As part of their twice early price harmonisation efforts, Microsoft have announced price decreases for “Commercial Cloud” products in certain European currencies from February 1st, 2026:
Microsoft reduce cloud prices in Europe
Microsoft announce 2026 price increases
Following Microsoft’s Ignite 2025 conference, they have announced some feature additions to Microsoft 365…and some price increases to go along with it.
Copilot Chat
This free entry point to Copilot, included with various Microsoft products, will have new features to work with Outlook inboxes and calendars and standard access to Agent Mode. There will also be additional management and security capabilities around Copilot Chat.
Enhancing Copilot Chat makes sense as an entry point into M365 Copilot…effectively a “freemium” model albeit in a product you’re already paying for.
Addition Security Features
Microsoft Defender for Office 365 Plan 1, currently only available with Microsoft 365 E5, is being added to:
- Microsoft 365 E3
- Office 365 E3
It appears that all features are being added but that is to be confirmed.
Furthermore, URL checking features are being added to Office 365 E1, Business Basic, and Business Standard. The Business SKUs (including Premium) are all getting 50GB email inboxes too.
Boosting the security capabilities of lower SKUs is a welcome move, given the importance of security in today’s tech world.
Endpoint Management
A range of Microsoft Intune products are being added to both Microsoft 365 E3 and E5, these are:
- Intune Plan 2
- Intune Advanced Analytics
- Intune Remote Help
While M365 E5 will also receive:
- Intune Endpoint Privilege Management
- Enterprise Application Management
- Microsoft Cloud PKI
Security Copilot and Microsoft 365 E5
The Microsoft announcement also talks about the adding of Security Copilot SCUs to Microsoft 365 E5. I covered that a few weeks ago here – https://cloudywithachanceoflicensing.com/2025/11/20/microsoft-security-copilot-scu-included-with-microsoft-365-e5/
2026 Pricing
Of course, these new features come at a cost. Pricing for the included suites will be increasing as of July 1, 2026 (aka Microsoft’s new financial year)…even Microsoft 365 E5.
M365 E3 increases by 8% and M365 E5 by 5%. An organisation with 15,000 E5 SKUs will see an increase of $1.6 million over a 3-year contract – so understanding how the additional features may work for you will help you decide what steps to take at renewal.
Something that I did notice is that, while there is no mention of new features being added to the Frontline Worker F SKUs, they too are increasing in price – with M365 F1 rising by 33% and M365 F3 by 25%.
8,000 F3 users will lead to an increase of almost $600,000 over 3 years…seemingly with no new features to show for it.
Note as well that these increases will also apply to non-profit pricing.
See the Microsoft post here – Advancing Microsoft 365: New capabilities and pricing update | Microsoft 365 Blog
What’s it all about?
ARPU (Average Revenue Per User) is a key metric for Microsoft (and all SaaS publishers) and this will help keep that growing for several more quarters through their next financial year and beyond. Increasing the amount they earn from each user is key to driving shareholder value…especially as the amount of new users to buy M365 licenses is decreasing. Higher pricing also increase the Customer Lifetime Value (CLV), another important metric that helps businesses plan future campaigns and initiatives.
There is the risk that customers will become angry and disillusioned and look for alternatives. However it’s likely that Microsoft are confident in their view that there are very few real alternatives to many of their products and, even when they are available, the time and effort involved in swapping will discourage most organisations. While some may leave, the increased revenue from those who stay will more than offset the losses.
For some organisations, the additional products in E3 and E5 may mean that they can reshape their licensing slightly – dropping additional SKUs or possibly even dropping from E5 to E3. However, it is yet another price increase from Microsoft…particularly galling if you don’t need or want those additional features. Review your Microsoft budget projections and work to lock in the lower pricing for as long as possible.
Microsoft Security Copilot SCU included with Microsoft 365 E5
Microsoft Security Copilot uses Security Compute Units (SCU) to measure the compute power used to run various workloads. A quantity of these is now available with Microsoft 365 E5 licenses, rollout starting from November 18th 2025..
What SCU capacity is included with Microsoft 365 E5 licenses?
Each Microsoft 365 E5 license includes 0.4 SCU so, for example, an organisation with 1,000 M365 E5 licenses will have 400 SCU per month. The allocation resets monthly and unused SCU cannot be rolled over to the next month.
There is a maximum limit of 10,000 included SCU per month – this is equivalent to 25,000 M365 E5 licenses.
