Office 365 and Microsoft 365 prices are going up for the first time ever

Information

Office 365 and Microsoft 365 prices 2022 – The price changes are impacting Office 365 and Microsoft 365 products with a new commerce experience also being launched (NCE). This sort of price change is not unique within the software as a service (SaaS) market. G Suite, or Google Workspace as it’s known now, had a similar increase for its business editions back in 2019 and other consumer products including Netflix and Spotify have increased their subscription price recently. In this blog I’m going to unpack what these changes are and why Microsoft products are still good value for money.

microsoft-365All of the Microsoft products will be impacted by the price change in some way as a result of the new NCE licencing structure however some products will experience as much as 20% increase. The products impacted by the biggest price change are:

  • Microsoft 365 Business Basic
  • Microsoft 365 Business Premium
  • Office 365 E1
  • Office 365 E3
  • Office 365 E5
  • Microsoft 365 E3

New features and apps

Microsoft has continuously invested in the development of Office 365 since its launch 10 years ago. Microsoft 365 was introduced 4 years ago and with that has come the addition of 1400 features and capabilities and 24 apps to the suite, including Microsoft Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard.

Microsoft are also adding in Audio conferencing capabilities for Microsoft Teams for a wider range of customers. This will now allow users to dial in to Teams meetings on the go or if they have a poor internet connection. This feature was previously only available with Microsoft and Office 365 E5.

All in one solution

Given the vast number of additional apps, features and capabilities that have been added to the suite since its release, now is a good time to think about replacing existing 3rd party solutions with the solutions included in your subscription- why pay for Zoom when you have access to Teams? Making use of things like Planner, Bookings, Forms and Teams will create overall business solution savings that outweigh the price increase.

The introduction of annual-term agreements – customers will now be able to choose to commit to a monthly, 1-year or 3-year subscription term. This is a new feature for customer who do not require the flexibility of decreasing licence numbers throughout the year. With the annual subscriptions, customers have the choice to either pay monthly or annually upfront.

This option can be provide significant costs savings to customers. Microsoft is willing to reward customers who are prepared to make long term agreements for licences. Please see our FAQ section below for more details.

It’s important to note that if you opt for a 1-year or 3-year licence and need to cancel some licences (if you reduce your staff number for example), you will still be liable for licence costs until the end of the term

How will Office 365 and Microsoft 365 annual-term licences work?

microsoft-365Example 1: Mary owns a small digital marketing company and employs 5 staff. She uses Microsoft 365 licences and has opted to avail of the cost saving with the 1-year agreement. After 4 months, Mary loses two staff members and now only required 3 licences. However, Mary will not be able to decrease her licence number until the end of her term, and will be required to pay for all 5 licences for a further 8 months.

Example 2: John runs a business accountancy office with 45 employees. He has availed of the 3-year licence agreement for his Microsoft 365 products. After 18months, John is contacted by a new supplier who has a ‘special introductory office’ for new clients which includes a saving on Microsoft 365 licences. John is keen to avail of the saving with the new provider however as John has a 3-year licence agreement, he is locked into the contract with his current provider until the end of the term. John cannot move his Microsoft 365 licences to the new provider or avail of the reduced pricing offer.

FAQs

  1. When will the New Prices come into effect?
  2. 1st March 2022.
  3. Will I be able to reduce the number of licenses we have?
  4. No. You can cancel outright at the end of the month. But if you buy 10 licenses, after 72 hours, you can only ever go as low as 10 during the month.
  5. What if I want to downgrade my package?
  6. If a customer purchases an E3 package, for example, they have to stick with the package for the entire term of the agreement, whether that’s a month or a year. That means every package has to be sold in the right way to customers and planned properly. We can help you with that.
  7. How will this work for multi-year agreements for us, who regularly need to make a lot of changes?
  8. Microsoft recommends in this case to go monthly. Monthly is more expensive. Multi-year will work for customers who know their start point, knowing they’ll never go under that point.
  9. Can Clients change IT partners/Microsoft supplier mid-term?
  10. No you cannot change partners mid-term.
  11. Can I still mix and match licences?
  12. Yes. This hasn’t changed. You can still have some E3, some Standard and some Premium – in short, whatever combination that works for you.
  13. Will there be an update to the Terms and conditions?
  14. Yes. New terms and conditions will be issued.

Need more advice on Office 365 and Microsoft 365 pricing?

If you are not sure which licencing subscription would suit your business, one of our team would be happy to chat through the options and help determine the best solution for your company. You can reach us using the contact us page or by email on sales@itus-tech.com.