Microsoft is making two separate changes to its 365 commercial offering in 2026: packaging changes that began rolling out in June, and price rises that took effect on 1 July. Most coverage treats these as the same event. They are not, and the packaging changes will affect more businesses than the price rise.
This is a practical breakdown of what is actually happening, who pays more, who pays less, and what to do before your next renewal. Written for AU SMBs of 20-200 staff with a current Microsoft 365 commercial agreement.
The packaging changes, rolling out from June 2026 and staged through the second half of the year, affect what is included in which SKU. Microsoft is moving certain features between plans, retiring some legacy bundles, and creating new bundles aligned with how customers actually use the products. None of this is a price rise. Some businesses will end up paying less; others will pay more because they will be pushed up a tier to retain features they currently have.
The pricing changes are the headline rate increases, and they are now in effect. Business Basic, Business Standard, E3, and E5 all rose on 1 July, while Business Premium held steady. We covered the details, and what to do if your renewal has already passed, in our post on the July 2026 price increases.
The packaging changes are the more strategic question. The pricing changes you can budget for. The packaging changes can quietly remove features you depend on if you do not pay attention.
The packaging changes touch Business Basic, Business Standard, Business Premium, the E3 and E5 enterprise tiers, plus some of the standalone add-ons like Teams Phone, Power Automate, and Power BI. Microsoft has historically used packaging revisions to push customers to the next tier up by moving popular features into higher SKUs. The 2026 changes are following the same pattern.
The specific feature movements are being staged through Microsoft’s commercial channel partners. The pattern that is clear: AI-adjacent features (Copilot integration points, advanced security, advanced compliance) are consolidating into Business Premium and E5. Mid-tier features (basic identity protection, threat protection) are moving up from Business Standard.
Three scenarios cover most AU SMBs.
You are on Business Standard today. Your effective cost went up with the July pricing change, and is likely to go up further because key features you currently rely on may move to Business Premium. Most Business Standard customers using SharePoint heavily, doing customer-facing email, or worrying about phishing protection should evaluate moving to Business Premium proactively rather than waiting for forced migration.
The maths: Business Standard at the new pricing is approximately $26.40 per user per month. Business Premium is approximately $33.00, and it did not rise in July. The $6.60 differential per user per month buys advanced threat protection, Intune device management, conditional access, and a richer compliance toolset. For most AU SMBs of 30+ staff, Business Premium is now the right baseline. Business Standard increasingly looks like a transitional product.
You are on Business Premium today. You are largely fine. Your licence price did not change in July, and the packaging changes are bringing more features into your tier, not removing them. The renewal conversation is whether E3/E5 is now justified, which depends on whether you need Microsoft Defender for Endpoint (you almost certainly do) and whether you have outgrown the Business plan user cap of 300.
You are on E3 or E5. Less impact from packaging, more impact from pricing. The E3 to E5 differential is widening. E5 adds Defender for Identity, Defender for Office 365 Plan 2, premium Power BI, and the advanced compliance suite. For AU businesses in regulated industries (legal, healthcare, finance) the E5 case is stronger than ever; for general professional services, E3 plus Defender for Business often makes more sense than full E5.
Microsoft 365 Copilot is licensed separately at approximately $42.90 per user per month on top of the base plan. The packaging changes do not bundle Copilot into the base SKUs, but they do change which base SKUs Copilot can be added to. The trend is clear: Copilot is being aligned to Business Premium and above.
If you are running Business Basic or Business Standard and considering Copilot, the practical answer is that you will need to upgrade the base plan first. The combined cost (base plan + Copilot) approaches enterprise tier pricing and most businesses we have advised end up choosing either Business Premium with Copilot for users who need it, or a more strategic enterprise AI approach (we covered the strategic option in our Claude versus Copilot analysis, and the current pricing across all three platforms in our ChatGPT vs Copilot vs Claude comparison).
