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Impact of Microsoft 365 Price Increases for 2022 and Beyond

Microsoft has announced commercial pricing increases for the 365 line of products, called the New Commerce Experience (NCE). The new Microsoft 365 pricing model will go into effect on March 1, 2022. Customers using monthly subscriptions will see the latest prices reflected in their March invoices. Businesses can lock in prices through annual or multi-year licenses and avoid paying monthly surcharges. Managed Service Providers (MSPs) have no negotiating power over the price hikes. So, it is crucial to evaluate your business requirements and priorities as soon as possible to determine the best option for your business.

Details of the Pricing Changes

Microsoft is increasing the prices globally on March 1, 2022, but specific local markets (including the UK) might see adjustments. The pricing changes are as follows:

 

Product

Current Price

New Price

Increase

Microsoft 365 Business Basic

$5.00

$6.00

20%

Microsoft 365 Business Premium

$20.00

$22.00

10%

Office 365 E1

$8.00

$10.00

25%

Office 365 E3

$20.00

$23.00

15%

Office 365 E5

$35.00

$38.00

9%

Microsoft 365 E3

$32.00

$36.00

13%

 

 * GBP pricing is to be confirmed in the future.

** Prices are listed per user.

 

The price increases will only affect small businesses (SMBs) and enterprises. Users in the education sector will not see any changes.

Currently, Microsoft charges the same price for monthly and annual subscriptions. However, from March 2022, Microsoft will charge a 20% premium for month-to-month subscriptions over annual ones. Month-to-month customers will see an additional price hike for the services on top of the above price increases. Microsoft is also introducing multi-year licenses to allow customers to lock in lower prices. These initiatives are designed to motivate customers to adopt annual subscriptions.

In the new pricing model, audio conferencing will see a significant change. Currently, the unlimited dial-in option is free only in E5 suites. Starting March 2022, unlimited dial-in will be available across Microsoft 365 Business Basic/Business Premium, Microsoft 365 E3/F3, and Office 365 E1/E3/F3. The service is available across 70+ countries with 44 languages and dialects. It means users can dial in to join Team meetings worldwide from any location or device.

cloud computing

Price Increase Comes After a Decade of Microsoft Value Adds

Microsoft introduced Office 365 in June 2011, which brought the Office suite of products to the cloud. In 2017, Microsoft 365 was the next leap forward that combined the power of Office, Windows, and Enterprise Mobility & Security (EMS).

Since 2011, Microsoft has added 25 apps to Microsoft 365, including Teams, Access, OneDrive, OneNote, SharePoint, Skype for Business, To-Do, Visio, and more.

It has also released 1400 new capabilities. Some popular capabilities are:

  • Communication and Collaboration: Together Mode, Custom Backgrounds, 250-people group chat capability, Whiteboard, real-time collaboration in Word/Excel/PowerPoint, etc.
  • Security and Compliance: Data Loss Prevention (DLP) for emails and documents, message encryption, MFA, eDiscovery, etc.
  • AI and Assistance: Stream Auto video transcription and face detection, Live captions and subtitles, Editor in Word, Designer in PowerPoint, Natural language query in Excel, etc.

 

However, the Microsoft 365 license prices have remained the same during the decade-long continuous improvements.

Evaluating Your Next Steps

As mentioned, managed service providers (MSPs) lack the authority for price negotiation with Microsoft. The price mandate is a global Microsoft initiative that will affect businesses worldwide.

An important point to remember with an annual subscription is that you can add new users during the subscription term, but you cannot remove users until the period ends. If your business has regular employee turnover due to a high number of seasonal or contract workers, then it might make sense to stay on a month-to-month subscription and pay the extra 20% premium.

However, most businesses will benefit from moving to an annual subscription. Then you would not have to pay 20% monthly surcharges. Also, in case of another price hike, you will be guaranteed the current price until the end of the annual subscription term. That said, for customers to gain flexibility, we recommend that maybe 10% of your licenses remain on month-to-month, giving the flexibility to add or remove users.

If you need help with your particular case, please feel free to contact us today. Our friendly ears can help you decide the best solution for your situation.

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