MDaemon Technologies Blog

On July 1, 2026, Microsoft will raise list prices across most of its commercial Microsoft 365 products. This is the second consecutive year your email and productivity solution has gotten more expensive, and that has many businesses reevaluating their options.

For a lot of small and midsize teams, the per-seat jump looks manageable. The annual number is where it starts to become problematic. And the three-year number is where it becomes a real budget conversation, which is exactly the conversation worth having before your next renewal date instead of after it.

Here is what is changing, why “do nothing” is the most expensive option on the table, and how the math looks if you own your email server instead of renting it.

What’s actually changing on July 1

Microsoft announced the increase in December 2025. The new commercial pricing takes effect July 1, 2026, and it applies to new and renewing customers globally.

The SMB-relevant numbers, per user, per month, on an annual commitment:

• Business Basic: $6 to $7 (about 17%)
• Business Standard: $12.50 to $14 (about 12%)
• Office 365 E3: $23 to $26 (about 13%)
• Microsoft 365 E3: $36 to $39 (about 8%)
• E5 tiers: roughly 5 to 8%

Two plans are holding flat: Business Premium ($22) and Office 365 E1 ($10).

At the top of the increase range, some of Microsoft’s frontline-worker plans (the lower-cost F-series licenses built for shift and deskless staff) rise by as much as 40-plus percent. And for organizations that lost their Enterprise Agreement volume discounts in November 2025, the effective increase can land closer to 20% once those two changes combine.

The renewal-timing trap

The new prices hit new and renewing customers on July 1, 2026. Existing customers stay at current pricing until their first renewal on or after that date. So nothing happens to your bill on July 1 itself.

Here’s the problem. Because nothing changes that day, it is easy to do nothing. Then your renewal quietly comes up in, say, September, which means the one window you had to lock in current pricing has closed without you ever making a decision.

The bigger question most admins skip

The larger question is: why is your email a cost that climbs every single July, with no end state where you own anything?

That is the structural difference between renting infrastructure and owning it. With a subscription, you pay forever, the number is set by the vendor, and the only certainty is that next year’s bill is higher than this year’s. There is no version of that arrangement where you stop paying and keep what you built.

Self-hosted email is the other model. You run your own mail server on a license you buy once, on hardware or a VM you already control. The cost is front-loaded and largely fixed instead of recurring and rising. A modest annual software maintenance plan (formerly called upgrade protection) keeps the license current and entitled to new versions, but it is a small, predictable fraction of per-seat subscription pricing and never resets what you own. Your per-seat count stops being a meter that Microsoft reads every month.

Subscription vs. perpetual, in real numbers

Let’s look at the numbers.

Take a 150-seat team on Business Standard. At the new rate of $14 per user per month, that is $25,200 a year, or $75,600 over three years, before the next increase lands (and based on the last two years, another one will). That figure buys you exactly nothing at the end. Cancel and you walk away with empty hands.

Now run the same 150 seats against a self-hosted MDaemon Email Server deployment. With MDaemon, you purchase a perpetual license for your user count, keep it current with an annual maintenance plan, and run it on infrastructure you already own. The license does not reprice itself every July, and the server is yours to keep.

Here is how three years actually compare at 150 mailboxes, a representative mid-size team. The Microsoft figures use the new rates taking effect July 1, 2026; the MDaemon figures are new-license prices that already include your first year of Software License Renewal.

At 150 mailboxes, three years on MDaemon with both add-ons totals $5,501, roughly 7% of the $75,600 Microsoft 365 Business Standard would cost over the same period, a difference of more than $70,000. When the term ends, the subscription leaves you with nothing to keep, while the MDaemon license is still yours.

Pricing notes: MDaemon figures come from the MDaemon Email Server purchase price calculator at mdaemon.com. Year one includes Software License Renewal; the three-year totals assume renewals at MDaemon’s standard rates: 50% of a new license for the Email Server, 20% off for ActiveSync, and no renewal discount for AntiVirus. Microsoft 365 uses the new commercial list price effective July 1, 2026 on an annual commitment. Exchange Server SE is an estimate only: Microsoft does not publish list pricing, it requires ongoing Software Assurance, and Windows Server and hardware are not included.

If you were already eyeing the exit

If you have been weighing your options since Microsoft set end-of-life dates for Exchange Server, remember you have other choices. Moving to Microsoft 365 is the default Microsoft wants you to take, but it is not the only option. A self-hosted MDaemon deployment keeps your email on-premises, under your control, on a licensing model that does not climb every year.

If that is your situation, our migration guide walks through moving off Exchange without routing everything through a rising subscription.

Take action before the Microsoft price hike

The worst response to a price increase is to absorb it without changing anything, which is also the most common response. Do not be the team that pays the new number and captures none of the offsetting value.

Before your renewal date, try a free trial of MDaemon. If you need help, you’ll find setup guides and other helpful information on our Literature page.