The Price of Microsoft Software Increases

As Microsoft gets ready to release its newest software update, the company has also announced that there will be a price increase for some of its products. This in-depth review will explore the reasoning behind the price increase and how it will affect customers and users. Whether you are a long-time Microsoft user or customer or just considering making the switch, read on to learn more!

What price changes can be expected?

In a new effort called the New Commerce Experience for Office, Microsoft plans to revamp how business partners sell its software. Having made the announcement in August 2021, Microsoft has planned to increase its prices for monthly subscribers by approximately 10-12% unless they shift to an annual subscription.

This increment is set to impact Office 365 and Microsoft 365 services for the commercial and business users of Microsoft’s software as a service (SaaS) offering. The new monthly subscription for its products will be as follows.

Microsoft 365 Business Premium price will cost $22 up from $20
Office 365 E1 will retail at $10 up from $8
Office 365 E3 will be subscribed at $23 up from $20
Microsoft 365 E3 will climb from $32 to $36
Office 365 E5 will retail at $38 up from $35

Why is Microsoft increasing its software prices?

For Microsoft, among the reasons for this price increase is to simplify its billing structure and its goal of encouraging customers and business partners to sign up for longer-term plans such as yearly or even three-year subscriptions.

This would potentially result in better revenue visibility while incentivizing customers to continue using their software. Even though software vendors who thrive on offering discounts for annual subscriptions over monthly subscriptions have acknowledged the price increase, they are still skeptical of the long-term effects.

On the other hand, smaller organizations struggling to maintain a steady cash flow and keep reserves while dealing with COVID-19 pandemic-related issues are reported to be frustrated by the increase. This is because the new model comes barely after another price increment on Microsoft 365, a bundle previously known as Office 365, done in August 2021.

Microsoft has also explained that its other reason for the price increase is to be able to constantly invest in its products and continuously update them at no extra charge. The company believes these investments are worth paying off with an increment.

As such, clients who specifically outsource Microsoft products via Microsoft’s Cloud Solution Provider program will be the ones who will feel the heat from the new subscription plan pricing. On the other hand, clients who outsource their Microsoft products via independent cloud solution providers (CSPs) will not feel any pinch from this increase. This is because the pricing they are receiving is very competitive, thanks to CSPs’ access to pools of discounted subscriptions.

When does the price increment come into effect?

For end-users currently using Office 365 or Microsoft 365, the price increase on renewals is set to be effected from July 2022. This means that only new orders are expected to go through the New Commerce Experience from March 2022.

Therefore, between January and June 2022, monthly and annual subscription pricing will remain the same until July, when new prices take effect. This is because Microsoft intends to provide a smooth transition for its customers onto the New Commerce Experience platform in preparation for the price increase. This will reduce any possible confusion arising during the transition process.

The takeaway

As soon as the Microsoft price increment takes effect, IT businesses worldwide are expected to adjust accordingly. Menark Technologies is here to help our Philadelphia, Wilmington, and MidAtlantic clients with the transition. Our team of IT experts and account executives will ensure your organization adjusts accordingly and maintains a smooth flow of operations despite the increase in Microsoft products prices. Contact us today to book a free and non-obligatory consultation session.

Thanks to Holden Watne at Generation IX in Los Angeles for his help with this article. Discover more at https://www.generationix.com/it-services-los-angeles/