Microsoft have recently announced price increases from March 2022, and at the same time announced the “New Commerce Agreement” affecting how we subscribe to their services.
When Office 365 was launched in June 2011, it included just Word, Excel, Powerpoint, Outlook, Lync, Exchange and Infopath. Ten years later, and around 24 new apps have been added, with many more additional capabilities. Key improvements are
- Microsoft Teams introduced, replacing Skype that in turn replaced Lync
- Realtime collaboration on Word/Excel/Powerpoint documents, along with auto-save
- Exchange mailboxes and Onedrive storage has grown
- Security has increased, including message encryption
- Mobile device management (MDM) and related solutions implemented for remote devices
- AI improvements, including those that sort and remove clutter in Outlook
No wonder that with no “substantive pricing update” since 2011, Microsoft think it’s time for a shake up
The price increases
The following products are subject to a change, effective from 1st March 2022:
- Microsoft 365 Business Basic (from $5 to $6)
- Microsoft 365 Business Premium (from $20 to $22)
- Office 365 E1 (from $8 to $10)
- Office 365 E3 (from $20 to $23)
- Office 365 E5 (from $35 to $38)
- Microsoft 365 E3 (from $32 to $36)
As of writing, the price increases given by Microsoft are only listed in USD. In time we will expect to be given the global variations (and therefore GBP as well) – don’t rely on your currency converter as unlike the exchange rate, GBP prices will be fixed.
The commitment changes
Whilst the pricing for Office 365 is normally given or displayed as a monthly cost, these are in fact the annual commitment rates which attract a 20% discount. Up to now, Microsoft have not enforced this commitment when dealing with partners such as VMit, and so businesses have been able to increase/decrease licences as required with no cancellation policies.
From September 2022, all end-users must either:
- Move to an annual commitment, but with only pro-rata quantity increases available. No decreases possible until the end of the 12 months. Can be paid monthly
- Stay on monthly commitment only, but pay an additional 20% for this flexibility. Licence quantity can be decreased at the end each of month
All plans are subject to a 72 hour cancellation policy, whereby after this period the full term is charged.
As of writing this article, there are still some scenarios which Microsoft are yet to comment on
- Whether mixing and matching commitment types is possible for the same end client
- Should a client migrate between IT support companies, whether commitments can be moved over (or if they have to start afresh)
We have fed back those questions to Microsoft, and we will hopefully get some more clarity in the not too distant future
So what does this all mean for me?
Firstly, we estimate that the price increases will only affect a handful of our customers, who mainly use Microsoft 365 Business Standard, Apps for Business and Exchange Online. Only a few Microsoft 365 Business Basic licences are used across our customer base.
However, all customers will have to choose between the annual or monthly commitment cycles.
Due to the additional premium when on the monthly cycle, we would recommend the overwhelming majority of businesses commit to the annual commitment model. If committing to this model prior to the planned price increases, this will also have the bonus of fixing your prices until the end of your 12 months.
Do I need to do anything now?
No. But keep an eye out as we will:
- Update our customers and this page when Microsoft publish the GBP prices
- Proactively be contacting our customers facing price increases during January 2022, to offer the annual commitment subscriptions and fix their costs until 2023.
By July 2022, we will have contacted all of our customers to confirm they wish to move onto the annual commitment.