What is Changing for Microsoft 365 Licensing?

Microsoft has published their global list‑price updates effective 1 July 2026. The key takeaway is that Microsoft has integrated additional AI, Security and Device‑Management features into their existing offerings which will now be reflected with increased renewal costs. Existing license plans will only be affected once their next renewal falls after 1 July.

As this is likely to affect every single organisation given the licenses being increased, it’s important that your IT Team confirms that you are on the most appropriate license for your business and user needs, to ensure that you aren’t paying for more than you need, but are also utilising as many of the features which are available to you as practicable.

What is Changing in Azure?

Unmanaged disks retire on 31 March 2026. If you still run Azure Virtual Machines (VMs) with Unmanaged Disks, you must migrate to Azure Managed Disks before the end of this month, as VMs with these unmanaged disks will be stopped and deallocated as per Microsoft.

Unlike Unmanaged Disks, Azure Managed Disks don’t charge by how much storage is actually used, but instead charge based on the maximum storage capacity of the disk, with the requirement to select a fixed tier for total size. As a result, a 128GB P10 disk will incur the same cost per month whether it is empty or full.

Here is a snippet of the monthly costs for Premium Managed Disks which can be found on Microsoft’s Managed Disk Pricing page as an indication, but you should reach out to your Microsoft Partner for more specifics on how this change will affect any Azure VMs you might be running.

Note: This retirement of Unmanaged Disks only affects Azure VMs, not Microsoft Cloud PCs.

What this means for Business Owners and IT Leaders

1. Budget for higher M365 costs at renewal
   Even small per‑user increases add up across hundreds of users and multi‑year terms. For example, 200 users on Microsoft 365 E3 at $4 extra per user per month is a cost of $9,600 more per year before any compounding factors.
   
2. Reallocate Users to the most suitable plans
   Because Business Premium pricing is not changing, it may be comparatively better value than Business Standard once security and device needs are considered. It’s important your IT Team gives Frontline SKUs special review due to the much higher percentage increases, in addition to reviewing any add-ons to see if another suite now offers comparable or better features for less.
   
3. Prepare for your Azure Managed Disk migration now
   Identify VMs with Unmanaged Disks, schedule maintenance windows, test conversions in non‑production, and clean up legacy VHDs to stop residual storage charges so that a last‑minute cutover can be avoided.

How can Altitude help prepare for your renewal and migration plans?
Contact the Altitude Innovations Team to assess your current needs and assist with these and other relevant services:

• Microsoft 365 License Health‑Check and Renewal Modelling: Identify potential savings, map users by role, and build a plan which offsets as much of the price increase as possible.
• Security Baseline Uplift: Align included features of your licensing to your environment, so that you are not double‑paying for third‑party tools where that capability already exists.
• Azure Managed Disk Migration: If you haven’t already arranged for all Unmanaged Azure Disks to be migrated, then you will need to urgently address this to avoid down-time/disruption to your business after the 31 March 2026 deadline.