In 2026, Microsoft has changed M365 licensing more in a single 90-day window than in the previous ten years. That's not an exaggeration. If you're an IT admin and you haven't been obsessively tracking every announcement, there's a good chance you're missing something that's going to cost your org real money.
Let me break down what's actually happening, because it's a lot.
Most people have heard about the price increases. E3 goes from $36 to $39 per user per month, E5 from $57 to $60. Annoying, but manageable.
The part that gets less attention is that three other things are happening the same day.
Storage is flipping to pay-as-you-go billing. That SharePoint sprawl you've been ignoring? It's about to start showing up on invoices as a line item instead of being quietly absorbed.
If you have sites that haven't been touched in two years sitting at 500GB, that's now your problem in a very concrete way.
And then there's the question of what you're actually paying for. Unassigned licenses keep renewing automatically. Departed employees sitting on E5 and Copilot seats until someone manually finds them isn't just an IT hygiene issue anymore, it's a budget leak.
Microsoft isn't going to clean this up for you.
On May 1, Microsoft launched M365 E7, which they're calling the Frontier Suite. At $99 per user per month, it bundles four things: Microsoft 365 E5, Microsoft 365 Copilot, Agent 365, and the Microsoft Entra Suite. All in one.
The pitch is clean: stop buying add-ons and get everything you need for the AI era in a single SKU. Whether that pitch makes sense for your organization is a completely different question, and it depends entirely on whether you actually need all four components for all your users.
For organizations that were already buying E5 plus Copilot, the math is closer than you'd think. For organizations where half the user base doesn't touch Copilot, $99 per user is a lot of money for capabilities that are going to sit unused.
| Your situation | Recommendation |
|---|---|
| Already on E5 + Copilot, with 80%+ of users actively using Copilot | E7 likely makes sense. Run the per-seat math before your next renewal. |
| On E5, planning to expand Copilot to most users in the next 12 months | E7 is worth evaluating. You also get Agent 365 and Entra Suite in the bundle. |
| On E5, Copilot deployed to a subset of users only | Stay on E5 with targeted Copilot add-ons. E7 at $99 for non-Copilot users is expensive. |
| On E3 | E7 is a significant jump. Consider E5 first, or E5 with selective Copilot licenses. |
| Primarily frontline or F3 workers | Stay on your current plan. E7 isn't designed for frontline workloads. |
Your access to Agent 365 depends entirely on which tier you're on.
If you're on E3, you don't have access to Agent 365. Period.
If you're on E5, you can get Agent 365 as a standalone add-on, but the prerequisites are real: you need the underlying identity and security infrastructure from E5, Purview, and proper Entra controls in place. It's not just buying an add-on license and flipping a switch.
E7 includes Agent 365 natively, which is the cleanest path. But again, only worth it if the rest of the E7 bundle actually serves your user base.
This is the part that surprised me when I dug into it. Copilot, Cowork, and Scout are all part of the Microsoft Copilot ecosystem, but they don't all bill the same way.
Microsoft 365 Copilot is a per-user per-month license, which most people understand. Copilot Cowork, which launched as generally available on June 16, is different: it requires a Microsoft 365 Copilot license AND usage-based billing through Copilot Credits on top.
Frontier customers had to set up that usage-based billing in the Microsoft 365 admin center by June 30. If you missed that, it's worth checking immediately.
Microsoft Scout is even less defined. It's an always-on personal agent that works across Teams, Outlook, OneDrive, and SharePoint, currently available through the Frontier program, with pricing described as usage-based and no public timeline for general availability yet. That level of opacity makes it nearly impossible to budget for right now.
The question I keep hearing from IT admins isn't about the price increases.
Most tenants have the same inventory sitting undiscovered: E5 seats assigned to people who left months ago, Copilot licenses on users who've never opened a Copilot experience, and SharePoint sites whose storage consumption is about to start appearing on invoices under a billing model that didn't count it before.
Here's what that looks like in a real tenant:
The M365 admin center can show you aggregate activity like this. What it won't tell you is which specific licenses are tied to those inactive accounts, or what they're costing you each month. And the moment you start layering in Agent 365 and Copilot Cowork with usage-based pricing on top of seat-based pricing, the complexity goes up fast.
Orchestry surfaces which licenses are assigned to inactive users across your tenant, bridging the gap between what you're paying for and what's actually being used. If you want to understand your licensing posture before the July 1 changes land, a license optimization review is the right starting point.
Microsoft 365 E7 (the Frontier Suite) bundles Microsoft 365 E5, Microsoft 365 Copilot, Agent 365, and the Microsoft Entra Suite at $99 per user per month. It became available for purchase on May 1, 2026.
Yes. Agent 365 isn't available on E3. On E5, you can purchase it as a standalone add-on, but it requires existing identity, security, and Purview infrastructure. E7 is the cleanest path because Agent 365 is included natively.
Not entirely. Copilot Cowork requires a Microsoft 365 Copilot license, but tasks are billed separately through Copilot Credits on a usage basis. The license gets you access; usage drives the additional cost.
The new commercial pricing takes effect on July 1, 2026. E3 moves from $36 to $39 per user per month; E5 from $57 to $60. If you commit to a 1- or 3-year subscription before July 1, you can lock in current pricing for the full term.
If you're responsible for M365 licensing decisions at your org, this one is worth an hour. David Francoeur and I are walking through the July 1 changes, the E7 decision framework, the Agent 365 prerequisites, and what you need to do before your next renewal, including a live demo of how Orchestry surfaces the license waste your native admin tools won't show you.
Register for the free June 29 webinar.