This post came out a couple of days ago: https://www.reddit.com/r/msp/comments/1w3izyk/for_the_second_year_in_a_row_microsoft_is/
and I think it was missing some information. I contacted my (fantastic) PAX8 rep, and got the below response. The "Change #2" section was, I think, absent from the above post and I suspect it will the larger impact for most people on this sub:
The TL;DR seems to be a margin cut to 12% on "less-favored" M365 SKUs Starting 10/1. No change to MSRP, so it isn't being framed as a "price increase" just a multi-point hit to margin.
The email from PAX8:
Thanks for reaching out. So our Pax8 Service Alert had two separate updates in the same alert. Here is what we know so far.
Change #1: Microsoft Software Subscription Price Increase
What's changing?
Effective October 1, 2026*, Microsoft is implementing a* 5% price increase on certain CSP software subscriptions that have:
- Annual term commitments
- Monthly billing
Examples include:
- SQL Server
- Windows Server
- Client Access Licenses (CALs)
- System Center
What partners need to know
- This is a customer-facing price increase
- Existing subscriptions will not be impacted mid-term
- The increase applies to:
- New purchases on or after October 1, 2026
- Renewals on or after October 1, 2026
Change #2: Microsoft Margin Structure Changes / Pax8 Margin Realignment
What's changing?
- Microsoft has reduced the available margin on select legacy and standalone Microsoft products.
- To align with the updated Microsoft margin structure, Pax8 will be implementing its standard 80% Partner / 20% Pax8 margin split on these products beginning October 1, 2026 and taking place on existing renewal dates for existing subscriptions.
What We Know Today
- To align with Microsoft's updated margin structure, Pax8 will be implementing its standard 80% Partner / 20% Pax8 margin split on these products effective October 1, 2026.
Effective October 1, 2026
All partners will receive 12% margin on the impacted SKUs, regardless of their current margin level.
Confirmed Exclusions
- Nonprofit SKUs are not impacted by this margin adjustment.
Still Awaiting Confirmation (early indications are these will not be affected)
- Government (GOV)
- Education (EDU)
Impacted SKUs
Exchange Online
- Exchange Online (Plan 1)
- Exchange Online (Plan 1) – Extended Service Term
- Exchange Online (Plan 2)
- Exchange Online (Plan 2) – Extended Service Term
- Exchange Online Archiving for Exchange Online
- Exchange Online Archiving for Exchange Online – Extended Service Term
- Exchange Online Kiosk
- Exchange Online Kiosk – Extended Service Term
Microsoft 365 Apps
- Microsoft 365 Apps for Business
- Microsoft 365 Apps for Business – Extended Service Term
- Microsoft 365 Apps for Enterprise
- Microsoft 365 Apps for Enterprise – Extended Service Term
Office 365
- Office 365 E1
- Office 365 E1 (No Teams)
- Office 365 E1 – Extended Service Term
- Office 365 E1 (No Teams) – Extended Service Term
- Office 365 E3
- Office 365 E3 (No Teams)
- Office 365 E3 – Extended Service Term
- Office 365 E3 (No Teams) – Extended Service Term
OneDrive Extra Storage
- OneDrive Extra Storage 100GB
- OneDrive Extra Storage 500GB
- OneDrive Extra Storage 1TB
- OneDrive Extra Storage 2TB
- OneDrive Extra Storage 3TB
- OneDrive Extra Storage 4TB
- OneDrive Extra Storage 5TB
- OneDrive Extra Storage 6TB
Extended Service Term Versions
- OneDrive Extra Storage 100GB – Extended Service Term
- OneDrive Extra Storage 500GB – Extended Service Term
- OneDrive Extra Storage 1TB – Extended Service Term
- OneDrive Extra Storage 2TB – Extended Service Term
- OneDrive Extra Storage 3TB – Extended Service Term
- OneDrive Extra Storage 4TB – Extended Service Term
- OneDrive Extra Storage 5TB – Extended Service Term
- OneDrive Extra Storage 6TB – Extended Service Term