Microsoft Software for 2026/27 Budget Planning

Microsoft 365 commercial prices rose on 1 July 2026 — increases of up to 33% on some plans. If you’re planning software spend for 2026/27, here’s how to build your budget around perpetual licences and stop paying more each year for the same tools.

What Changed on 1 July 2026

Microsoft raised commercial prices across most Microsoft 365 and Office 365 plans. The increases took effect globally on 1 July 2026, hitting both new subscriptions and existing customers at their next renewal. UK pricing is pegged to the US dollar, so actual GBP costs also fluctuate with the exchange rate — a double hit.

This isn’t a one-off adjustment. Microsoft raised Microsoft 365 prices in 2022 and has now raised them again in 2026. The direction of travel is clear — subscription costs go up, and there’s no mechanism to opt out of the next increase.

What This Means for a Typical UK SME

Take a 10-person team on Microsoft 365 Business Standard — the most common plan for small businesses that need the desktop Office apps plus cloud email and Teams. At the new price of $14 per user per month, that’s approximately £1,350 per year (at current exchange rates, ex-VAT). Over five years, you’re looking at roughly £6,750 — assuming prices don’t rise again, which they will.

That same 10-person team could equip every desk with Office Professional Plus 2024 from Software Supplies for a one-off total of around 10 × . No renewal date. No price increase. No surprise on next year’s budget.

Five-Year Cost: Subscription vs Perpetual

The gap between a Microsoft 365 subscription and a one-off perpetual licence widens every year. Here’s how a 10-user team’s cumulative spend compares over five years.

By year five, the subscription path has cost more than five times the perpetual alternative — and it resets to zero the moment you stop paying. The perpetual licence keeps working indefinitely.

Building Your 2026/27 Software Budget

Here’s how to plan your Microsoft software spend category by category, using perpetual licences where they make sense and subscriptions only where you genuinely need cloud features.

Office Suite

This is the biggest line item for most businesses and the most straightforward swap. Office Professional Plus 2024 includes Word, Excel, PowerPoint, Outlook, Access, and OneNote — the same desktop apps as Microsoft 365, without the subscription.

Operating System

If you’re upgrading from Windows 10 (which you should be — ESU is a bridge, not a destination), a genuine Windows 11 retail licence is a one-off cost that stays with the machine for its lifetime. No Windows 365 subscription required.

Specialist Tools

Project and Visio are where the subscription markup is most extreme. Microsoft charges $30/user/month for Project Plan 3 ($360/year) and $15/user/month for Visio Plan 2 ($180/year). The perpetual alternatives pay for themselves within months.

Development

Visual Studio Professional is a perpetual IDE licence — no Visual Studio subscription required for individual developers or small teams.

What M365 Bundles That Most SMEs Don’t Use

Part of Microsoft’s justification for the July 2026 price increase is the bundling of new features — Defender for Office 365 P1 into E3, Security Copilot into E5, and Intune enhancements across both. But here’s the question most UK small businesses should be asking: do you actually use what you’re already paying for?

If you’re paying for Microsoft 365 Business Standard and your team uses Word, Excel, Outlook, and occasionally PowerPoint, you’re paying a premium for a bundle where you use four apps out of fifteen. A perpetual Office licence gives you those four apps — plus Access and OneNote — for a one-off cost.

When Microsoft 365 Still Makes Sense

This isn’t a blanket argument against subscriptions. Microsoft 365 has genuine value in specific scenarios, and it’s worth being honest about where perpetual licences don’t fully replace it.

For many businesses, the practical answer is a mix: perpetual Office licences for the majority of users, and a handful of M365 subscriptions for staff who genuinely need cloud features. There’s no technical barrier to running both side by side.

Your 2026/27 Software Budget Checklist

Use this framework to plan your Microsoft software spend for the year ahead.

1. Audit what you actually use. Log in to your Microsoft 365 admin centre and check usage reports. If most users only touch Word, Excel, and Outlook, they don’t need a subscription.
2. Calculate your current annual M365 spend. Multiply your per-user price by headcount by 12. That’s your recurring baseline — and it just went up.
3. Price the perpetual equivalent. Office Pro Plus 2024 from Software Supplies replaces the desktop apps at a fraction of one year’s subscription cost.
4. Identify who genuinely needs cloud features. Exchange Online, Teams, SharePoint — if specific staff depend on these daily, keep them on M365. Move everyone else to perpetual.
5. Factor in Windows. If you’re still on Windows 10, budget for Windows 11 licences now. ESU buys time but the upgrade is inevitable — and a one-off Windows 11 Pro key costs less than two months of most M365 subscriptions.
6. Check specialist tools. Project, Visio, and Visual Studio all have perpetual alternatives that pay for themselves within a year versus the subscription equivalents.
7. Lock in prices now. Software Supplies prices are fixed in GBP at the point of purchase. No exchange rate risk, no renewal surprise, no annual increase.

Frequently Asked Questions