Price Increases for Microsoft On-Premises Servers Take Effect July 1

Mary Jo Foley is the Editor in Chief at Directions on Microsoft. Before joining Directions, Mary Jo has worked as... more

As largely expected, Microsoft will be increasing prices of its on-premises servers by 10% beginning July 1 (the start of its fiscal 2026). Prices for on-premises SharePoint Server, Exchange Server, Skype for Business Server all will get the 10% hike. And prices for the Core Client Access License (CAL) Suite and Enterprise CAL Suite will go up 15 and 20 percent, respectively, as of July 1. Note: If you are a Microsoft Enterprise Agreement (EA) customer with exclusively E3/E5 users, you will not be affected by these changes, as all your use rights for the products in question already are included in your suites.

July is also when the new Exchange Server Subscription Edition (SE) and Skype for Business Server SE will be generally available, Microsoft confirmed in an April 3 blog post. (Microsoft officials previously had said to expect the new Exchange and Skype for Business Servers to arrive in early Q3 2025.) In order to deploy these new releases, customers must have either active Software Assurance (SA) or cloud subscription licenses for all users and devices that access them.

Microsoft Exchange team officials said last year that Microsoft was planning to release the first Cumulative Update (CU) for Exchange Server SE in October 2025. That date now looks more like early 2026 at the earliest, based on information shared with Directions on Microsoft by Microsoft.

CU1 is significant for a couple of reasons. Once customers deploy Exchange Server SE CU1, they no longer will be able to mix and match older and new Exchange Servers in the same installation. This means that companies moving to Exchange Server SE will have to get 100% of their servers there before they have to apply CU1, yet another turn of the Exchange Server SE squeezer.

CU1 also is expected to be the vehicle for Microsoft to add support for Exchange Server SE for the new Outlook client for Windows. Currently, Microsoft doesn’t claim that the new Outlook works with on-premises Exchange (even though some customers seem to have found a way with a workaround and IMAP).

“The licenses price hikes, the cutoff of old versions, the weak link with new Outlook, they all point to a single message: If you care about Exchange e-mail, get off Exchange Server,” said Directions analyst Rob Helm.

A Separate Teams SKU Reprieve

In other licensing-related news, Microsoft is backtracking on a previous policy that required customers moving from EAs to Cloud Solution Provider licenses from having to purchase Teams SKUs for a few dollars more per user separately from their Microsoft 365 subscriptions.

“(P)artners who have customers with expiring Enterprise Agreements (EA) with Microsoft 365 E3 and E5 with Teams and Office 365 E1, E3, and E5 with Teams, which are end of sale (EOS), can renew into CSP and keep their Teams entitlement,” Microsoft said in an April 1, 2025, update to the Partner Center announcement site. Prior to this announcement, the standard policy for EA customers moving to CSP was that they were “net new” (to CSP) and thus could not purchase Microsoft 365 suites that contained Teams.

To qualify, customers must have EA agreement subscriptions expiring in the coming six months or EA agreements in the “grace period” (having expired in the past 90 days). Directions has asked Microsoft if there will be any way for other customers who previously were considered net-new because of the change in license/channel to be grandfathered into the “With Teams” bundle under the new rule. No word back so far.