Re-evaluating total costs with AI amidst Microsoft 365 price hikes: decision framework for switching to Google Workspace

The annual Microsoft 365 renewal quote, typically unchanged year to year, came in more than 10% higher this year—even without any change in headcount. With the price increase for Microsoft 365 commercial plans taking effect on July 1, 2026, and new pricing applying to existing contracts sequentially on their respective renewal dates from July 1 onward, this shock of opening renewal quotes will reach companies in turn throughout the coming year. While many business leaders and IT personnel may have contemplated switching to Google Workspace at this juncture, the metric for comparison today extends beyond differences in base licensing fees. Both Microsoft and Google have completed restructuring their pricing structures over the past year to incorporate AI. What you need to evaluate is total cost inclusive of AI based on your actual business usage.

First determine when and by how much costs will rise for your company

Hearing about a price increase often prompts an immediate urge to explore migration, but the first step is pinpointing the exact financial impact and timeline for your organization. This revision does not apply uniformly across all plans; the scope and rate of increases vary by tier.

* Monthly cost per user on an annual commitment. Yen figures are tax-exclusive reference conversions from Microsoft's direct US dollar pricing; actual billed amounts vary based on contracting channel (direct vs. reseller), currency exchange rates, and applicable taxes.

Three key points stand out: Business Basic and Standard—the mainstays for SMEs—face the highest percentage increases; Business Premium and Office 365 E1 remain unchanged, meaning not every plan is rising; and for existing contracts, changes take effect starting on the first renewal date on or after July 1. A company whose renewal falls in May next year still has a 10-month evaluation window. Checking your renewal date will immediately clarify whether you must make an urgent decision or can conduct a thorough, measured comparison.

Another factor that cannot be overlooked is that this price adjustment is bundled with expanded functionality. Copilot Chat support is broadening across all plans to include email, calendars, and agent usage inside Office apps. For E3 and E5, advanced Intune features are becoming standard, which may actually reduce overall spending for companies previously paying for these as separate add-ons. Understanding this as a restructuring that embeds AI and security as standard in exchange for higher base fees reveals the next comparison dimension.

Google Workspace has already completed its restructuring to include AI

Does this mean Google Workspace remains cheaper? The reality is not quite that simple. Google already completed a realignment in the same direction ahead of Microsoft.

In 2025, Google Workspace integrated Gemini AI features—previously a paid add-on exceeding ¥2,000 per user monthly—as a standard capability across all tiers, adjusting base pricing accordingly. Furthermore, transitional grace-period pricing for small organizations with 10 or fewer users has been expiring sequentially on renewal dates starting in January 2026. Maintaining lower grandfathered rates simply because of small team size is no longer an option.

Official pricing as of July 2026 on an annual commitment stands at ¥800 for Business Starter, ¥1,600 for Business Standard, and ¥2,500 for Business Plus (per user monthly, tax exclusive). These rates include Gemini, and tiers from Standard upward allow AI usage directly inside Docs, Sheets, Slides, and Meet. The specific features available by plan are detailed in our article breaking down decision criteria for Gemini plan selection.

In short, 2026 marks the year both Microsoft and Google aligned on the model of "including baseline AI in base licensing, charging extra only for heavy usage." Many comparison articles published several years ago compare base rates excluding AI, but that yardstick no longer reflects operational reality.

Comparing total costs inclusive of AI changes the landscape

Comparing the pricing structures of both suites inclusive of AI reveals distinct differences.

In brief, Google Workspace includes practical, day-to-day AI in standard plans, allowing you to expand quotas only for heavy users, whereas Microsoft 365 broadens foundational Copilot Chat access but requires an add-on license of ¥4,497 per user monthly for full AI capabilities inside Word and Excel.

Consider a company with 30 employees where 10 actively use AI. With Microsoft 365 Business Standard, the base cost is roughly ¥63,000 monthly after revisions; adding Copilot for 10 users brings the total to approximately ¥108,000 per month. Structuring the same team on Google Workspace Business Standard yields a base cost of ¥48,000 monthly with Gemini accessible to everyone; even if adding AI Expanded Access for three heavy power users, the total remains around ¥57,000 per month. Under these assumptions, the difference reaches roughly ¥600,000 annually.

However, this estimate fluctuates significantly depending on who receives AI access and to what extent. If Copilot is assigned to no one, the gap between Standard tiers shrinks to around ¥500 per user monthly; if provisioned to everyone, the gap surpasses ¥100,000 per month. The ultimate answer to total cost lies not in pricing tables, but in your organization's reality of who uses AI and how much.

Cost predictability adds another critical consideration. Copilot Cowork, made generally available on June 16, functions as agentic AI capable of handling time-consuming tasks autonomously, but its pricing combines the base Copilot license with consumption-based credit billing. Deploying it without clear usage policies can make monthly billing unpredictable. For SMEs seeking to leverage AI within predictable, fixed budgets, this distinction can matter just as much as baseline license fees.

