and missed opportunities to lock in lower pricing.
As a Modern Workplace Product Manager at Babble, my job is to ensure you stay ahead of licensing changes, avoid overspend, and get full value from the tools you’re already paying for.
If you want to get ahead of the July 2026 changes, the best move you can make in the next 30 days is to book a free SmartCheck scan with us. We’ll help you:
If you’re feeling blindsided by Microsoft’s constant updates, you’re not alone. Come and talk to us! We’ll keep you up to date so you stay productive, secure, and in control of your costs.