Upgrade proposals are a normal part of a Microsoft renewal. Move to E5, or to E7, and you get more features, more security tools and, in E7’s case, Copilot. The proposals are often attractive, but an upgrade that is not tied to a clear need is simply a higher price.
This article sets out what has changed, what each tier includes and how to decide whether an upgrade is justified.
What has changed this year
Prices rose on 1 July. Microsoft 365 E3 moved from 36 to 39 dollars per user per month and E5 from 57 to 60 dollars. The increases came with added features. E5 gains Security Copilot capacity and expanded Intune management, while E3 gains Defender for Office 365 Plan 1. Part of what you pay more for is functionality you may not have asked for.
There is also a new top tier. M365 E7 combines E5, Microsoft 365 Copilot, Entra Suite and Agent 365 at 99 dollars per user per month, and the same source notes that Microsoft removed the Enterprise Agreement volume-discount levels in November 2025.
Where Microsoft is pointing its effort
Microsoft’s own results show the direction. Its 10-Q says commercial cloud growth was driven by higher revenue per user, reflecting upsell to premium seat offerings including Copilot, E5 and E7. On the earnings call, management said E7 had already reached millions of paid seats and acknowledged weaker sales execution in E3 and standalone products.
Read plainly, that means premium upgrades are a priority for Microsoft’s sales teams. Expect to be offered them, and expect the offer to be framed as a way to simplify or save. Sometimes that is true. Often it is not.
Does E5 pay for itself?
The extra cost of E5 over E3 is 21 dollars per user per month at the new list prices, which is 252 dollars per user per year. As an illustration, upgrading 1,000 users would cost about 252,000 dollars a year more. If only 200 of them need the extra capabilities, the same upgrade for those 200 costs about 50,400 dollars. These are invented figures, but they show why a blanket upgrade deserves scrutiny.
The test is simple. For each E5 capability you are being asked to pay for, such as advanced security, compliance tooling, analytics or voice, ask who will use it, what it replaces and how you will know it is being used. If you already pay for a separate product that E5 would replace, count the saving. If you do not, treat the capability as an extra cost.
And E7?
E7 raises the question differently, because it bundles several products. Compare it with the cost of buying the parts you would actually use. If you plan to roll out Copilot widely, E7 may be competitive. If Copilot will go to a small group, you will be paying for it for everyone in the tier.
Ask Microsoft for an itemised view of what is in the bundle and what each element would cost on its own. Ask what happens if you want to drop an element at the next renewal, and whether the bundle price is protected for the term.
A mixed estate is allowed
Many organisations assume the whole estate must be on one tier. That is rarely required. A business can license most users on E3, a group on E5 and a smaller group on a premium bundle, as long as each user is licensed for what they use. Splitting by role usually costs less than a blanket choice, and it gives you a clear evidence base for the next renewal.
What to ask before you accept
Ask what specific problem the upgrade solves. Ask for usage evidence for the features you would be paying for. Ask how the quantity was set, and whether it reflects real need. Ask whether any promotion applies, and when it ends. Ask what the price will be at the following renewal. Ask what you could do instead, such as targeted add-ons for specific groups.
Gathering the evidence
To test a proposal you need data on what is used today. For security features, check which protections are switched on and which are generating activity. For compliance features, check whether the policies exist and who relies on them. For voice, analytics and productivity extras, check licences assigned against active users. If the data shows features are not in use, an upgrade is paying for shelfware.
Equally, the data may show the opposite. If many users already rely on separate add-ons that E5 includes, an upgrade may save money. The aim is not to resist upgrades. It is to make the decision on evidence.
Negotiating the details
If you do upgrade, negotiate the terms around it. Ask for the price to be held for the full term. Ask for the right to move users between tiers at renewal, so that you can adjust as use becomes clear. Ask whether any discount depends on a minimum quantity, and what happens if you fall below it. And ask that any bundle be itemised, so that you can see what each part costs and drop what you do not need next time.
Conclusion
Microsoft is steering customers towards E5 and E7, and its own results explain why. For a buyer, the right response is not to refuse every upgrade but to require a reason for each.
Tie each tier to a defined group and a defined need, test the evidence and protect the price. An upgrade that earns its place is good value. One that does not is a price increase with a different name.