Deciding solely because "it becomes cheaper" leads to failure

Reading this far might make Google Workspace appear to be the clear winner, but from our perspective of consulting on migrations for clients, migrations motivated solely by cost differences run a high risk of encountering friction. Before looking at quote discrepancies, three core factors must be evaluated.

First is dependence on desktop Office applications. Microsoft 365 Business Standard includes installable desktop versions of Word, Excel, and PowerPoint, whereas Google Workspace does not. In companies that regularly exchange complex Excel files with external clients or rely on VBA macros for order processing and inventory tallying, this presents a substantial barrier. A hybrid structure—identifying who truly requires desktop Office and retaining Microsoft licenses only for them—frequently serves as the practical middle ground.

Second is navigating critical technical cutovers during migration. Can historical emails be migrated without data loss? Can MX record changes be executed without mail delivery downtime? How will file storage destinations be structured? Missteps in planning will halt business operations, as detailed in our article summarizing common pitfalls when migrating from Microsoft 365 to Google Workspace. Migration costs should be budgeted separately as one-time first-year expenses, rather than conflated with ongoing operational savings.

Third is clarifying the fundamental purpose of switching. Price increases are merely a catalyst; functional and operational fits remain as distinct as ever. While functional comparisons reflecting workplace habits are explored in our Google Workspace vs. Microsoft 365 comparison article, a migration succeeds only when you transform the initial shock over renewal quotes into a deliberate strategy for designing your company's information infrastructure.

Model case: Moving away from one-size-fits-all licensing at renewal

To illustrate the decision process concretely, consider a model case: a wholesale distributor with just under 30 employees. Upon receiving notice from their reseller that Microsoft 365 billing would increase starting with their post-July renewal, management began considering a migration to Google Workspace. At this stage, leadership usually envisions a simple, wholesale shift—moving everyone together to whichever platform is cheaper.

When taking inventory of actual usage across all staff before comparing quotes, it is common to find that only a few sales administrators use macro-enabled Excel sheets for ordering and inventory, while the vast majority primarily use email, calendars, and file viewing. Meanwhile, requests to use AI in daily work have surfaced from sales and planning teams, yet budget requests for add-on Copilot licenses have repeatedly been deferred. The price revision notice often acts as the catalyst that brings this unaddressed misalignment to the surface.

The realistic solution here is to stop migrating everyone uniformly. Maintain Microsoft licenses for the desktop version of Office only for the few members who handle macro tasks, and move the remaining members to Google Workspace Business Standard in a hybrid setup. The core foundation for email, calendar, and file sharing is consolidated on Google, giving everyone access to Gemini within its standard offering. Under this configuration, your monthly burden decreases compared to continuing to pay post-price-increase rates for everyone, making the previously sidelined goal of "AI for all" a reality without purchasing additional licenses. What works isn't choosing whichever is cheaper, but taking the price increase as an opportunity to count "who actually needs what" before restructuring your setup.

Two things to do before your renewal date

First, confirm your contract renewal date and purchasing channel. Because the new pricing takes effect starting with renewal dates on or after July 1, the time remaining until your renewal date is the exact window available for consideration. Costs and negotiation room also vary depending on whether you purchase directly or through an agency. Next, take stock of actual usage, including AI. How many people truly need desktop Office, and who wants to use AI on a daily basis? Once you have these two numbers, the high-level picture of whether to "optimize your configuration within M365," "switch to Google Workspace," or "use a hybrid setup" becomes clear even before requesting quotes.

If you are hesitating over a switch after reviewing your renewal quote, cannot determine which platform fits your company better when factoring in AI, or are unsure of the steps to migrate without disrupting operations—please feel free to reach out via GleamHub's free IT and Google Workspace consultation. From assessing your current contracts and actual usage to comparing total costs including AI, proposing configurations (including hybrid models), and mapping out realistic migration roadmaps, we partner with you at a pace that fits your organization.

Sources

• Implemented July 2026: About the Price Revision for Microsoft 365 Commercial Products - Alternative Architecture DOJO
• Notice of Microsoft 365 Price Revisions (From July 2026 Onward) - NTT DOCOMO Business
• Revised from July – New Pricing and Features for Microsoft 365 - 365Room
• Microsoft 365 Copilot Plans and Pricing - Official Microsoft
• General Availability of Copilot Cowork Begins - Microsoft Source Asia
• Compare Flexible Pricing Plan Options - Official Google Workspace
• [From January 2026] Google Workspace Price Revision Now Includes Organizations of 10 or Fewer - office masui
• AI Expanded Access - Google Workspace Help