Behind the Microsoft PowerApps Cost Increase

By Joshua Osborne

Director of Client Services – Microsoft, NPI

June 22, 2020

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Microsoft has a storied history of subtly and not-so subtly making changes to its licensing methodologies. These changes can have variable impacts on cost – sometimes small or, in the case of the latest changes to Microsoft PowerApps licensing, quite material for some customers. It’s also worth pointing out that Microsoft has a habit of being “less than proactive” in notifying customers about these changes. In many cases, like the one we’ll dive into below, customers end up finding out only when subjected to a large price increase.

Microsoft test-seeded its new PowerApps platform throughout much of 2018 and early 2019, with public pricing and licensing options becoming broadly available in 2019. Fundamentally, PowerApps is a development platform for mobile and web apps. Microsoft describes it as “a low code/no code application platform that allows enterprises to digitize business operations by easily building line of business applications and customizing existing Office 365 and Dynamics applications.”

This is a hotly contested space, with well-known competition like QuickBase and ZOHO. Customers have a vast array of potential solution providers offering very different pricing options and application and operating systems support. Essentially, Microsoft has been inching its way into the marketplace over the last few years, partially by including some PowerApps capabilities in its Office 365 and Dynamics 365 platforms.

Changes to Microsoft PowerApps Licensing and Pricing Could Drive Up Costs for Those Customers That Don’t Act

Microsoft originally offered customers two different primary per user platforms called PowerApps Plan 1 and PowerApps Plan 2.  Plan 1 was the low-cost entry point to digitize a select few apps and had several limitations. Plan 2 was for users really looking to take full advantage of the platform’s digitization and development capabilities. Unsurprisingly, the difference in price between the two was significant. Plan 1 retailed for around $6 per user per month, while Plan 2 retailed for around $40 per user per month.  Microsoft saw much more adoption of Plan 1, with customers typically trying to negotiate better pricing for Plan 2.

Microsoft has responded to this price pressure (among other market dynamics) by quietly discontinuing Plans 1 and 2 and has replaced them with a new model. The new model offers a per user, per application option, and an unlimited application per user option. Microsoft has made the unlimited application per user license close to the previous Plan 2 pricing. Information on features are below, and you can find more detail on Microsoft’s pricing here.

Microsoft’s licensing and pricing change is clearly designed to extract more revenues from clients looking to further digitize and transform. But there’s a silver lining, albeit a temporary one. Customers have a real opportunity to optimize pricing and terms in the near future as Microsoft tries to gain customers and market share. Again, competition is fierce and that’s buy-side leverage. Combine it with real-time price benchmark analysis, and you can get a good deal if PowerApps is on your roadmap.

Here is some PowerApps licensing information from Microsoft:

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