Microsoft Delays Price Increases

Microsoft has announced that higher demand for cloud services resulting from home and hybrid working is the reason why it will delay its planned commercial price increases for Microsoft Office 365 and Microsoft 365.

Two Week Grace Period  

An announcement posted in the ‘Partner Center’ section of Microsoft’s website states that the commercial price rises announced back in August will now be subject to a two-week grace period. This means they will come into effect after March 14 rather than on March 1.

The grace period will provide partners with additional lead time for adapting business processes and placing orders for “six Modern Work products”. Microsoft 365 Business Basic, Microsoft 365 Business Premium, Office 365 E1, Office 365 E3, Office 365 E5, Microsoft 365 E3.

This means that all CSP new commerce transactions for these products submitted into the system no later than March 14, 2022, 5 p.m., Pacific Daylight Time (PDT), or 12 a.m. UTC on March 15, 2022, will be invoiced at the February 2022 pricing. Those submitted after this cut-off point will be invoiced at the increased March price list pricing.

Price Increases  

As announced back in August, the new prices for Microsoft’s commercial products which were originally due to come into effect on March 1, 2022, range from increases of 9 per cent to 25 per cent depending on the product. The increases, as listed on Microsoft’s website are:

– Microsoft 365 Business Basic (from $5 USD to $6 USD per user).

– Microsoft 365 Business Premium (from $ 20 USD to $ 22 USD).

– E1 (from $8 USD to $10 USD).

– E3 (from $20 USD to $23 USD).

– E5 (from $35 USD to $38 USD).

– Microsoft 365 E3 (from $32 USD to $36 USD).

Why?  

Microsoft has justified the prices by saying that although there hasn’t been a substantive price rise for 10 years, users have benefitted from many extra services and more value being added to services. For example:

– Since the introduction of 365, the company has added 1,400 features, and 24 apps to the suites.

– Microsoft 365 has added security capabilities including data loss prevention (DLP) for email and documents, sensitivity labels, and message encryption to help guard valuable company data.

– Content Search, eDiscovery, and core Litigation Hold have been added to help users with compliance.

– Built-in mobile device management (MDM) and other management tools like Microsoft Endpoint Manager have been added to, as has Microsoft Teams to help support remote and hybrid workforces. Teams, for example, has been particularly helpful to many businesses during the pandemic.

What Does This Mean For Your Business? 

The price increases were announced 6 months ago, so were expected. A grace period, albeit just a couple of weeks is, of course, welcome. It is true also that there have been no major price increases in 10 years, which is a long time in the tech world, and many businesses will acknowledge that Microsoft 365 is better than it used to be. It is also much better for Microsoft to now have customers on their SaaS models. The cloud and apps like Teams have proven to be very important to users over the lasts two years of remote and hybrid working and, Microsoft says, it is the popularity of hybrid working that is behind the decision to give a grace period before the price increases.

Of course, Microsoft needed to invest heavily on innovation to keep its products relevant and, over the last couple of years, to stay ahead of competitors in the collaborative/remote working market (Google, Zoom and Slack), which is another justification for its commercial price rises.