The Pros & Cons of Microsoft’s New Pricing & Contract Terms

The Pros & Cons of Microsoft’s New Pricing & Contract Terms

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Jed Fearon

Solution Advisor, 17+ years of experience in MSP Solution Development, Sales and Marketing Communications

Microsoft is increasing its pricing AND changing its subscription model.

Change number one: Beginning March 1, 2022, Microsoft is increasing its fees for Microsoft 365, Dynamics 365, and Power Platform.

Change number two: Microsoft is pushing its entire commercial client base to make annual commitments or face a 20% premium if they decide to go month-to-month.

These initiatives are part of Microsoft’s New Commerce Experience (NCE), which replaces the Cloud Solution Provider (CSP) Program.

We’ll examine the pros and cons of these announcements and leave you with some inspiration to engage with your MSP right away. The time to choose the best path forward is now.

What do some of the pricing increases look like?

  • Microsoft 365 Business Basic: $5.00 per user to $6.00
  • Microsoft 365 Business Premium: $20.00 per user to $22.00
  • Office 365 E1: $8.00 per user to $10.00
  • Office 365 E3: from $20.00 per user to $23.00
  • Office 365 E5: from $35.00 per user to $38.00
  • Microsoft 365 E3: from $32.00 per user to $36.00

What do some of the penalties for month-to-month look like?

  • Microsoft 365 Business Basic: $7.20 per user versus $6.00
  • Microsoft 365 Business Premium: $26.40 per user versus $22.00
  • Office 365 E1: $12.00 per user versus $10.00
  • Office 365 E3: $27.60 per user versus $23.00
  • Office 365 E5: $45.60 per user versus $38.00
  • Microsoft 365 E3: $43.20 per user versus $36.00

Learn More: New Pricing for Microsoft 365

The Cons!

  1. The month-to-month term now comes with a 20% premium as a trade-off for flexibility.
  2. The cancellation policy for a 12-month commitment is strict, so you can only reduce licensing at the end of your term. (However, you can still add licensing at any time.)
  3. Clients can no longer switch MSPs (licensing partners) mid-term without being double-billed.
  4. Microsoft is the dominant market player in office productivity, cloud innovation, and cyber security (and can’t be instantly ditched for a better, more cost-effective alternative). Especially when one doesn’t exist.

Since MSPs pay the same rates as their clients (no discounts for us), everyone is affected.

The Pros!

  1. Compliance, cybersecurity frameworks, and reporting will be easier to manage with fewer moves, adds, and changes throughout the year.
  2. Simplified billing will lower your MSP’s administrative overhead so they can invest more time with you on strategic initiatives.
  3. The move to annual commitments will inspire MSPs and their clients to get more intentional (and organized) about selecting the appropriate services/licenses.
  4. Its continuously evolving cybersecurity framework-friendly feature set will help companies counteract nonstop security vulnerabilities.

As the classic adage goes, nothing lasts forever, so the time for a price and contract correction was inevitable.

When Microsoft launched Office 365 in 2011, the productivity suite included seven applications: Word, Excel, PowerPoint, Outlook, Lync, Exchange, and InfoPath.

Eleven years later, it’s expanded to include 24 more:

  • Access
  • Bookings
  • Delve
  • Forms
  • GroupMe
  • Kaizala
  • Lens
  • Lists
  • OneDrive
  • OneNote Class Notebook
  • Planner
  • Power Apps
  • Power Automate
  • Power BI
  • Publisher
  • SharePoint
  • Staff Hub
  • Stream
  • Sway
  • Teams
  • To-Do
  • Visio
  • Whiteboard
  • Yammer

And they are not slowing down with enhancements. Most significantly, everything in the Microsoft ecosystem is purpose-built for cyber security resilience, which is why many Microsoft partners worldwide see the shift as “embraceable change.”

The safety features easily outweigh the costs and updated contract requirements.

Learn More: Embraceable Change

What should I do right now?

We recommend clients work with their MSP partner to identify and use a blend of long-term and short-term commitments that best suit their specific licensing needs.

Microsoft depends on MSPs to do all the heavy lifting. By offloading sales, value-added support, and administration, Microsoft can put most of its resources into innovation and growth.

On that note, reach out to your MSP immediately! (Hopefully, they’ve already contacted you.) You have some big decisions to make before March 1, 2022.

If you enjoyed this article, you might also like some of the related content in our free eBook.