Selling less as an upgrade

Microsoft changes how storage works in Microsoft 365 Family and Premium. Until now, each member of a subscription got 1 TB of OneDrive storage. A subscription has up to six members, so a full family had 6 TB. The new model replaces this with one shared pool of 2 TB for the whole family. New subscriptions use it since 2026-10-08. Existing subscriptions change at the first renewal after 2027-05-02.

Microsoft announces this as an improvement. It is a cut of up to two thirds.

Pooling is not the problem. The cap is. Google One and iCloud+ also share one pool in a family. A pool of 6 TB would be strictly better than six separate buckets of 1 TB. What Microsoft sells is a pool that is a third of the old total, for the same price.

The arithmetic

Members using their storage Old capacity New capacity
1 1 TB 2 TB
2 2 TB 2 TB
3 3 TB 2 TB
6 6 TB 2 TB

Microsoft says that members are “less likely to run out of individual storage limits”. This is true, because individual limits no longer exist. The family limit that replaces them is lower for every family with three or more active members.

Who wins

Microsoft says that “unused storage can benefit the entire family”. This helps only when one member needs more than 1 TB and the others use almost nothing. That is a small household with one power user. In all other households, the unused storage that “benefits the family” was already there. It was just labelled with a name.

Contention

Microsoft says that “storage automatically goes where it’s needed”. Before the change, each member had 1 TB that nobody else could take. After the change, one phone that backs up 4K video can fill the pool, and sync stops for everybody. The announcement mentions no per-member quotas and no controls for the subscription owner. Your files stay private. Your ability to save new ones does not.

The upsell

Microsoft says that “additional storage purchases can help everyone with the subscription”. Translated: the way back to the capacity you had is to pay for it. Add-on storage goes up to 10 TB, or you upgrade to Microsoft 365 Pro with a 5 TB pool. The change creates the demand, and the same page sells the fix.

Shrinkflation

The announcement mentions no price change. The price stays, the storage goes from 6 TB to 2 TB. For a family of six, that is a price increase of 200 % per terabyte. Snack makers do this with smaller bags. They do not usually call the smaller bag “more flexible”.

The increase grows with each member who uses their storage. Only a single user pays less per terabyte. Two users break even. From the third member on, every person in the family makes each terabyte 50 percentage points more expensive.

−50 % +50 % +100 % +150 % +200 % 0 % 1 member: 1 TB before, 2 TB after, price per TB −50 % 1 member: 1 TB before, 2 TB after, price per TB −50 %−50 % 1 2 members: 2 TB before, 2 TB after, price per TB ±0 %±0 % 2 3 members: 3 TB before, 2 TB after, price per TB +50 % 3 members: 3 TB before, 2 TB after, price per TB +50 %+50 % 3 4 members: 4 TB before, 2 TB after, price per TB +100 % 4 members: 4 TB before, 2 TB after, price per TB +100 %+100 % 4 5 members: 5 TB before, 2 TB after, price per TB +150 % 5 members: 5 TB before, 2 TB after, price per TB +150 %+150 % 5 6 members: 6 TB before, 2 TB after, price per TB +200 % 6 members: 6 TB before, 2 TB after, price per TB +200 %+200 % 6 Members who use their storage
Change in price per terabyte by number of members who use their storage.

The grace period

Members over the limit keep access to their files “for up to one year”. Microsoft presents this as a courtesy. It is a deadline. Within this year, a family with 4 TB of photos has three options:

  1. Delete 2 TB of their own memories.
  2. Pay more for the storage they already had.
  3. Move everything to another provider, by hand, with home upload speeds.

Your data is perfectly safe. It is just not entirely yours to keep without paying a ransom fee. The kidnapper is polite, though: you get twelve months’ notice and regular reminder emails.

The framing

The support page lists four benefits. It does not put the old total of 6 TB next to the new total of 2 TB anywhere. A change that is good for customers does not need to hide the one number that customers would compare.

A plain headline would be “Family plans now include 2 TB instead of up to 6 TB”. Microsoft chose “storage automatically goes where it’s needed”. It does: to the add-on storage checkout.

What to do

  1. Check how much storage your family uses today, per member and in total.
  2. If the total is above 2 TB, plan now. You have until your first renewal after 2027-05-02, plus the grace year.
  3. Compare the price of add-on storage with other providers before you pay to keep what you already had.