How to crush the Microsoft price-change curveball

Jan 20, 2022

Over the last few months, Microsoft made a series of announcements that will impact all users of Microsoft 365. The easiest of these to understand (and prepare for) is the price increase. Microsoft hasn’t increased their pricing for the Office Suite applications in a decade. Now, now; let’s temper our attitudes about this. How many of us can say we haven’t increased our costs/rates in over ten years?

As Jared Spataro, Corporate VP for Microsoft 365, declares in his blog post, Microsoft navigated 10 years of continuous improvements and augmentations to the Office suite adding 24 new apps and over 1,400 new features and capabilities. Those of us prospering with Business Premium (MBP) head-bob acknowledgement of that truth and continue to take advantage of the best-office-bundle-money-can-buy. A $2 per seat per month price hike on MBP represents a 10% increase in cost but we still realize over $50 per month in savings (bundle cost versus individual license costs).

Below are the price changes effective March 1, 2022:

  • Microsoft 365 Business Basic, from $5 to $6 per user
  • Microsoft 365 Business Premium, from $20 to $22 per user
  • Microsoft 365 E3, from $32 to $36 per user
  • Office 365 E1, from $8 to $10 per user
  • Office 365 E3, from $20 to $23 per user
  • Office 365 E5, from $35 to $38

Tip #1 to crush the curve ball – buy the bundles. If you don’t know what licenses you are using, reach out to our sales and support teams and we can help you discover if there is a better bundle to buy.

Term is the new term

The next significant change from Microsoft is related to duration or term of licenses. Effective around the same time as the price increase, Microsoft’s flexible monthly licenses will incur a premium price. In the past, a licensing partner like IMS could provide businesses access to monthly licensing at the same rate as the annual. When Spring comes, that changes – and those changes complicate things a wee bit.

Any un-specificity on when this happens is deliberate as Microsoft is still navigating the last details about when the following will happen:

  • Annual commitments maintain constant price per license and commit the business to total cost over the term
  • Monthly commitments will incur a 20% premium added to the standard license cost
  • Contemplations around a 3-year commitment, at a lower per user rate, have been leaked to the public

Compound the term changes with the price changes and the curveball has been released. If a business commits to an annual purchase of 50 MBP licenses before March 1, Microsoft will honor the previous license costs for a year. New license after March 1 earn the new rate and depending on how a business wants that attributed (monthly or termed for a year), that new license will be $22 per user per month for annual or $26.40 per user per month for month-to-month. Final curve: existing licenses will also have a legacy term applied, keeping the rate for a currently unspecified timeframe (hints at late Q2/early Q3 have been shared).

So many variables

Don’t sweat trying to figure out what to do and which way to go. IMS helps navigate the variables and best path forward, considering your annual turnover rate and current license use case. We suggest commitments at the maximum number of licenses on an annual basis and reserve your turnover rate for the month-to-month licenses. Through the discovery process, we look for the best bundles possible and keep the cost increase at a minimum.

Microsoft users have about two months to figure out these changes. Set a meeting with your account executive or technical account manager in the very near future. Let IMS help coach you through the curveball and continue to take advantage of all that Microsoft offers for your business.

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