IT Insight: Microsoft’s ‘new commerce experience for Office’

Unless you have been paying close attention, Microsoft quietly announced in August of 2022, that it would increase MS Office subscriptions with a 20% price hike for customers choosing to stay month-to-month with their Microsoft Cloud product software subscriptions.

It should be noted that Microsoft has not increased its pricing in over 10 years. The primary cause for the rise in cost is increased security needed to protect your data and information.

According to Microsoft, “since its launch a decade ago, Office 365 has grown to over 300 million commercial paid seats. Along the way, we have continuously re-invested to meet the changing needs of our customers. Four years ago, we introduced Microsoft 365 to bring together the best of Office, Windows, and Enterprise Mobility and Security (EMS). That same year we added Microsoft Teams as the only integrated solution where you can meet, chat, call, collaborate, and automate business processes—right in the flow of work. In fact, since introducing Microsoft 365 we have added 24 apps1 to the suites—Microsoft Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard—and have released over 1,400 new features and capabilities in three key areas”.  Those three areas are communication and collaboration (Microsoft Teams), Security and Compliance and AI and Automation.

With the new pricing model, subscribers will be unable to opt out of annual subscriptions, even if you are midway through the term. i.e. if you lose employees, the subscription is not adaptable. Smaller companies that have been able to purchase licensing per seat in the past, are the ones at risk. You will still pay for the seats you committed to with your annual subscription. Those companies most affected post-pandemic are trying to save cash, especially after Microsoft increased the price of Microsoft 365 in August of 2021. Beginning in March, new orders will have to go through the new pricing model, “New Commerce Experience” and as of July renewals will be committed to the new model subscription.

The price increase will impact six of the core O365 and M365 plans:

Microsoft 365 Business Basic – from $5 to $6 per user

Microsoft 365 Business Premium – from $20 to $22

Office 365 E1 – from $8 to $10

Office 365 E3 – from $20 to $23

Office 365 E5 – from $35 to $38

Microsoft 365 E3 – from $32 to $36

The NCE pricing includes all cloud products for O365, M365, D365, and Power Platform. Although you can continue month-to-month payments for these products, there is a premium for this flexibility. 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 for the yearly commitment.

– Your partner for the subscription, cannot be changed during the term of the commitment. The price for the products during the term of the commitment is locked in. You can increase license counts at any time, but you cannot reduce license counts until the 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.

– 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.

These pricing and program changes are challenging to understand and evaluate. It is critical to consult with your managed service provider now. With over 25 years’ experience, PCG is the Microsoft certified licensing expert with your business and benefits in mind.

Now is the time to understand the impact of Microsoft licensing changes on your business with PCG as your reliable partner.

JoAnn Hodgdon is Vice President and Co-Founder of Portsmouth Computer Group (PCGiT) with her husband David. PCG provides comprehensive managed IT services, business continuity, security, cloud computing and Virtual CIO services to their clients.  You may reach her at joann@pcgit.com  or through www.pcgit.com.