Price hikes are coming to Microsoft, effective in July and August 2025. These increases will mainly impact enterprise customers, and particularly those maintaining on-premise infrastructures.
As of mid-2025, Microsoft is:
After significant price increases in April of 2025, these changes are in line with Microsoft’s ongoing strategy to drive cloud adoption and reinforce their Modern Lifecycle policy for core products. If your company has significant on-premise Microsoft infrastructure, this is an important update to plan for. In this article, we’ll cover the market context surrounding these changes, an in-depth breakdown of the price changes, and practical steps to assess impact and prepare accordingly.
Microsoft’s licensing model has undergone big strategic shift this year. Following notable price increases in April 2025 for cloud-based services like Power BI and Teams Phone, they’re now targeting their on-premises product suite.
Microsoft’s incentive programs for on-premise to cloud migration have been ongoing since as early 2023, if not earlier, and this new update forms part of their continued efforts to phase users out of both legacy and on-premise deployments and accelerate the transition to cloud-dominated environments. The July/August price increases come after a set of changes in April 2025, primarily targeted at cloud services and reflecting a consistent trend toward pricing realignment across Microsoft’s portfolio.
The cloud incentive trend forms part of broader trends impacting IT budgets globally, as companies who either prefer or are required to remain on-premise for operational reasons face rising costs year-over-year for the same set of software products.
As of mid-2025, the following price increases will be implemented:
1. On-Premises Server Products
This increase coincides with the general availability of new Subscription Editions for these products, which fall under Microsoft’s Modern Lifecycle policy. Organizations still using perpetual licenses for these workloads will now face steeper costs.
2. CAL Suites
Effective August 1st, Client Access License suites are also seeing substantial increases:
The price for Core CAL Suite will go up by 15%, while Enterprise CAL Suite pricing will go up by 20%.
Originally planned for July, the effective date for CAL Suite increases has been extended to August 1st. This gives companies a window (although a narrow one) to make the appropriate strategic adjustments.
These increasing will have significant impact on customers on Enterprise Agreements (EA) and Enterprise Subscription Agreements (EAS), particularly those with high CAL consumption.
1. Audit and Optimize Licensing
To determine the impact of the upcoming price increases, immediately review your existing on-prem CAL usage and standalone server deployments. Eliminate over-licensing and consolidate where possible.
2. Assess Cloud Migration Readiness
With price hikes reinforcing Microsoft’s cloud-first trajectory, now is the time to reassess your readiness for Microsoft 365 or hybrid configurations. If you must remain on-prem for other operational reasons, cost modelling that anticipates increased costs may also be useful.
3. Leverage Contract Negotiation Windows
If your EA or EAS is up for renewal, use the price hikes as leverage to negotiate:
If you’d like more support on negotiation strategies, our Microsoft Practice Director has a fantastic Microsoft Negotiation clinic webinar that shares his playbook for renewal preparation and negotiation. Get access to it here.
4. Engage Licensing Advisors
Engage Microsoft licensing consultants to model cost impacts and optimize entitlements in your next renewal to help you offset the rising cost of Microsoft products. Sometimes price increases are unavoidable, but there’s almost always other optimizations that can offset the cost and even save money.
If you’re interested on our Microsoft optimization methodology, you can book a discovery call with one of our Microsoft licensing experts here.
The mid-year 2025 price adjustments by Microsoft are more than routine increases. They’re sending a clear message on their intentions: the value of legacy and on-premise systems will continue to deprecation, so pay more or exit stage left into the cloud. As more organizations heed the call, demand for cloud migration support and budget control will rise sharply. If you’re already planning a cloud migration, early preparation will be key to long-term success, as well as cost and operational efficiency.
Enterprise leaders must act swiftly to lock in current pricing where possible, evaluate long-term cloud strategies, and strengthen contract terms in upcoming negotiations.
The time to prepare is now. Ignoring these changes could lead to substantial unbudgeted costs and strategic disadvantages in the evolving Microsoft ecosystem. Stay informed, stay proactive, and leverage these shifts to optimize your software spend.
2Data is an independent software licensing advisory specializing in Microsoft, Oracle, SAP, Salesforce and IBM optimization. We help companies reduce contract costs, manage risk, and simplify their software licensing.
