Microsoft 365 Prices - here's what's changing

In August of 2021, we alerted you to some planned changes to the Microsoft 365 (some still call it Office 365) range of cloud services under the New Commerce Experience model for 2022. See https://blog.grantmcgregor.co.uk/microsoft-announces-new-pricing and also in this week's TechTip video.

This week’s blog seeks to add an update to this article and to outline the crucial decisions that you will need to consider in continuing to subscribe to the Microsoft 365 suite of cloud products and services…

A reminder of what’s changing with Microsoft New Commerce Experience

The CSP (Cloud Solution Provider) programme was created in 2015 to allow cloud service providers such as Grant McGregor, to handle 365 license billing, support, and administration for our customers for Microsoft 365. The New Commerce Experience aims to simplify aspects such as billing and will affect the relationship between us, the IT partner, and Microsoft. However, there are some changes that will have a direct impact on customers purchasing Microsoft 365 licensing in 2022. For example, the main headlines are:

Pricing - There is a price increase coming on Microsoft 365 Business Basic and Business Premium, Office 365 E1 and E3 (and some other Microsoft subscriptions) on 1st March 2022. At time of writing, Microsoft has yet to publish this new price list, but it looks to be an approximate uplift of between 9% and 25% depending on the specific subscription service and term commitment. Having said that, it will be possible to commit to a longer up-front term on these 365 licenses upfront in order to effectively defer any significant price increase. We’ll say more on this option shortly. For now, please do note that this new price increase affects ALL Microsoft 365 customers, and not just those who purchase through a partner such as Grant McGregor. The official word on this issued last year from Microsoft on this is here: https://www.microsoft.com/en-us/microsoft-365/blog/2021/08/19/new-pricing-for-microsoft-365/

Annual or Monthly Term Agreement – to Fix or Flex – and the implications of each? Microsoft has previously offered its subscriptions via CSP providers like us with a 12-month term but paid monthly - though they have been very relaxed about reducing and cancelling licences which was a real bonus during the early stages of the pandemic when businesses either reduced headcount (and licences) or placed employees on furlough. This clearly didn’t suit them though and one big shift in this New Commerce Experience model is to strongly enforce commitment or offer complete flexibility but at a premium price! This is not unusual in many other subscription models such as Netflix or even in paying a higher price overall to pay your car insurance monthly than in one lump sum. The good news is that you will be able to continue to pay monthly either way, it’s just that you will be legally and commercially committed to a minimum number of subscription licences for a minimum term of 12 months unless you are happy to pay a premium of around 20% for month-to-month flexibility and the ability to reduce your licence numbers inside of the 12-month anniversary. New Commerce Experience affords businesses the flexibility to mix and match these two types for the most cost-effective form of flexibility. So, if you’re a business with a headcount of 50 people but 10 of these are more seasonal or need to be flexible, you can buy 40 of your licences on a 12-month commit plus the other 10 on a 1-month commit – albeit at a higher price for that flexibility.

New Product SKUs - As a result, we will offer 2 products lines for e.g. Microsoft 365 Business Premium – there will be NCE Fix 12-month commitment Microsoft 365 Business Premium; and NCE Flex 1-month commitment Microsoft 365 Business Premium, both at different price points. Once fixed, you will not be able to reduce your quantity of licences on the former for a full 12-month period and, on the latter, until a full month of usage. No fees will be refundable for either model for the licence or the term in question so it’s an important consideration to commit and save money or to flex and pay extra for that privilege.

Support, Administration, and additional Value-Add Services – As with the CSP model you enjoy today, the expert team at Grant McGregor will continue to administer, support, update and secure your investment in Microsoft 365 Cloud Services. As you will have experienced day to day and week to week, the ServiceDesk team here conduct all your employee on-boarding, off-boarding and admin changes to 365. This is a huge part of the demand placed on our Support team, but these guys are all trained and qualified to handle all your requests around permissions, support and help with the many aspects of your 365 suite including Teams, SharePoint, Email, Email Security and much more today. Microsoft needs qualified, bona fide partners such as us to provide this knowledge and value to millions of business users around the world. Moreover, our Project team are helping all our clients to understand and implement best in class Microsoft data and access security measures from 365 tools such as Microsoft InTune that are now built into Business Premium subscriptions. Grant McGregor will continue to provide these 365 support, administration, and change management services under this new model. We will also automatically incorporate 3rd party email security, continuity, and protection services with every 365 subscription and incorporate this into the overall product cost.

With all these new options and considerations, what’s the right Microsoft 365 Subscription for my business?

Since the announcement we’ve been working with Microsoft and our Distribution partners to work out how we can best help Grant McGregor customers to minimise this price rise and keep their cloud services costs as low as possible on their Microsoft 365 services. We always look to help our customers achieve savings but to make sure they have the right levels of productivity and protection to give them a competitive advantage in their own marketplace.

As such, we’ve put together some information to help you understand which products you use are affected by these changes and what we can do to help you keep your 365 subscription costs to a minimum and guide you through the best way to purchase your Microsoft 365 licenses. Our team will engage with you over the coming weeks to communicate and help you understand what the changes will mean for you. As we all know from recent hikes to fuel, energy and food, prices do rise, and we realise that this will be another increase on top of several others – albeit one that has been planned and communicated for some time. We must remind you, though, that this fabulous Microsoft 365 suite with massively improved functionality, productivity and security services that has kept your business (and ours) able to operate effectively from anywhere through the past 2 years, has not gone up in price with any significant increases since 2011. That’s a long time ago.

So, look out for further Blogs and Emails from us in the next few weeks, and our team will reach out direct to you, about your options going forward. Please note though, that if you take no action, we’ll default you to the 1-month commit ‘flex’ subscription and that will mean a monthly price rise of more than 20%! We’ll still be able to move you over to a less expensive, 12-month commitment after a month, or to mix and match your licences appropriately but it might make sense to lock in your 2022 prices for a year as soon as you can.

If you have questions about Microsoft 365 subscriptions, your options under the New Commerce Experience or want to discuss how you can maximise your investment in Microsoft 365, then please get in touch with the GM team.

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