Microsoft 365 Price Increases in 2025: What You Need to Know.

Significant changes are on the horizon for Microsoft’s pricing structure, particularly concerning Microsoft Teams. This shift in product pricing will inevitably affect both Microsoft enterprise agreement prices and Microsoft support for many users.

Microsoft’s adjustments in 2025 will have far-reaching implications for businesses of all sizes, making it crucial for decision-makers (including both CIOs and CFOs) to understand and prepare for the upcoming shifts in the software licensing landscape.

Microsoft 365 price hikes prompt budget reevaluation | prima91 - stock.adobe.com

In a move that sent ripples through the tech industry, Microsoft was compelled to unbundle Teams from its Microsoft 365 suite due to an EU antitrust investigation. This decision, initially limited to Europe, has now become a global strategy with significant consequences for users worldwide.

Starting April 1, 2024, Microsoft introduced standalone pricing for Teams, offering it as a separate product called Microsoft Teams Enterprise. The cost for this standalone version is $5.25 per user per month in the US.

Why Is This Important?

For many, this change means increased costs and the need to explore alternative solutions for covering those price changes. It forces organizations like yours to reevaluate collaboration tool strategies and potentially restructure budgets.

Don’t navigate these changes alone. Contact US Cloud today to schedule a consultation and ensure your organization is prepared for the Microsoft 2025 price increases.

Teams Price Increase

Effective April 1, 2025, Microsoft is implementing a significant price increase for Teams Phone licenses:

• Teams Phone Standard will increase from $8 to $10 per user per month
• Teams Phone Standard for Frontline Workers will rise from $4 to $5 per user per month

This 25% price hike reflects the continuous innovations and added value Microsoft has delivered to Teams Phone users over time. For organizations heavily reliant on Teams for communication, this increase could have a substantial impact on IT budgets and necessitate a reevaluation of their collaboration tool strategies.

2025 Microsoft Teams pricing per user.

In a move that affects not just Teams but all annual subscriptions, Microsoft is introducing a 5% premium for monthly billing options. Previously, customers could commit to an annual subscription for Teams and pay monthly at the same rate as if they had paid upfront for the entire year.

Starting April 1, 2025, this will change. Customers opting for monthly billing on annual subscriptions will pay 5% more than those who choose to pay upfront for the entire year.

This applies to all Microsoft products with annual subscription options, including:

• Microsoft 365
• Office 365
• Enterprise Mobility + Security
• Windows 365
• Dynamics 365
• Power Platform

Why Should I Pay Attention to the New Microsoft Teams Cost?

The 25% hike in Teams Phone licenses will substantially impact organizations with large numbers of users. Meanwhile, the 5% premium for monthly billing introduces a new consideration in how companies must manage their cash flow and software expenses.

Teams price hikes affect user costs and billing strategies | IB Photography - stock.adobe.com

In addition to the Teams price increase and monthly billing premium, Microsoft is implementing regional pricing adjustments and offering targeted promotions to help ease the transition for customers—but only in certain countries.

Regional Pricing Changes

Microsoft is adjusting prices in certain regions to reflect currency fluctuations:

• United Kingdom: 5-6% reduction in pricing for select products, effective February 2025
• Brazil: 12% increase across various products, also starting February 2025

These regional adjustments highlight the importance of considering your organization’s global footprint when planning for the 2025 price changes. Additionally, if your business is not in the areas mentioned above, you may not feel a financial reprieve from the Microsoft Teams cost changes.

New Copilot Features

Microsoft is also adding value to its Copilot offering:

• Introduction of a free version of Copilot Chat
• Bundling of additional features like SharePoint Advanced Management with Copilot licenses

These enhancements aim to increase the perceived value of Copilot subscriptions in light of the pricing increases.

Microsoft 365 price hikes prompt cost-saving strategies | keBu.Medien - stock.adobe.com

To effectively manage these changes, businesses should consider the following strategies:

1. Conduct a Thorough Needs Assessment: Evaluate your organization’s actual usage of Microsoft products to identify opportunities for optimization.
2. Consider Long-term Commitments: Weigh the benefits of annual upfront payments against the flexibility of monthly billing, considering the new 5% premium.
3. Explore Alternatives: While Microsoft’s ecosystem is deeply entrenched in many businesses, direct Microsoft Support is not a required service to continue using these products. Microsoft’s 2025 price increases provide organizations with a new opportunity to explore competitive solutions for third-party Microsoft support.

Negotiate Enterprise Agreements: Larger organizations should consider negotiating Enterprise Agreements, which can often provide more favorable terms. If negotiations fall through, it’s just another chance to consider third-party Microsoft support for those crucial Microsoft products.

Why Do Microsoft Price Increases Matter?

Proactive planning can significantly lessen the impact of these price increases. By assessing needs and exploring all available options, businesses like yours can optimize their software spending and potentially find more cost-effective solutions.

This approach to software licensing leads to major savings and improved operational efficiency for you and your company.

As these pricing changes rapidly approach, many organizations are seeking ways to optimize their Microsoft licensing and explore cost-effective alternatives.

 This is where we come in. As experts in Microsoft licensing and cloud solutions, US Cloud can help your business navigate these changes effortlessly, saving you money while ensuring you have the tools you need to succeed.

Working with a specialized partner like US Cloud can provide invaluable insights and strategies for managing these price increases. Our expertise can help you make informed decisions, leading to significant cost savings and more efficient use of Microsoft products.

Ready to explore your options? Schedule a call with us today to discuss how we can help you optimize your Microsoft licensing strategy.

Will the Microsoft Teams unbundling affect existing subscriptions?

• Existing customers with bundled Microsoft 365 or Office 365 subscriptions that include Teams can continue to use, renew, upgrade, and modify their existing plans without disruption until their renewal date

How much does Microsoft Teams cost for businesses in 2025?

• Microsoft Teams pricing for businesses varies based on the plan:
• Microsoft Teams Essential: $4.00/month (£3.30/month) per user
• Microsoft 365 Business Basic: $6.00/month (£4.90/month) per user
• Microsoft 365 Business Standard: $12.50/month (£10.30/month) per user
• Microsoft 365 Business Premium: $22.00/month (£18.10/month) per user

What are the Microsoft Teams pricing options for personal use in 2025?

• For personal use, Microsoft Teams offers:
• A free plan with basic features
• Microsoft 365 Personal: $9.99/month (£8.49/month)
• Microsoft 365 Family: $12.99/month (£10.49/month)

How much will Microsoft Teams Phone cost in 2025?

• Starting April 1, 2025, Microsoft Teams Phone pricing will increase:
• Teams Phone Standard: From $8 to $10 per user/month
• Teams Phone Standard for Frontline Workers: From $4 to $5 per user/month

What Microsoft products are not affected by the 5% monthly billing premium in 2025?

On-premises software, Azure Reserved Instance/Savings Plan, Marketplace, GitHub, and AirGap are not affected by the 5% price increase for monthly billing.