A New Era for Microsoft 365 Licensing

Microsoft recently announced a number of important changes to its licensing portfolio. These include the introduction of a new leading enterprise licence, ‘Microsoft 365 E7’, pricing changes across core suites, ongoing separation of Teams from core licences, and extra functionality being bundled into existing subscriptions.

At the centre of this announcement is their new license, E7. Microsoft is positioning this as a new bundled model that brings together productivity, AI, identity, security, compliance, and agentic automation in a single SKU. In practical terms, it marks a shift in how Microsoft wants enterprise customers to buy and govern Microsoft 365 going forward.

This will be most relevant for:

• Customers already on E5 + Copilot
• Organisations investing heavily in AI and automation
• Security and compliance-led environments

But really, it’s for those that take business innovation seriously.

For those who want to understand more about E7 and the broader Microsoft 365 licensing changes, keep reading…

1. Microsoft 365 E7 – The New SKU in Town

Microsoft officially unveiled the M365 E7 Licence on 9 March 2026 – with general availability landing on 1 May 2026.

Described as the new “Frontier Suite”, according to Microsoft’s announcement, E7 includes Microsoft 365 E5, Microsoft 365 Copilot, Agent 365, and Microsoft Entra Suite, alongside advanced Defender, Intune, and Purview capabilities (what a selection!).

Microsoft has set the retail price at $99 per user per month, although UK pricing has not yet been formally published.

Features:

Key Takeaways:

Microsoft is using E7 to package AI productivity, AI agents, advanced identity governance, and security tooling into one commercial model. That makes it particularly relevant for organisations that are already buying multiple add-ons separately, or that expect AI and security governance to become more tightly linked over the next 12 to 24 months.

For customers already using E5 and planning wider Copilot adoption In my opinion, E7 may become a cleaner commercial route.

For security and compliance-led organisations, the bigger story is Microsoft’s direction of travel – identity, AI, and security are increasingly being positioned as one end-to-end ecosystem.

2. Wider Pricing Changes – Effective 1 July 2026

Microsoft has confirmed that updated list pricing for commercial Microsoft 365 suites will take effect on 1 July 2026. Microsoft says these changes will apply globally, with local market adjustments.

As standard, Microsoft has published pricing changes in USD, but as a rough guide, we’re expecting UK pricing to look something like the following:

• Business Basic: $6 to $7 – £4.44 to £5.19
• Business Standard: $12.50 to $14 – £9.26 to £10.37
• Microsoft 365 E3: $36 to $39 – £26.67 to £28.89
• Microsoft 365 E5: $57 to $60 – £42.22 to £44.44
• EMS E3: $10.60 to $12 – £7.85 to £8.89
• Entra ID P1: $6 to $7 – £4.44 to £5.19

For organisations focused on enterprise licensing, the E5 increase is modest in percentage terms, but it sits alongside a broader commercial change. Microsoft is raising prices while also adding more built-in AI, security, and management features into the suites themselves.

In other words, Microsoft is not just charging more – it is trying to shift customers towards broader bundled value.

3. Teams Licensing – Continued Separation from Core Suites

Microsoft now offers Microsoft 365 and Office 365 suites both with Teams and without Teams globally. Microsoft says these licensing changes were put in place worldwide from 1 November 2025, extending the earlier regional separation of Teams from core suites.

In practical terms, this means “no Teams” SKUs are now a normal part of Microsoft’s licensing structure, and Teams is increasingly treated as a separate purchasing decision rather than a default inclusion. For some organisations this may reduce cost where Teams is not required. For others, it adds another layer to renewal and procurement planning, particularly where multiple Microsoft bundles and add-ons are already in use.

4. What’s Being Added into Existing Licences

Alongside E7, Microsoft is also increasing the value of existing licences by bundling more functionality into them from 2026. Microsoft has confirmed that:

• Office 365 E3 and Microsoft 365 E3 will include Defender for Office 365 Plan 1
• Office 365 E1, Business Basic, and Business Standard will include URL checks
• Microsoft 365 E3 and E5 will gain additional Intune capabilities
• Microsoft 365 E5 customers will receive Microsoft Security Copilot as part of the suite rollout, with embedded agents across Defender, Entra, Intune, and Purview workflows

For E5 customers specifically, Microsoft has said the suite will include Intune Endpoint Privilege Management, Intune Enterprise Application Management, and Microsoft Cloud PKI, alongside Security Copilot rollout.

In my opinion, this just reinforces E5’s role as Microsoft’s core advanced security and management baseline, even before E7 is considered.

The practical implication is that licence comparisons are becoming less static. The value of E3, E5, and E7 is now shifting not just because of price, but because Microsoft is actively changing what each suite contains.

5. New and Renamed SKUs

Microsoft is also continuing to simplify how security and compliance products are packaged and described.

Key naming changes include:

• Microsoft Defender Suite – previously Microsoft 365 E5 Security
• Microsoft Purview Suite – previously Microsoft 365 E5 Compliance

Microsoft has also introduced:

• Microsoft Defender Suite for Microsoft 365 Business Premium
• Microsoft Purview Suite for Microsoft 365 Business Premium

Copilot remains an add-on for most core Microsoft 365 licences, but it is included by default in E7. Microsoft is also clearly pushing more bundled Copilot-led propositions as part of its broader AI commercial strategy.

Taken together, these changes suggest Microsoft is trying to reduce fragmentation at the top end of the stack while still preserving modular options lower down.

That is useful from a product simplification perspective, but it does mean organisations need a clearer view of what they already own, what is being added automatically, and where they may be duplicating spend through legacy add-ons.

For ROI-conscious organisations, a licensing optimisation review shouldn’t be optional, it should be firmly on the roadmap for the next 12 months.

What This Means in Practice

For organisations already investing in Microsoft 365 security, compliance, and AI, the key licensing question is no longer just “What does E5 include?” It is increasingly:

• What is now being added into E5 automatically?
• Where does E7 reduce add-on complexity?
• When does bundling improve value, and when does it simply move cost into a different line item?
• How will AI, identity, and security governance need to evolve alongside licensing?

E7 will not be the right fit for every organisation. But it does show where Microsoft is heading – towards a licensing model that brings together AI productivity, AI agents, identity governance, and advanced security in one enterprise package.

For customers already on E5 + Copilot, organisations investing heavily in AI and automation, and security and compliance-led environments, that direction matters now rather than later.

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We’re Here to Support You

These changes are not just commercial. They affect how organisations plan for AI adoption, identity governance, compliance, security operations, and long-term Microsoft 365 cost control.

If you are reviewing your Microsoft 365 roadmap, preparing for renewal discussions, or simply want to understand what these changes could mean for your organisation, contact us here.