Technology giant Microsoft (MSFT) has announced that it will increase the prices of its Office productivity software subscriptions for commercial and government clients starting on July 1, 2026.
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The Seattle-based company’s bundled Office applications, which include Word, Excel, PowerPoint and Outlook, have been facing increased competition in recent years from rivals such as Google parent company Alphabet (GOOGL) and others.
“We are continuously investing and innovating our platform for the future,” said Microsoft in a blog post. “In the last year, we released more than 1,100 features across Microsoft 365, Security, Copilot, and SharePoint.” The new features have added value to the suites and justify a price increase, said the company.
Microsoft’s Price Increase Breakdown
The price increases for Office subscriptions break down as follows:
- For small and medium-sized businesses, Microsoft 365 Business Basic will cost $7 per person per month, up from $6.
- Microsoft 365 Business Standard will be available for $14, up from $12.50.
- Microsoft 365 Business Premium will continue to cost $22.
- The entry-level Office 365 E1 offering for enterprises will still be sold for $10.
- Office 365 E3 will jump 13% to $26 from $23.
- The Microsoft 365 E3 package including Windows for enterprises will rise 8% to $39 from $36.
- The full-featured Microsoft 365 E5 will increase to $60 from $57.
Price hikes for Microsoft’s commercial Office subscriptions have been rare. In 2022, the technology giant hiked prices for its productivity bundles for the first time since launching the original Office 365 subscriptions back in 2011. Microsoft changed the name of Office 365 to Microsoft 365 in 2020.
Nearly 45% of Microsoft’s $77.7 billion in fiscal first-quarter revenue came from its Productivity and Businesses Processes unit, which includes Office.
Is MSFT Stock a Buy?
Microsoft’s stock has a consensus Strong Buy rating among 35 Wall Street analysts. That rating is based on 33 Buy and two Hold recommendations issued in the last three months. The average price target on MSFT stock of $629.98 implies 30.92% upside from current levels.
