Microsoft Price Increases: What You Should Know For March 2022
On August 19th, 2021, Microsoft announced that it would be increasing the prices of its Microsoft 365 and Office 365 services. This will be the first price change in over a decade. The price change will affect business and commercial users of Microsoft’s software as a service (SaaS) offerings from March 1st this year, with no changes to pricing for education or consumers.
In this post, we will walk you through everything you need to know about Microsoft’s price updates.
Overview of Microsoft’s Continuous Innovation of Its Products
Since the launch of Office 365 about a decade ago, it has garnered more than 300 million commercial paid seats. Microsoft reinvested in it along the way to ensure that it meets consumers’ changing needs. About 4 years ago, Microsoft launched Microsoft 365 to bring together excellent Windows, Office, and EMS (Enterprise Mobility and Security). The company also added Microsoft Teams – an integrated solution where you can meet, call, chat, collaborate, and automate business processes – right in the workflow.
In fact, since the introduction of Microsoft 365, the company has gone on and added 24 apps to suites – Power Apps, Microsoft Teams, Power Automate, Power BI, Visio, Planner, Stream, OneDrive, Whiteboard, and Yammer. They have also released over 1400 new features and capabilities in three key areas, namely:
Communication and collaboration
Microsoft Teams acts as the new front end for work, learning, and life for over 250 million active monthly users. It automates business processes by allowing users to meet, call, chat, and collaborate effectively. In 2020 alone, Microsoft released over 300 new capabilities, including background effects, Together mode, live reactions, raise, large gallery view, breakout rooms, and live captions with speaker attributions, just to mention a few.
Additionally, Microsoft introduced a new category of collaborative tools in Teams, thereby empowering people and organizations for hybrid work through deep integration with Whiteboard, Power Platform, Lists, Planner, Form, Shifts, and SharePoint.
Security and compliance
Today, the cybersecurity landscape is more complex than ever. With the sophistication and scale of attacks only increasing, security and compliance are a top priority for every business. Over the years, Microsoft has added new attack surface minimization capabilities to help organizations better defend themselves against ransomware and other cyber threats.
Among the security features added include data loss prevention (DLP) for documents and emails, message encryption, and sensitivity labels to help organizations keep sensitive data secure. Microsoft also added compliance capabilities that help organizations minimize risks and respond to various regulatory requirements.
AI and automation
Over the past decade, Microsoft has infused AI capabilities into collaboration and productivity applications to help everyone achieve more. For instance, cloud-powered AI can now automatically create maps, tables, and charts in Excel and sort out emails and eliminate clutter in Outlook. AI-powered captions, translation, and transcription make communication and collaboration more engaging and accessible to everyone.
Even so, the price for these value-adds is about to rise. Several Office 365 and Microsoft 365 plans’ prices will see a per-user increase ranging between 8.5% and 20% by March 1st.
One potential positive caveat in this is that it signals that Microsoft will continue paying attention to the value it delivers through its lowered tiered licenses and also continue to improve them and make them more secure against the ever-evolving cyber threats.
Which Microsoft Plans Will Increase and by How Much?
Microsoft announced a price increase for 6 license plans – four in Microsoft 365/Office 365 Enterprise categories and two in Microsoft 365 for the Business category. What differentiates the categories is the user limit. Businesses can support up to 300 users, whereas Enterprise can support an unlimited number of users, and each plan tier offers access to different levels of service.
Here is an outline of the price changes:
Office 365/Microsoft 365 Enterprise
- Microsoft 365 E3: $32 to $36 (12.5%)
- Office 365 E1: $8 to $10 (25%)
- Office 365 E3: $20 to $23 (15%)
- Office 365 E5: $35 to $38 (8.57%)
Microsoft 365 Business
- Microsoft 365 Business Basic: $5 to $6 (20%)
- Microsoft 365 Business Premium: $20 to $22 (12%).
The price change will apply to all Microsoft 365 users across the world. That said, there’ll be local market adjustments for specific regions.
Which Plans Won’t Be Affected?
Currently, individual consumer and education plans haven’t been selected for price changes. Even so, these plans may see price changes in the future. A few other Enterprise and Business license tiers were also exempted. These were frontline workforce plans which are still undergoing changes and rebuilding. Microsoft 365 E5 won’t be affected by the price change. This echoes Microsoft’s push to upgrade Microsoft 365 to a more hybrid workforce support solution.
What Will Be the Impact on the Price of Month-To-Month Subscriptions?
Microsoft is also making changes to its New Commerce Experience (NCE), a new per-seat model for customers to purchase Microsoft products through its third-party partners. Basically, this program is designed to help partners simplify licensing and manage subscriptions. Organizations paying monthly subscriptions will face a 20% increase in pricing unless they move to an annual subscription model.
A month-to-month license for Microsoft 365 Business Basic for 5 users will increase from $30 to $36 a month, whereas a 500-user license for Office 365 E1 can increase from $5000 to $6000. Additionally, Windows 365 SKUs will only be available for month-to-month plans going forward. Thankfully, it won’t be subjected to the 20% pricing add-on.
Discounted Pricing for Multilayer and Annual Licenses
One of the silver linings of Microsoft’s price updates is that there will be a discount when you sign a multilayer or annual agreement for your plan, during which the per-seat costs will remain locked.
To encourage partners to migrate to the NCE, Microsoft is offering 5% off annual subscriptions through March 2022. This promotion will apply to all new commerce seat-based commercial offers for subscriptions of up to 2400 seats.
Microsoft is getting more expensive, but not without good reason. Microsoft’s wealth of improvements and additions – past, present, and in the future may justify this price increase.
If you need help understanding how Microsoft’s price updates will affect your business, ARCIS Technology Group can help. We are a top Microsoft partner that provides IT services for Canton & Akron businesses. Reach out to us with any questions. You can be sure that we will answer them satisfactorily.