Microsoft’s latest Office 365 price increase will mean higher costs for many of the vendor’s enterprise customers. If you’re wondering if the O365 price increase will impact your spend, here is what you need to know.
Which offerings are being affected by this price increase?
O365 E1, O365 E3, O365 E5 & M365 E3
How much is the price increase?
Which licensing programs are being affected by this price increase?
Currently, this price increase only applies to commercial products. Educational and consumer plans are not impacted by this announcement and changes to government plans with be phased in over several years.
Volume Licensing Agreement (EA, EAS, MPSA) and Cloud Solution Provider (CSP) customers will be price protected for the applicable subscription plans or the term of their agreement/subscription, provided they were purchased prior to March 1, 2022. Existing customers will not be impacted until their renewal date on or after March 1, 2022.
Is it ‘just’ a price increase?
Microsoft has announced it will be adding unlimited dial-in capabilities for Microsoft Teams meetings across their Enterprise (O365 E1/3, M365 E3), Business (these are sub-300 offerings) and Frontline (M365 F3, M365 F1, O365 F3) Suites.
In the price increase announcement, Microsoft is quick to point out it has added 24 new apps (in whole or in part) since launching in June 2011. While that is technically accurate, the additions don’t all meet “killer app” criteria. A handful stand out and add noteworthy value, including OneDrive, SharePoint and Teams, but the jury is still out on applications like GroupMe, Kaizala, Lens, Stream, Sway, Whiteboard and Yammer. Power Platform and Visio were touted as high value additions, but they provide limited functionality as part of Microsoft’s suites. Many organizations are or will spend significant amounts on the full licensing of these products.
Is the Office 365 price increase fair?
In Microsoft’s defense, this is the first substantive pricing update since the launch of Office 365 more than a decade ago. And it has added new value through new apps and functionality. On this basis, it is fair. Customers that have skillfully optimized their licensing for Microsoft purchases and renewals over the past 10 years have been the beneficiary of increasingly capable technology.
However, concerns arise any time a SaaS vendor announces a material price increase – mainly because customers feel they’re at the vendor’s mercy. The subscription nature of SaaS means you can no longer simply stop payment and remain on the version of software you currently have (like Microsoft’s legacy license with software assurance use rights). Furthermore, a price increase announcement a month after announcing nearly $70 billion annual operating income probably is not the greatest timing…
What can customers do to offset the price increase?
This is where good news comes in. It is very much possible to neutralize Microsoft’s Office 365 price increase. We share 2 tactics enterprises can deploy to minimize or eliminate cost the cost impact of these changes in this short bulletin. Bonus – you may find these tactics lower your overall Microsoft spend below pre-increase levels.
- Bulletin: How to Neutralize the Impact of New Microsoft 365 Pricing
- Blog: Windows 365 Price and Purchase Considerations
- Blog: O365 Optimization: Getting to the Root of Suboptimal Licensing to Eliminate Cost Waste
- White Paper: How to Eliminate Toxic Spend on Large SaaS Estates and Reduce SaaS Costs
- NPI Service: Microsoft License and Cost Optimization Consulting