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Changes to Microsoft licensing and what that means for businesses

As the economy picks up, demand for many inputs is outstripping supply, driving up prices for things as diverse as construction materials, energy, and food ingredients. Soon, that list will include Office 365 subscriptions.

In August Microsoft announced that effective March 1, 2022 there will be a global pricing increase to their Microsoft 365 and O365 commercial plans. (Consumer and education subscription prices aren’t changing — for now.)

As the tools available within this popular suite have grown, adapted and advanced, it has been anticipated that the pricing would one day shift to reflect the true value of these products.

Several Microsoft 365 plans, including Microsoft 365 Business (Basic and Premium), Office 365 (E1, E3, and E5), and more will see a per user pricing increase ranging from 8.5 percent to 25 percent. To Microsoft’s credit, this will be the first substantiative cost update to Office 365 since it’s launch date a decade ago.

So, does this mean if you currently own any of these licence plans that on March 1st, your pricing will go up automatically? Not exactly.

If you are a Microsoft customer who prepays for your licensing a year at a time (annual prepay), then this price increase will not go into effect until your annual term renews on or after March 1, 2022.

If you are a Microsoft customer on a month-to-month licence payment plan, whether you know it or not, behind the scenes you are actually on an annual subscription model.

Since the arrival of Microsoft 365, 24 apps have been added within the suite. These apps include Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard.

While you are not obligated to stay on the annual subscription basis and can cancel and make licence adjustments at any time, if you check your admin centre in the licencing section, you will notice that each monthly plan still shows an expiration date sometime in the future.

Meaning the price increase will not take effect on your monthly plan until the subscription renews on or after March 1, 2022.

Timing is key

All of that said, if you provide or upgrade any of these products on or after March 1, 2022, then you are subject to an instant price increase. So, timing is key, and planning is important.

With these changes coming into effect, licensing tenant administrators are recommended to do a full review and get your “house” in order by doing the following:

  • Assess your licencing situation
  • Optimise your monthly subscriptions (including under-utilised technology included in the licences)
  • Reduce costs by removing unused licences (such as having an E3/E5 assigned to a terminated employee account)
  • Choose the right SKU for your needs (such as Microsoft 365 Business for organizations under 300 seats)
  • Review spend and understand what you’re being billed for each month
  • Evaluate the benefits vs. risks of signing up for multi-year plans that will reduce flexibility and increase your commitment to Microsoft
  • What are you getting for this price increase?

What’s in it for you?

Microsoft have been generous with the number of free features added to their products over the last decade since Office 365 was launched.

Four years ago, the introduction of Microsoft 365 (M365) brought together the best of Office, Windows, and Enterprise Mobility and Security (EMS). At the same time Microsoft Teams was introduced, which gave businesses the ability to meet, chat, call, collaborate, and automate their processes.

Since the arrival of Microsoft 365, 24 apps have been added within the suite. These apps include Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard. Over 1,400 new features and capabilities have also been released in the three key areas of communication, security and automation.

One thing is clear: Microsoft is trying to entice enterprises to spend more to save more, as the percentage price increases will be smaller on fuller-featured (and more expensive) bundles, closing the price gap between Office 365 and Microsoft 365, and making the higher support levels more attractive.

For a full list of all the new features Jared Spataro, VP for Microsoft 365 has written an extensive blog under “New Pricing for Microsoft 365” on the Microsoft Website.

Related: The best use of techspertise

Mariette Tolmay
Mariette Tolmay
Mariette Tolmay is the marketing lead at Stratus Blue. She can be contacted at mariette@stratusblue.co.nz.

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