Pricing considerations
Should organisations exceed their M365 E5 included SCU quantity, overage SCU will be available for $6 per SCU on a Pay As You Go (PAYG) basis. That is 50% higher than the “Provisioned” SCU pricing of $4.
However, an interesting point – and something that adds complexity to these decisions – is that the included SCU provide more flexible billing than the traditional provisioned capacity model.
Under provisioned capacity, an organisation commits to a set number of SCU per hour and is charged for that amount even if actual usage is lower. With E5, the included SCU are drawn down only by the amount actually consumed each hour, which provides a more accurate reflection of usage and avoids paying for unused capacity:
- With Provisioned Capacity, if you provision 5 SCU but only use 3.5 – tough, you pay for all 5.
- With E5 Included, you would only use 3.5 SCU.
This addition is another move to keep organisations on M365 E5, rather than stepping down to E3 +add-on.
SCU included with Microsoft 365 E5 – https://learn.microsoft.com/en-gb/copilot/security/security-copilot-inclusion
Microsoft Agent 365 – what we know so far
It’s been rumoured for a while that Microsoft would release a new product/license for AI Agents called Agent 365 and we have the first public acknowledgement of this from Redmond.
Microsoft 365 Message MC1183300 is titled “Microsoft Teams and Microsoft 365 Copilot: Discover and create agentic users from Teams and M365 Agent Store” and gives us some initial information.
Starting in mid-November 2025, we will get “AI-powered Agentic Users” that will have “full organisation identities”. Users will be able to request agent templates but, at least for now, admins will control the creation and licensing.
What are AI Agents?
Microsoft differentiate them from bots and say:
Agentic Users are provisioned as full-fledged user objects with their own:
- · identity in the organization’s directory (via Entra ID or Azure AD)
- · email addresses
- · Teams accounts
- · presence in the org chart
They can participate in meetings, send and receive emails and chats, access and act upon enterprise data, and learn from interactions to improve over time. They have the ability to “proactively reason and act without explicit instructions”.
How are AI Agents licensed?
Per Agent licensing
Continue reading “Microsoft Agent 365 – what we know so far”Microsoft Product Terms: October 2025
More name changes to keep us all busy!
Rebranded Microsoft 365 E5 Security (and all relevant offers) to Microsoft Defender Suite
Rebranded Microsoft E5 Compliance (and all relevant offers) to Microsoft Purview Suite
M365 E5 Security = Microsoft Defender Suite
M365 E5 Compliance = Microsoft Purview Suite
M365 F5 Security = Microsoft Defender Suite FLW
M365 F5 Compliance = Microsoft Purview Suite FLW
There is also a “Defender + Purview Suite FLW” SKU
FLW = FrontLine Worker
As always, there’s going to be a period of time where the names differ between pages, sites, documents etc. so be prepared…especially for renewals.
2) Removed Microsoft Defender Threat Intelligence from Availability and Prerequisite Tables
3) Azure Firmware Analysis and Azure IoT Operations connectors added
Microsoft remove Enterprise Agreement discounts on Online Services
BIG Microsoft news!
Are you a Microsoft EA customer with Online Services at Level B, C, or D pricing?
From November 1st, 2025:
“Microsoft will expand the set of products that have a single consistent price across Price Levels A-D to include all online services” on EA and MPSA agreements.”
The new pricing will be the same as on the Microsoft site once the waterfall discounts are removed.
This will take effect from your next renewal, or when you buy Online Services not on your CPS, post November 1st.
On-premises software pricing isn’t changing.
This is going to cause a lot of Microsoft bills to increase significantly – be prepared!
See the announcement here – https://www.microsoft.com/en-us/licensing/news/online-services-pricing-consistency-update
Microsoft Product Terms: May 2025
Microsoft have made a few changes this month:
Added “hidden offer products” to MCA Availability tables – these seem to include:
- M365 Cross-tenant User Data Migration
- Microsoft Defender Vulnerability Management Add-on to Microsoft Defender for Endpoint for Servers
- Viva Glint
- VDA Add-on for M365 E3/E5 USL
- M365 Apps for Enterprise
- Workplace Analytics
Numbers 2, 4, and 7 may not be available “in all sales channels and geos” and may also require “engaging with a Microsoft representative to place an order“.
A new Remote Network Bandwidth SKU has been added to the M365 section (this relates to Global Secure Access via Entra).
