On 1 July, Microsoft 365 prices went up across most business plans. Google did the same thing to Workspace last year. Both increases were explained by AI features, and in neither case was anyone asked whether they wanted them.
tl;dr:
What happened? Microsoft raised prices on most Microsoft 365 commercial plans on 1 July 2026, by between 5% and 33% depending on the plan. It says the money pays for new capabilities, led by Copilot Chat improvements and security tooling. Google got there first, folding Gemini into every Workspace Business and Enterprise plan in January 2025 and lifting the base price to cover it.
What is the risk for UK businesses? Generative AI has stopped being something you buy and become something you are billed for. Neither suite sells a business plan that strips the AI out and costs less, and the new price arrives automatically at renewal. That is what pricing power looks like in a market with two serious suppliers.
What is the solution? Work out which parts of the suite you actually use, then pay for those. If most of your spend is storage, documents and collaboration, a UK provider covers that ground without the AI surcharge, and without your files sitting under US jurisdiction.
What changed on 1 July
Microsoft announced the increase on 4 December 2025, and it took effect on 1 July 2026. Here are the UK list prices, per user per month on an annual commitment.
| Plan | Before | After |
|---|---|---|
| Business Basic | £4.90 | £5.75 |
| Business Standard | £10.30 | £11.55 |
| Business Premium | £18.10 | £18.10 |
| Microsoft 365 E3 | £33.10 | £35.85 |
| Microsoft 365 E5 | £52.40 | £55.15 |
| Frontline F1 | £1.90 | £2.55 |
| Frontline F3 | £6.20 | £7.75 |
Business Premium is the one that held still. Everything else moved, and the steepest rises land on the Frontline plans, up by roughly a quarter and a third. Those are the licences bought for shop staff, care workers and people out on site, which is to say the cheapest seats belonging to the people paid least. Business Basic, where a lot of small UK firms start, is up about 17%.
Nobody gets moved the moment the clock strikes July. Microsoft applies the new price at your next renewal, which is why plenty of businesses have not felt this yet. It is still coming.
What the money buys
Microsoft’s licensing page sets out what has been added. Business plans get Copilot Chat enhancements, including inbox and calendar awareness, agents in Word, Excel and PowerPoint, better URL protection, and 50GB more email storage. Enterprise plans get Security Copilot on E5 plus extra Defender and Intune features.
Some of that is useful on its own terms. Fifty gigabytes of mailbox is fifty gigabytes of mailbox, and the security additions are real. But the headline is AI, and the AI is the part you cannot decline. There is no Business Standard without Copilot Chat, sold cheaper to people who would rather not have it. The Register pointed out that home subscribers were at least offered a route back to a cheaper plan without the AI, assuming they could find the option. Business customers were not offered one at all.
The same pattern shows up in how the software arrives. Microsoft’s own deployment documentation is blunt about it: “Windows devices with the Microsoft 365 desktop apps automatically install the Microsoft 365 Copilot app. The installation happens in the background and doesn’t interrupt the user.” Admins can stop it, and Microsoft documents how, but it takes seven steps through a settings pane most people have never opened, in the Microsoft 365 Apps admin center rather than the Microsoft 365 admin center. Microsoft adds a tip warning you not to confuse the two.
One more line from that page is worth reading twice. Customers in the European Economic Area cannot enable automatic installation at all. The UK left the EEA, so UK businesses get the default that Europe was spared.
Google got there first
None of this is unique to Microsoft. On 15 January 2025, Google announced that “the best of Google AI” was now included in Workspace Business and Enterprise plans. The standalone Gemini add-ons, which had cost around $20 per user per month, were discontinued. The base price went up by roughly $2 per user per month instead. Existing customers were moved across from 17 March 2025, or at their renewal.
Google framed this as a saving, and for anyone already buying the Gemini add-on it genuinely was. If you were not buying it, and had no plans to, you got a price rise and an AI assistant you had not asked for. Business Standard now costs £11.80 per user per month in the UK on annual billing. Administrators can switch individual Gemini features off. They cannot buy the plan without them.
So in the space of eighteen months, the two suites that between them run most UK offices have both made generative AI a compulsory line on the bill.
This is what a concentrated market looks like
We wrote last month about the CMA’s cloud market investigation: three years of work, a finding that the market is not competing properly, a recommendation from the regulator’s own inquiry group to impose binding rules on Microsoft and AWS, and a board decision to accept voluntary promises instead. This is what that looks like when it reaches your invoice.
In a competitive market, a supplier who bundles in something you did not ask for and raises the price has to worry about losing you. In a market where two firms hold most of it, and where leaving means moving your email, your files, your identity system and everyone’s habits at the same time, they do not have to worry very much. The increase goes out, the renewal gets signed, and the maths was never close.
None of which makes Copilot or Gemini bad products. Plenty of businesses will use them properly and get their money back. The problem is not the AI. The problem is the missing no. Paying for something you chose is a purchase. Paying for something you cannot refuse is a tax.
Working out what you actually need
The useful exercise before your next renewal is a boring one: list what your business genuinely uses. For a lot of UK firms the honest answer is email, somewhere to keep files, something to write documents and spreadsheets in, and a way to share all of it with colleagues and clients.
If email is the anchor, you will probably keep a mail provider, and we are not going to pretend otherwise. Bigby does not do email. But storage, documents and collaboration are the parts that hold the most data and the least lock-in, and they are the parts you can move without hiring a consultancy to do it.
That is what we built Bigby.drive for. Encrypted file storage on UK servers, documents, spreadsheets and presentations you can edit in the browser, and shared spaces with proper access control. Our Office tier with 500GB per person is £9.99 per user per month on annual billing, and you can read the whole price list without booking a call with anyone. We do not scan your files, we do not train AI on them, and there is no assistant reading over your shoulder that you have to go and find a setting to turn off.
We are equally clear about where we lose. If you need the full depth of Excel, or Teams, or one vendor for everything, our honest comparisons with OneDrive and Google Drive say so plainly. If you handle client files or confidential records for a living, our pages for professionals go through the obligations in more detail.
What we will promise is this. When our prices change, it will be because our costs changed, and we will tell you which ones. We support WebDAV specifically so that you can leave if that answer ever stops being good enough.
If your renewal notice has landed and the number has moved, join the waiting list or send us a message. We would rather earn the switch than inherit it.