After a decade of consistent pricing, Microsoft is making some big changes to the way it bills, terms and renews Microsoft and Office 365 subscriptions and licenses. Here is what you need to know about new Microsoft pricing changes due in 2022.
At its launch in June 2011, Office 365 included the Word, Excel, PowerPoint, Outlook, Lync, Exchange, and InfoPath apps. Since then, and particularly since 2017, Microsoft has added and enhanced a host of entirely new capabilities including: Access, Bookings, Delve, Forms, GroupMe, Kaizala, Lens, Lists, OneDrive, OneNote Class Notebook, Planner, Power Apps, Power Automate, Power BI, Publisher, SharePoint, Staff Hub, Stream, Sway, Teams, To-Do, Visio, Whiteboard, and Yammer. With more and more packed into the Office and Microsoft 365 offerings, it was only a matter of time before Microsoft’s “decade of continuous innovation” had to translate into pricing uplifts to support the increasing complexity required of its communication and collaboration, security and compliance and AI and automation features.
And that time is now. Let’s take a look at what is changing and how as we head into 2022.
Change No. 1. Baseline pricing increases across 5 key offerings
In August 2021, Microsoft announced across the board global pricing increases of between USD$1-$4 per user across the Microsoft 365 Business Basic/Premium, Office 365 E1/E3/E5 and Microsoft 365 E3 offerings. Final AUD pricing will depend on exchange rates and local pricing adjustments for certain regions. On average, resellers expect roughly a 15-20% increase in baseline licensing and subscription costs across the board. These new prices are due to take effect from March 2022.
Change No. 2. New Commerce Experience licensing model
On top of the baseline pricing increase announced above, Microsoft is also moving licensing to its New Commerce Experience model. Under this model, subscribers who commit to annual or 3-year terms will avoid a new 20% premium that will be applied to monthly subscriptions.
Subscribers who lock into 12-month or 36-terms will have guaranteed pricing over that term with payment of the full term upfront.
Essentially the new model provides a 20% cost saving incentive over the annual term to counter the fact that there are no options to decrease seat counts during the term (although increases and upgrades are possible mid-term). The task for savvy IT budget makers now will be to accurately forecast their resource changes over the term and ensure they utilise the monthly or annual term options to best effect.
One tricky part of the consideration, however, is that many organisations may believe they are already on a monthly arrangement but actually have an annual licencing agreement with Microsoft that has a renewal date. To date, when subscriptions were classed as monthly, the renewal date was just a nominal date, but now that renewal date will signal the grace period where changes and cancellations can be made with suitably prorated penalties.
What does it all mean?
Sound complex? Well, it is and it isn’t…
Will you be heavily impacted? Answer is…it depends…
In short, you will be paying 15-20% more for licenses across the board from March 2022 onwards, and then whilst renewing your licensing for a 12 or 36-month term going forward won’t incur any additional cost, opting for monthly subscriptions will attract a further 20% premium.
What these two big changes do require in early 2022, however, is a review of your current licensing, a discussion about your now and future needs, and some modelling of what these pricing changes will mean for you.
We’ll be having these discussions with our Managed IT Service clients through February and March 2022, but feel free to reach out with questions or to get the conversation started early.
And to get the conversation started, we’re running an Online briefing Tuesday February 1 2022 from 10am to run through all the details of these new pricing changes and subscription arrangements, as well as model some common scenarios and options you might like to consider.
REGISTER NOW to make sure you reserve your place!
To find out more or start the discussion now, contact our Sales and Account Management Teams on 1300 629 786 or right here.