Microsoft Raises Microsoft 365 List Prices as AI Infrastructure Bills Climb Across Cloud

Microsoft raised list prices on select commercial Microsoft 365 subscriptions on July 1, with increases of 5% to 13% for enterprise suites with Teams and as much as 43% for Microsoft 365 F1 without Teams, VentureBeat reported. The company justified the increases with new features in AI, security and management.

Microsoft's July 1 Price Increase and AI Surcharges

Existing commercial customers on affected plans see the new price at their next renewal after July 1, regardless of how they buy. Salesforce raised Enterprise and Unlimited edition list prices for Sales Cloud, Service Cloud, Field Service and select Industries Clouds by an average of 6% on August 1, 2025, citing "the significant ongoing innovation and customer value delivered through our products" as it rolled out Agentforce packaging.

Cost pressure is showing up in corporate budgets. In VentureBeat Intelligence's October AI Infrastructure and Compute survey, 56% of respondents said a software vendor added an AI surcharge, raised a renewal price citing AI, or moved features the organization already had into a higher-priced tier in the past 12 months. Among respondents who reported at least one of those vendor changes, 40% said the added cost amounted to 10% or more of their annual software spending.

Alphabet reported negative free cash flow for the second quarter in a row on October 28, after $51.4 billion of capital spending in the third quarter, and guided 2026 capital spending to $195 billion to $205 billion. CFO Anat Ashkenazi expects it to rise "significantly" in 2027.

Microsoft's Cloud Backlog and Capital Spending

According to akta.pro company records, Microsoft reported quarterly revenue of $82.9 billion in Q2 FY2026, up 18% year-over-year, and its AI business surpassed a $37 billion annual revenue run rate with 123% year-over-year growth. The same records list more than 220,000 employees globally.

Microsoft's $677 billion backlog was the largest of the four providers that reported approximately $2.48 trillion in combined backlog in their latest results, alongside Oracle at $664 billion, Amazon at $578 billion, primarily from AWS, and Google Cloud at $561 billion. Microsoft CFO Amy Hood told analysts in January that OpenAI accounted for about 45% of Microsoft's commercial backlog at the time.

Earlier Microsoft Moves on AI Costs

In June 2026, Italy's AGCM launched an investigation into Microsoft over alleged unfair commercial practices related to Microsoft 365 subscription price hikes, claiming the company bundled Copilot and Designer AI services without adequate disclosure and automatically migrated customers to more expensive plans, according to akta.pro company records.

Hood told investors on April 29 that the company expected roughly $190 billion in calendar 2026 capital expenditures, including approximately $25 billion from the impact of higher component pricing. Microsoft lowered its forecast to about $175 billion in July after a change in how its data center leases are classified, then to about $170 billion in October, citing delays in third-party capacity.

Gartner's Memory and Inference Cost Forecasts

Gartner said on October 21 that demand from data center systems has driven memory prices to more than double over the past 12 months, with cost increases cascading throughout storage, server, networking, PC and device supply chains. "This 'memflation' effect is expected to persist through 2027 before hardware pricing begins to stabilize," said Gartner analyst John-David Lovelock.

Gartner predicted on August 17 that AI inference costs per agentic workflow will increase more than fivefold through 2028, even as it expects token costs to fall 95% by 2030. "Product leaders cannot rely on more efficient token economics to rationalize AI costs," said Will Sommer, senior director analyst at Gartner. "Each successive generation of AI capability will necessitate more, and often more expensive, tokens."