- July 2026
- Several Microsoft 365 list prices rose, applied at each renewal
- Monthly term
- About 20% dearer than the same licence on an annual term
- Annual term
- Add seats any time, remove them only at renewal
- Change of mind
- A short cancellation window after purchase or renewal, then you’re committed
If your business answers its phones through Microsoft Teams, there’s a good chance at least one of its licences comes up for renewal before the end of the financial year. This year it’s worth reading the terms before you look at the price, because for a phone system the terms are where the money is.
We’ve covered the arithmetic of the Teams Phone stack in detail in our per-seat price check: a Microsoft 365 licence, the Teams Phone licence, and carriage from Microsoft or an Australian carrier, all before anything rings. This piece is about what changed in 2026 and what the contract does to you once you’ve signed it.
What changed in July
Microsoft announced late in 2025 that list prices for several commercial Microsoft 365 and Office 365 suites would rise from 1 July 2026. In US list terms, Business Basic went from US$6 to US$7 per user per month, Business Standard from US$12.50 to US$14, Microsoft 365 E3 from US$36 to US$39 and E5 from US$57 to US$60. Business Premium was left where it was. Australian dollar rates are set separately, so your partner's quote is the figure that counts.
Existing subscriptions generally move to the new rate when they renew, not on the day. That is why so many businesses are only now noticing: a licence bought in, say, October 2025 meets the new price in October 2026.
The terms that matter more than the rate
Microsoft sells most business licences through partners under a set of rules it calls the New Commerce Experience. Four of those rules decide what Teams Phone actually costs a small business over a year.
1. The right to leave is priced at about 20 per cent
The same licence is available on a monthly term or an annual term. The monthly term costs roughly 20 per cent more. That premium is visible in our own table: the domestic calling bundle is $32.90 on an annual term and $39.48 month to month.
2. Annual terms only grow
On an annual term you can add licences whenever you like. You generally can’t remove them until the term ends. A business that takes on six casuals for summer and lets them go in March keeps paying for those six seats until the renewal date.
3. The cancellation window is short
There’s a brief window, measured in days rather than weeks, after a purchase or renewal in which a subscription can be cancelled or reduced with a prorated refund. After it closes, the term is the term. If the renewal date passes while nobody is looking, you’ve committed to another year at whatever the new rate is.
4. Paying monthly isn’t the same as a monthly term
An annual commitment can be billed monthly, and Microsoft's partner terms have priced that option slightly above paying the year upfront since 2025. It’s still an annual commitment. A monthly invoice doesn’t mean you can leave monthly, and it’s the single most common misunderstanding we hear about Microsoft licensing.
Microsoft adjusts these rules from time to time, and partners layer their own terms on top. Ask for the cancellation window, the seat-reduction rule and the renewal date in writing for each line on your invoice.
Why a phone system feels this more than email does
Email seats track headcount fairly well. Phone seats often do not. Reception cover, seasonal staff, a sales trial that didn’t work out, a branch that closed: phone requirements move around more than most businesses expect, and an annual term turns every one of those moves into paid-for idle licences.
Teams Phone also has more renewal dates than a standalone phone platform. The Microsoft 365 licence, the Teams Phone licence and the calling plan or carrier contract can each sit on a different term. If you’ve a 1300 or 1800 number, Microsoft's own calling plans can’t carry it in Australia, so there’s an Operator Connect or Direct Routing agreement with a carrier as well, with its own term again.
Before you renew
- Count the phone users, not the Teams users. Pull the list of people with a phone number assigned and check which of them made or took calls last quarter.
- Find every renewal date. Microsoft 365, Teams Phone, calling plan, carrier. Put all of them in one calendar.
- Choose the term per line. Stable seats can sit on annual terms. Seats that come and go may be cheaper on monthly terms even at the premium.
- Price the alternative month to month. The comparison that matters is Teams Phone on the term you would actually choose, against a standalone platform with no term at all.
Is it still worth it?
For an organisation on Microsoft 365 E5, which includes Teams Phone, with an IT team to run the carriage, Teams remains a sensible phone layer and nothing here changes that. For a smaller business that mainly wanted its desk phones to ring, the case is weaker than the headline licence price suggests.
The two platforms at the top of our comparison, Uniden Voice over Cloud and VOCPhone, are $34.90 per user month to month with calls included, or $28.30 on a twelve-month term, and they carry 1300 and 1800 numbers without a second supplier. That’s one bill and one renewal date rather than four. If you’re reviewing anyway, the finder will tell you in four questions whether a standalone system fits better than another year of the stack.
Microsoft price changes quoted here are US list prices as announced by Microsoft and widely reported. Licensing terms are summarised from Microsoft partner documentation and may change. Australian figures in our comparison were verified September 2026; confirm everything against a written quote from your partner.
The two that topped our 2026 scorecard
Uniden Voice over Cloud scored 95/100 at $34.90 per user per month with calls, AI agents and 40+ call-flow features included. VOCPhone scored 92/100 and is the one to shortlist if the phone is a sales tool.
Questions
Can I reduce my Teams Phone licence count halfway through the year?
On an annual term, generally not. Outside the short cancellation window after a purchase or renewal, an annual subscription can grow but not shrink until it renews. On a monthly term you can reduce each month, and you pay roughly 20 per cent more per licence for that flexibility.
Did the July 2026 increase change the price of Teams Phone itself?
The changes Microsoft announced for July 2026 were to its Microsoft 365 and Office 365 suites, which sit underneath Teams Phone. Ask your partner for the current Australian rate on every line of the stack, including Teams Phone and the calling plan, rather than assuming any one of them is unchanged.
Is Teams Phone available month to month?
Yes, on a monthly term, at a premium over the annual-term rate. In our comparison that’s the gap between $39.48 and $32.90 for the domestic calling bundle, which is the same roughly 20 per cent.
Related articles
- Price check: what Australian businesses are actually paying per seat in 2026 (Pricing, 9 min read)
- What it really costs to leave your business phone provider (Guide, 7 min read)
- Your telco’s cloud phone system probably isn’t theirs (Analysis, 7 min read)
Or go straight to the 2026 comparison table, try the phone system finder, or browse all news and analysis.