Let's be real: trying to figure out the actual Microsoft Office 365 subscription cost feels a lot like reading a restaurant menu where half the prices are missing and the waiter keeps trying to sell you a side of AI you didn't ask for. It's confusing. Honestly, most people end up overpaying for features they never touch, or they get stuck with a "Basic" plan that doesn't even let them open Excel on their desktop.
As we sit here in early 2026, the landscape has shifted. Microsoft is leaning hard into Copilot (their AI assistant), and they've recently announced a wave of price hikes for commercial plans that will kick in by July. If you’re just a person trying to write a resume or a business owner managing twenty seats, you need to know where the traps are.
The Personal and Family Breakdown
If you're just looking for Office for yourself or your house, you have three main paths.
First, there’s Microsoft 365 Basic. It’s cheap—roughly $1.99 a month or $19.99 a year. But here’s the kicker: it doesn’t include the desktop apps. You’re stuck with the web versions of Word and Excel. Basically, you're paying for 100GB of OneDrive storage and an ad-free Outlook. For some, that's enough. For most, it's a trap.
Most individuals end up on Microsoft 365 Personal. This runs about $6.99 to $9.99 a month, depending on if you catch a promo or pay annually for $99.99. You get the 1TB of storage and the "real" desktop apps.
Then there's the Family Plan. This is easily the best value in the whole catalog. For about $12.99 a month ($129.99 a year), you can share it with five other people. Each person gets their own 1TB of storage. Total of 6TB. If you split that cost with just one other person, you're already winning.
One weird nuance in 2026? Copilot. Microsoft is now bundling "Pro" AI features into these personal plans, but they often limit the "AI credits" you get. If you want the full-octane AI experience, they might try to nudge you toward the new Microsoft 365 Premium (the consumer version), which pushes the price closer to $20 a month.
Business Tiers and the July 2026 Price Hike
If you're buying for a company, things get spicy. Microsoft announced a significant price increase for commercial plans that takes effect on July 1, 2026. If you're on a monthly plan, you'll feel it immediately. If you're on an annual commitment, you've got a buffer until your renewal.
Here is what the monthly per-user cost looks like right now versus what's coming:
- Business Basic: Currently $6. It's jumping to $7. (No desktop apps here, just web/mobile and Teams).
- Business Standard: Currently $12.50. It’s heading to $14 or $14.50 depending on the region. This is the "sweet spot" for most small businesses because it includes the desktop versions of the apps.
- Business Premium: Staying flat at $22. Microsoft wants you on this plan. It includes advanced security and device management (Intune), and they’re keeping the price steady to make the jump from Standard feel smaller.
The Enterprise Jungle
For the big players, the Office 365 E3 and E5 plans are the standard. E3 is moving from $23 to $26 per user. E5—the mack daddy of plans with all the voice calling and high-end security—is climbing from $57 to $60 or $65.
Why the Price is Moving
Microsoft's logic is pretty simple: they’re adding more stuff. Specifically, they're baking more security features and AI capabilities into the core licenses. In the past, you had to buy "add-ons" for things like advanced phishing protection or certain Teams features. Now, they're just rolling them in and raising the floor price.
Is it worth it? Sorta. If you actually use the security tools, it's cheaper than buying third-party software. But if you just want to send emails? It feels like a tax.
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Student and Teacher Freebies
Never pay full price if you're in school. Seriously.
The Office 365 A1 plan is still free for students and teachers with a valid .edu email. It's web-only, but it gets the job done. If you need the desktop apps, the A3 plan usually costs around $2.50 to $3.25 a month. Often, your university has already paid for this, so check your school portal before you put a credit card down.
In 2026, some universities are even offering a year of Microsoft 365 Personal for free to graduating seniors to keep them in the ecosystem. It's worth a look.
Strategic Moves: How to Save Money
You don't have to just accept the list price.
First, buy through a reseller if you're a business. Partners like CDW or local MSPs often have access to "legacy" pricing or bundles that Microsoft won't show you on their website.
Second, consider the Family Plan for business. If you are a "solopreneur" or a tiny team of three, there is nothing stopping you from using a Family subscription. You lose the "enterprise" security and the custom @yourbusiness email (unless you hook up a domain), but you save hundreds of dollars a year.
Third, look at Office Home & Student 2024. Yes, they still sell a "one-time purchase" version. It’s about $150. No subscription, no monthly bill. You don’t get OneDrive storage or mobile app features, but if you just want Word on your laptop until the end of time, this is the way to go.
Actionable Next Steps
- Audit your seats: If you're a business, check how many "Business Standard" licenses you have assigned to people who only use web mail. Downgrade them to "Basic" and save $7+ per month per person.
- Lock in now: If your renewal is before July 2026, opt for a 12-month annual commitment to lock in the 2025 rates for another year.
- Check your 365 Personal/Family usage: If you aren't using the 1TB of cloud storage, you might be better off with the $2 Basic plan or even just the free web versions.
- Education check: If you're a student, go to the Microsoft Education portal and enter your school email. Don't spend a dime until you see if you're eligible for the A1 or A3 grants.
The "hidden" cost of Microsoft 365 isn't just the monthly fee—it's the inertia of paying for features you don't use. Take ten minutes to look at your billing statement today. Odds are, there's a cheaper way to do exactly what you're doing.