Microsoft raised the prices of Office business subscriptions in July, with a price increase of up to 33% for frontline worker products

Microsoft plans to raise the prices of its Office software for business and government customers next year, marking the company's second adjustment to commercial subscription pricing since 2022.

On Thursday, Microsoft announced that it will increase the prices of its Office software for business and government customers starting July 1 next year. Among these, the price of the basic package for frontline workers will jump by 33%, with some enterprise-level packages seeing increases of over 10%.

Microsoft stated that over 1,100 new features have been released in the past year, adding value to the Office suite. Notably, this price increase does not include the $30 per month Microsoft 365 Copilot AI assistant service, which remains available as a standalone product.

In recent years, Office applications, including Word, Excel, PowerPoint, and Outlook, have continued to face competitive pressure from Google. The new pricing structure will affect cost expenditures for customers ranging from small businesses to large enterprises and government clients such as the U.S. Department of Defense.

Specific Price Increase Plan, Frontline Employee Packages See the Largest Increase

According to the plan released by Microsoft, the price adjustments cover multiple product tiers from small businesses to large enterprises, although some basic package prices remain unchanged.

For small and medium-sized enterprises, the monthly fee for Microsoft 365 Business Basic will increase from $6 per user to $7; the Business Standard will rise from $12.5 to $14. However, the Business Premium priced at $22 will maintain its original price.

In the enterprise product category, the entry-level Office 365 E1 package will continue to have a monthly fee of $10. However, the price of the Office 365 E3 package will increase from $23 to $26, a rise of 13%.

The price of the Microsoft 365 E3 package, which includes the Windows operating system, will increase from $36 to $39, an increase of 8%. The most comprehensive Microsoft 365 E5 package will see a slight adjustment from $57 to $60.

In this price adjustment, the packages aimed at frontline workers, such as cashiers, see the most significant increases.

The subscription price for Microsoft 365 F1 will rise from $2.25 to $3, a staggering increase of 33%; while Microsoft 365 F3 will increase from $8 to $10. Government clients, including the U.S. Department of Defense, will also face similar percentage increases.

Price Adjustment History and Market Background

Price adjustments for commercial Office subscriptions are not frequent.

Since the initial launch of Office 365 subscriptions in 2011, Microsoft has only conducted its first major price increase in 2022.

In 2020, Microsoft rebranded Office 365 to Microsoft 365. In January of this year, Microsoft announced an increase in prices for the consumer Office suite Nicole Herskowitz, Vice President of Microsoft 365 and Copilot Business, stated in a blog post:

We are continuously investing and innovating for the future of the platform. Over the past year, we have released more than 1,100 features in Microsoft 365, security, Copilot, and SharePoint.

She wrote:

These new features add value to the product suite.

In many cases, businesses can receive discounts; however, reports indicate that Microsoft has begun to scale back direct bulk transaction discounts for certain customers.

Financial Impact: AI Features Independent, Productivity Business Remains Pillar

This price adjustment highlights the central role of the productivity software business in Microsoft's financial landscape, while also reflecting its strategy of positioning AI features as an independent growth engine.

Financial data shows that in Microsoft's most recent fiscal quarter, nearly 43% of its total revenue of $77.7 billion came from the "Productivity and Business Processes" segment, which includes Office.

In October, the company disclosed that revenue from Microsoft 365 commercial cloud services grew by 17%, with the number of subscribers increasing by 6%, driven primarily by products aimed at small and medium-sized enterprises and frontline workers. Analysts believe that this targeted price increase is expected to further strengthen this growth momentum.

At the same time, the $30 per month Microsoft 365 Copilot add-on service is excluded from this price adjustment, maintaining its independent pricing as a premium AI feature.

Reports indicate that some companies have begun to widely promote Copilot, while others are hesitant about expanding deployment. Analysts believe that until the cost-effectiveness of AI tools is fully clarified, businesses will continue to have divergent attitudes toward investment in them