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

In preparation for general availability in July, Microsoft is developing Subscription Edition versions of Exchange Server and Skype for Business server. They’ll cost you 10% more.

Mary Jo Foley
April 8, 2025
Exchange & Outlook, On-premises, Skype for Business Server, Teams
Free-form dots in a wave on a black background

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. As of July 1, the Core Client Access License (CAL) Suite and Enterprise CAL Suite will both see price increases of 15% and 20%, respectively. Note that because all of your use rights for the products in question are already included in your suites, you will not be affected by these changes if you are a Microsoft Enterprise Agreement (EA) customer with only E3/E5 users. 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. (In the past, Microsoft officials had predicted that the new Exchange and Skype for Business Servers would arrive in the first quarter of 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 SKU Reprieve for Separate Teams 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.
In an April 1, 2025, update to the Partner Center announcement site, Microsoft stated, “(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.” Prior to this announcement, the standard policy for EA customers moving to CSP was that they could not purchase Teams-enabled Microsoft 365 suites because they were “net new” (to CSP). 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.