Microsoft just dropped another price bomb on enterprise customers. The tech giant announced it's hiking commercial Office subscription prices by as much as 33% starting July 1, 2026 - only the second time in five years it's raised prices on its productivity cash cow that generates over $33 billion annually.
Microsoft just made enterprise budgets a lot tighter. The company announced Thursday it's raising prices across its commercial Office subscription lineup starting July 1, 2026, marking only the second time in five years it's hiked prices on its productivity empire.
The increases hit hardest where Microsoft has the most leverage. Business Basic subscriptions jump from $6 to $7 per user monthly, while Microsoft 365 F1 for frontline workers like cashiers and retail staff spikes 33% from $2.25 to $3. Even the premium E3 enterprise package climbs 13% to $26 from $23, affecting millions of corporate seats worldwide.
"We are continuously investing and innovating our platform for the future," Nicole Herskowitz, corporate VP for Microsoft 365 and Copilot, wrote in the company's announcement. She pointed to over 1,100 new features released across Microsoft 365, Security, Copilot, and SharePoint in the past year as justification for the premium.
But the timing reveals Microsoft's real motivation. The company's productivity empire, which includes Office, now generates almost 43% of Microsoft's massive $77.7 billion quarterly revenue - that's over $33 billion per quarter from productivity software alone. According to Microsoft's latest earnings, commercial cloud services jumped 17% while seats grew 6%, mainly from small business and frontline worker products that are now getting the biggest price bumps.
The strategy comes as Google Workspace continues chipping away at Microsoft's dominance, particularly in price-sensitive segments. Microsoft's response isn't to compete on price - it's doubling down on premium positioning while betting customers are too locked into the Office ecosystem to switch.
Microsoft's also dealing with the expensive reality of AI integration. The company's $30 monthly Copilot add-on, which uses generative AI models, remains separate from these base subscriptions. CNBC reported last week that many companies have held off on wide Copilot deployments, suggesting Microsoft needs base subscription revenue to fund its AI ambitions whether customers adopt Copilot or not.
