Microsoft Extended Service Terms and 2026 Price Increase: What to Know

The Microsoft Cloud Solution Provider (CSP) program is changing, with two updates arriving within weeks of each other that will affect how commercial customers manage Microsoft 365 renewals and budget planning.

Beginning May 4, 2026, Microsoft is changing how CSP subscriptions behave when auto‑renew is turned off. Then, starting July 1, 2026, Microsoft 365 pricing increases for commercial customers will apply at each subscription’s next renewal on or after that date.

While these updates are separate, they both surface at renewal. This article outlines what’s changing how the updates connect, and what to review now to avoid unintended disruption.

Microsoft’s Introduction of Extended Service Terms

Microsoft is introducing a new program concept called Extended Service Terms (EST), effective May 4, 2026, which changes how CSP subscriptions behave when auto‑renew is turned off. As part of this update, Microsoft is eliminating the 30‑day grace period that previously allowed subscriptions to remain active after expiration without renewal action.

Under Microsoft’s program design, when auto‑renew is turned off, CSP subscriptions follow one of two paths:

• They cancel at expiration, resulting in an immediate stop of service, or
• For partners that opt in, subscriptions may transition to Extended Service Terms, where service continues on a month‑to‑month basis at a premium ranging from 3% to 23% depending on the original commitment term.

Extended Service Terms is a Microsoft‑defined extension option. It does not lock in pricing and does not replace a formal subscription renewal.

How CDW Is Handling the Introduction of Extended Service Terms

At this time, CDW is not offering Extended Service Terms. To ensure clarity and avoid unexpected costs or service disruption, any subscription purchased through CDW with auto‑renew turned off will cancel at expiration, with no continuation of service. Extended Service Terms will not be applied or enabled for subscriptions managed through CDW.

Microsoft is also implementing a pricing update for commercial customers, effective July 1, 2026. The change primarily impacts Microsoft 365 subscriptions and applies at each subscription’s next renewal on or after that date, rather than immediately on July 1.

Because both the auto‑renewal behavior change and the pricing update surface at renewal, customers may encounter both during the same review cycle.

Your CDW account manager can help confirm which subscriptions are affected and when updated pricing would apply.

Because both updates impact renewal timing and behavior, a single review of your CSP environment can address them together.

• Review upcoming renewals
  Identify which subscriptions are nearing expiration and which renew on or after July 1, 2026.
• Confirm auto‑renew settings
  Pay close attention to any subscriptions with auto‑renew turned off.
• Take proactive action for non‑renewing subscriptions
  Turn auto‑renew on at least one week before expiration, or plan for service cancellation and transition users accordingly.
• Plan for budget impact
  Align renewal timing with Microsoft’s July 1 pricing changes so budgets and forecasts stay on track.

Working with your CDW account manager ahead of expiration helps ensure continuity of service and reduces the risk of unintended disruptions.

Do I need to take action by May 4, 2026?
If any of your CSP subscriptions have auto‑renew turned off, yes. After May 4, those subscriptions will cancel at expiration with no grace period. Reviewing renewal settings in advance helps ensure the outcome aligns with your plans.

What are Extended Service Terms?
Extended Service Terms is a Microsoft‑announced program designed to allow CSP subscriptions to continue on a paid, month‑to‑month basis after expiration. While Microsoft has introduced this option at a program level, Extended Service Terms are not currently available for subscriptions managed through CDW and will be offered at a future date.

How are Extended Service Terms priced?
When enabled by Microsoft‑approved partners, Extended Service Terms are billed monthly at a premium ranging from 3% to 23% over list price, depending on the original commitment term. This option is not currently available through CDW.

Which subscriptions does the July 1, 2026 price increase apply to?
Microsoft’s July 1, 2026 pricing update impacts a broad range of Microsoft 365 subscriptions, with varying percentage increases depending on product segment.

Within the Business portfolio, Microsoft 365 Business Basic will increase by 16% (or 23% without Teams), and Business Standard will increase by 12% (or 16% without Teams). Frontline offerings will see larger changes, with Microsoft 365 F1 increasing by 33% and F3 by 25%.

In the Enterprise portfolio, pricing adjustments are more moderate. Microsoft 365 E3 will increase by approximately 8%, Microsoft 365 E5 by about 5%, and Office 365 E3 by 13%, while Office 365 E1 will remain unchanged. Several standalone and add‑on products are also affected, including Windows E5, Enterprise Mobility + Security (EMS) E5, Entra Plan 2 and Windows Enterprise per device.

Overall, price changes range from 5% to 16% for most core enterprise and business SKUs, with higher increases applied to frontline and select standalone offerings.

What’s the best next step?
Schedule time with your CDW account manager to review upcoming renewals, confirm auto‑renew settings, and understand how the July pricing changes affect your environment.