The Way You Consume and Pay for Microsoft 365 and Office 365 Is Changing
Recent announcements and updates from Microsoft reveal changes to Office 365 (O365) and Microsoft 365 (M365) plans, pricing, and term contracts in two key areas:
- A price increase is coming on March 1, 2022 for six of the core O365 and M365 plans
- March will also bring the introduction of the New Commerce Experience (NCE), including price adjustments for Microsoft cloud products depending on how the client purchases and manages their licensing
Keep reading for a thorough breakdown of each of these updates and how they relate to each other.
The Price Increase
To Microsoft's credit, it has not raised prices on any of its cloud services for some time. Meanwhile, Microsoft has been continually adding features and new products to these services, so the price increase (for the growing value and ROI) is probably long overdue. The price increase itself is only impacting six of the core O365 and M365 plans, including:
- Microsoft 365 Business Basic (up from $5 to $6 per user)
- Microsoft 365 Business Premium (up from $20 to $22)
- Office 365 E1 (up from $8 to $10)
- Office 365 E3 (up from $20 to $23)
- Office 365 E5 (up from $35 to $38)
- Microsoft 365 E3 (up from $32 to $36)
March 1, 2022 marks the official start date for the pricing increase on these specific O365 and M365 plans.
So, does this mean if you currently own any of these license plans that on March 1st your pricing will go up automatically? Not exactly.
If you are a Microsoft client 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 client on a month-to-month license payment, whether you know it or not, behind the scenes you are on an annual subscription model. While you are not obligated to stay on the annual subscription basis and can cancel and make license adjustments at any time, if you check your admin center in the licensing section, you will notice that each monthly plan still shows an expiration date set 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.
With all of this stated, if you provision 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.
New Commerce Experience (NCE)
This one is trickier. Just bear in mind that the NCE program is different from the previously mentioned model on price increase, although they do stack in some cases.
NCE impacts all cloud products for O365, M365, D365, and Power Platform in that the client must evaluate how they want to transact these products long term. There are a couple of options to consider, taking effect on March 1, 2022.
You can continue month-to-month payments for these products; however, there is a premium for this flexibility. Items to note:
- A 20% price increase will impact these products
- This premium is on top of the price increase for the six O365 and M365 plans previously mentioned
- You can commit to an annual or multi-year agreement for certain products rather than pay month-to-month. Items to note if you commit to annual or multi-year:
- You are not subject to the 20% price increase
- You can pay all up front or still have the option of paying off the commitment monthly. Either way, you are responsible for paying the entire commitment, even if you try to cancel early
- Your partner for the subscription, whether it is Microsoft or a CSP provider, cannot be changed during the term of the commitment
- You are price-locked for the products provisioned during the term of the commitment
- You can increase license counts at any time, but you cannot reduce license counts until the committed term is up for renewal
- You can upgrade products in the committed plan at any time
- If you commit to NCE after March 1, 2022, you are also subject to the price increase for the six O365 and M365 plans detailed above
Remember, if you are currently a cloud services client with Microsoft, you already have a subscription in place for your products. Whether you are paying up front annually or monthly, the price increase for the six plans and NCE will not take effect until the renewal date of your subscriptions, on or after March 1, 2022.
The official deadline to fully transition to the NCE program for all Microsoft clients is February 1, 2023.
Your Action Items Now
In summary, as simple as you try to make it, the pricing and program changes are challenging to understand and assess. It is critical to consult with River Run as we carry the Microsoft licensing expertise, Gold certifications, forward-thinking services, and a willingness and ability to explore options with your user benefits in mind.
Don't wait; now is the time to understand the impact of Microsoft licensing changes on your business and to consider early adoption of these programs with River Run as your reliable partner.
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