The standalone add-on SKUs are being repackaged into two patterns. The first is consolidation: smaller standalone SKUs being merged into larger bundled offerings. The second is alignment to base SKU: certain add-ons (notably advanced Power Platform features) becoming available only on Business Premium or higher base plans.
For AU SMBs running Teams Phone, the practical impact is minor. Teams Phone with Calling Plan is staying as a standalone add-on, though the entry-level packaging changes slightly. For Power Automate Premium and Power BI Pro, expect them to become bundled into the right base SKUs rather than standalone purchases.
If you take no action before your renewal, three things happen. First, the new pricing applies automatically at your next renewal, and already applies if you are on month-to-month. Second, Microsoft will quietly migrate you to the new packaging at renewal, which may push you to a higher tier to retain features. Third, if you have legacy SKUs from before the Business plan family was introduced, those are being retired during the 2026 revision, forcing migration to current SKUs.
The risk is not the cost increase, which you can absorb. The risk is the feature loss if you let Microsoft pick the migration path for you. We have seen this pattern before with the Office 365 to Microsoft 365 transition in 2020; businesses that paid attention got the right plan, businesses that did nothing ended up with the wrong plan and had to fix it later.
We work with Perth and AU SMBs to optimise Microsoft 365 licensing at renewal. The process starts with an inventory of your current SKUs and actual feature usage, then a forward-looking plan that accounts for the packaging changes still rolling out, the new pricing now in effect, and your business growth over the next 12-24 months.
For our managed IT clients this is included as part of the vCIO function. For businesses without managed IT in place, we offer Microsoft 365 licensing reviews as a standalone engagement through our IT consulting team.
Inventory your current Microsoft 365 SKUs. Open the Microsoft 365 admin centre and list every plan and add-on you currently pay for, with user counts. If you do not know how to find this, your IT provider should be able to send it within an hour.
Map features you actively use against the SKU they sit in today. The biggest mistake at renewal is paying for features you do not use, or planning a downgrade that quietly removes features you do use. Get the actual usage data, not a guess.
Book a licensing review before your renewal. Contact us on 1300 EPIC IT. The packaging changes are being staged through the rest of 2026, so the time to plan is before the renewal email arrives, not after.
The packaging changes began rolling out in June 2026 and are being staged through Microsoft’s commercial channel partners over the second half of 2026. They are separate from the pricing changes, which took effect on 1 July 2026. The packaging changes affect which features are included in which SKU.
No. The pricing changes are rate rises across most Business and Enterprise plans that took effect on 1 July 2026 (Business Premium held steady). The packaging changes are separate, rolling out from June through the rest of the year, and affect which features sit in which SKU. The two combined can produce a larger effective cost increase than the pricing change alone, depending on which features move tier.
For most AU SMBs of 30+ staff, yes. Business Premium adds advanced threat protection, Intune device management, conditional access, and a richer compliance toolset for approximately $6.60 per user per month more than Business Standard, and Business Premium’s price did not rise in July while Business Standard’s did. The 2026 packaging changes are also moving popular features up from Standard to Premium, so the effective gap is narrowing whether you upgrade or not.
Legacy SKUs from before the Microsoft 365 Business plan family are being retired during the 2026 revision. Businesses still on these older plans will need to migrate to current SKUs. The migration is usually straightforward but the right target SKU depends on which features you actively use, so plan it rather than letting Microsoft pick the default.
No. Copilot remains a separate license at approximately $42.90 per user per month on top of the base plan, with a Copilot Business tier promotion running for SMBs through December 2026. The 2026 packaging changes affect which base plans Copilot can be added to, with Copilot increasingly aligned to Business Premium and Enterprise tiers rather than Business Basic or Business Standard.
For a typical AU SMB of 30-100 staff, a licensing review takes 2-3 hours of consulting time plus the time to gather usage data from your Microsoft 365 admin centre. Epic IT delivers the review within a week of receiving access to your tenant, with a written recommendation covering current state, optimised state, and the renewal action plan.
