Renewal anniversaries come around, the invoice arrives, and most businesses click ‘renew’ on the same licence mix they had the previous year. With Microsoft’s price rise landing on 1 July 2026, that habit gets more expensive than most businesses can afford. A proper Microsoft licence review at each renewal is one of the simplest ways to take control of that cost.

Why renewal is the right moment for a Microsoft licence review

The renewal date is the only point in the year when you can change what you’re paying for without penalty. Outside that window, you’re locked into the commitment made twelve or thirty-six months ago. Yet most renewals get treated as an admin task. The reseller sends a quote, finance signs it off, and the same licences carry on for another term.

That matters because Microsoft 365 estates rarely stay still. People leave. New starters get added. Roles change. Add-ons get bought to plug a specific gap. After a couple of years, the licence list reflects history rather than what the business needs now. A review at the anniversary point is the chance to reset that before you commit to another full term at the new prices.

What a Microsoft 365 renewal review looks at

Proper reviews start with usage data from the admin centre. Microsoft’s active users and product usage reports show which licences have been used over the past 30, 90 or 180 days, broken down by service. Someone might hold an E3 licence but only ever open Outlook on the web and a Teams chat. That’s a strong sign they could sit on a lower tier without any change to how they work.

The review then maps users to roles. Knowledge workers, frontline staff, executives and contractors all need different things. Putting everyone on the same SKU is easier to administer but usually more expensive than it needs to be. The output is a plan: who moves tier, who keeps their licence, and which add-ons can be retired.

The common gaps a Microsoft licence audit tends to find

A few patterns come up time and again on a Microsoft licence audit.

The first are dormant or unassigned licences. Someone leaves and their account gets disabled, but the seat keeps billing. Or licences sit in the tenant from a procurement spike that was never reassigned. These are the easy wins because removing them changes nothing for users.

Over-specified knowledge workers are the next pattern. E5 sits at the top of the stack with advanced security, compliance, analytics and voice features. Plenty of users are on E5 who would be well served by E3 or Business Premium, with features they’re paying for but not using sitting idle in the background.

Standalone add-ons that overlap with bundled features come up consistently. Microsoft Defender for Office 365 Plan 1 is being added to Microsoft 365 E3 and Office 365 E3 as part of the July 2026 packaging update, so a separate Defender subscription becomes a duplicate cost the day the renewal goes through.

Frontline staff on full knowledge-worker SKUs is the last big one. Shift workers, field engineers and reception staff often get added to the same E3 or E5 pool as office staff when F1 or F3 would cover what they need at a fraction of the cost.

Why the July 2026 price rise raises the stakes

The Microsoft 365 price update announced on 4 December 2025 takes effect on 1 July 2026. The headline numbers vary by SKU. Across the commercial suites, increases range from 5% on Microsoft 365 E5 up to 33% on Microsoft 365 F1, with some standalones and no-Teams Frontline variants moving higher. Microsoft 365 Business Basic rises 16%, Business Standard 12%, Microsoft 365 E3 8%, and Office 365 E3 13%. Business Premium and Office 365 E1 prices hold

For a 50-user business on Business Standard, the price rise alone adds around £750 a year. The headline figure is manageable in isolation, but the problem is what it compounds. If 10% of your seats are dormant, 15% are on the wrong tier, and a couple of add-ons duplicate what’s now bundled, the price rise applies to all of that waste at the new rates. You end up paying more for licences you weren’t using in the first place.

Existing customers stay on current pricing until their next renewal after 1 July 2026, which gives most businesses a clear runway to review what they have before the new rates take hold.

Turning a renewal into a commercial decision

A renewal is the moment where licensing stops being a tech decision and becomes a commercial one. The technical question of which SKU contains which feature is solvable. The harder question is whether the bill you’re about to sign off reflects how the business works.

That’s the case for treating Microsoft licensing optimisation as a proper review rather than a tick-box exercise. The output should be a clear picture of who needs what, what the spend looks like at the new prices, and where the easy savings are. You then have a baseline to track against next year.

If you’d like a structured look at your licence mix before your next renewal, we run a free, no-obligation Microsoft licence review for London and Essex businesses. You’ll get a usage-based view of what you’re paying for, where the gaps are, and what changes could lower your Microsoft 365 spend without affecting your team. Get in touch to book yours.

Frequently asked questions

When does the Microsoft 365 price increase take effect?

Microsoft announced the change on 4 December 2025, with new pricing effective 1 July 2026. Existing customers stay on current pricing until their next renewal after that date, so the impact depends on when your renewal anniversary falls.

Can I lock in current Microsoft 365 prices before the increase?

In many cases, yes. Renewing before 1 July 2026 can secure existing pricing for the next annual term. Whether that’s the right move depends on your current licence mix, not only the price.

What’s the difference between Microsoft 365 E3 and E5?

E3 covers core productivity, security and management for knowledge workers. E5 adds advanced security, compliance, analytics and voice features. The price gap is meaningful, and most businesses only need E5 for a subset of users.