The M365 suite of Office applications primarily those of Excel, PowerPoint, and Word, has been around for quite some time. Consumers, especially those of businesses, have found it to be far most cost effective to use these productivity tools straight from the Cloud rather than buying them separately, at the retail level. There are a lot of advantages to this, especially that of scalability and affordable pricing.

As the business dynamics change for each customer, there was a lot of flexibility offered in terms of adding or reducing the number of licenses that were needed. This allowed for many SMBs to literally stay afloat during these turbulent times, and to preserve the much-needed capital.

But starting in March of this year, Microsoft is going to raise the prices of the M365 suite for the first time in time in 10 years. This certainly has raised some concerns, and the information as to what to expect and how to plan for future capital budgeting is still unclear. But so far, here is what we know.

What Is Changing?

The pricing is going to increase at least by 20 – 31%, and is set to take place by March 1st of this year. Here is a flavor of what to expect, as it is illustrated in the matrix below:

The Plan The Price Increase
Microsoft 365 Business Basic An increase of up $1 to $6 per month, per user
Microsoft 365 Business Premium An increase of $2 to $22 per month, per user
Office 365 E1 An increase of $2 to $10 per month, per user
Office 365 E5 An increase of $3 to $38 per month, per user
Microsoft 365 E3 An increase of $4 to $36 per month, per user
Office 365 E3 An increase of $3 to $23 per month, per user

(SOURCE: 1).

As one can see above, these price increases can have a financial impact on a business, which is largely dependent upon the total number of end users that they have at the current time. Microsoft has not released the new license changes for the Education and Charity Plans yet.

The Other Factors

Apart from the price increases, there are other key factors that you need to know of as well, which are as follows:

  • You will be required to sign brand new agreements
  • Microsoft is terminating the legacy CSP subscriptions
  • Legacy CSP subscriptions cannot be renewed after March 10
  • Microsoft new subscription terms are Monthly, Yearly and tri annual.
  • New subscription terms have a 72-hour cancellation window
  • There will be three new M365 licensing agreements:
    • A 1-month agreement (this is the most flexible option, but it has the highest cost);
    • A 1-year agreement (this can be paid monthly or upfront);
    • A 3-year agreement (this can be paid on annual or monthly basis);
    • The price guarantee is based on the terms of the agreement;
    • There will be on average a 20% to 31% price increase for the monthly agreements;
  • With the annual contract, the pricing will remain the same for the entire year, but you cannot lower the number of licenses during that term. However, you can add licenses as needed at the same pricing during the remainder of this contract;
  • With the 3-year contract, the features are the same as the annual contract, but the required commitment is for a three-year time period.

Conclusions

The time to act on these price changes is NOW. You do not want these price increases to catch you by surprise. If you have any questions, or need help in figuring out the financial impact to your business, contact us today. Matt Katzer, the Founder and CEO of KAMIND IT, also participated in a recent podcast, specifically discussing these price increases. You can download the podcast here.

Sources

  • https://www.computerworld.com/article/3630634/microsoft-plots-price-hikes-for-most-office-microsoft-365-subscriptions.html