Microsoft Dragon Copilot has been added – this is a healthcare focused product from their Nuance acquisition.
Microsoft bring 3 year licenses to CSP
Microsoft have announced 3-year subscription terms on CSP for:
- 1) Microsoft 365 E3 (with and without Teams)
- 2) Microsoft 365 E5 (with and without Teams)
- 3) Microsoft Teams Enterprise
- 4) Microsoft 365 E5 Security
- 5) Microsoft 365 E5 Compliance
Numbers 1, 2, and 3 will be available from June 1, 2025 while 4 & 5 will come on July 1, 2025.
The price will be the same as 3 x 12-month subscriptions but of course, with the price protection against increases that a longer commit brings. It seems there will be a 100 SKU minimum for these 3-year SKUs.
This strengthens the push for smaller EA customers to move across to CSP and comes hot on the heels of the “channel transfers interface” to that launched in April to help partners renew Enterprise Agreements (EAs) into CSP and retain their existing rights to bundled Teams.
Microsoft have also announced enhanced investment in, and incentives for, CSP partners moving into FY26 from July 1st.
See more info here.
Microsoft Purview gets more PAYG SKUs for AI
Microsoft Purview is a suite of products focused on data security, governance, and compliance across the Microsoft portfolio.
Microsoft first introduced Pay As You Go (PAYG) aka Consumption SKUs for Purview in January 2025 and now, from May 1, 2025 there are a new set. These new SKUs are aimed at protecting “your data as it moves across networks and through GenAI applications“.
The * is to note that Audit Standard is included within “Microsoft first party applications such as Microsoft 365 applications, Fabric, and Microsoft first party AI apps like Microsoft 365 Copilot, Security Copilot or AI applications custom-built using Copilot Studio“.
New metric/acronym alert! The 10,000 events for Insider Risk Management are known as a “Data Security Processing Unit (DPSU)”.
I notice that, for “Data Security Investigations”, Microsoft say:
“Data Security Investigations is billed through two meters: 1) the Data Security Investigations non-AI processing and storage meter and 2) Security Compute Units.
The Data Security Investigations non-AI processing and storage meter allows customers to store data related to an investigation. Security Compute Units are used to measure the computational capacity needed to run the AI analysis within DSI.”
Security Compute Units (SCUs) were introduced with Microsoft Security Copilot. It seems now that certain Purview PAYG usage may also consume your SCUs – needing further planning and budget insights.
You can see more from Microsoft here.
Microsoft Product Terms: March 2025
Removed “without Microsoft’s prior written approval” from the clause preventing using MS service to mine crypto…I guess they realised they were never going to give anyone permission for this!
Changed the Use Rights for Azure Local software from:
“Customer may use the Azure Local software only (i) on servers dedicated to Customer’s internal use“
to
“Customer may use the Azure Local software only (i) on devices dedicated to Customer’s internal use“
Microsoft say this represents a move to “include smaller, more affordable devices than traditional servers“
They also removed the following clause “Any customer support for Azure Local that may be available from Microsoft requires that Azure Local runs on server hardware that is pre-validated and listed in the Azure Local catalog or any successor.”
Added Microsoft 365 Copilot Chat to the list of EU Data Boundary Services
March 5th
You can now add the Microsoft 365 E5 Security add-on to the Business Premium SKU.
March 12th
Added a section on Data Handling of Query Data with M365 Copilot & M365 Copilot Chat:
- Microsoft has no rights in Query Data other than as needed to provide the services,
- Query Data is not used to improve Bing,
- Query Data is not used to create advertising profiles or track user behavior,
- Query Data is not shared with advertisers or otherwise beyond Microsoft and its contracted suppliers who are subject to terms no less protective than these provisions,
- Query Data is not used to train generative AI foundation models, and
- Query Data is treated as Customer confidential information and protected by appropriate technical and organizational measures.
Clarification that certain concurrent use rights for Defender on up to 5 devices does not include Server OSEs:
- Eligible Licensed Users may use Microsoft Defender for Business on up to five concurrent devices. Customer may not use a Microsoft Defender for Business User SL with server OSEs.
- Eligible Licensed Users may use Microsoft Defender Vulnerability Management or Microsoft Defender Vulnerability Management Add-on on up to five concurrent devices. Customer may not use Microsoft Defender Vulnerability Management or Microsoft Defender Vulnerability Management Add-On User SLs with server OSEs.
Cloudy with a chance of Licensing 