Happy to fork out more for Microsoft 365?

Good things don’t last forever. There’s often more than a grain of truth in a cliché. Having reflected on the news that prices are going up for Microsoft 365, here’s why we think the new changes probably make sense:

They’ve added tonnes of stuff

Since the last price rise – less than five years ago – Microsoft has added plenty of new features. And we’re not just talking incremental updates, we’re talking entirely new products like Teams.

If Teams hadn’t been bundled in with 365 for free, we think that most customers would have happily paid out for it separately. Given you know what over the last year and a half.

Other tech giants do it

In our recent Cloud Talk podcast, Rich Gibbons made a good analogy. The cost of his boxset bingeing has almost doubled since first signing up to Netflix. But because the quality and quantity of the content has gone up too, it feels justified.

So, as long as this doesn’t become a regular move from Microsoft, we think the price increase makes sense. We’ve all had it pretty good for a long time.

You get savings in other ways

In truth, Microsoft 365 offers a lot of value, even with the increase. (If you didn’t know, this kicked in on the 15th March 2022). Commercial licences only; no changes to consumer or education products).

For example, thanks to the addition of things like Planner, a lot of customers have been able to stop paying for separate tools like Project. So, there’s been a net-cost saving there already.

But wait, what about the New Commerce Experience?

Alongside the 365 increase, Microsoft announced changes to the CSP programme to streamline product subscriptions. These include:

• New monthly term offers with a price premium for customers who need term and seat-count flexibility.
• Annual term offers with competitive pricing for stable, long-term customers.

 

There are slight positives in this announcement: the launch of communication credits and new multi-geo capabilities. But it’s set more than a few alarm bells ringing…

Liability – long-term cost risks

If customers sign up for an annual or multi-year term and then go out of business, their CSP has to cover the cost of that agreement. The same applies to Westcoast Cloud too. If any of our partners go bust, we’re liable for any outstanding contract costs.

Monthly cost – out of reach for most?

The Microsoft 365 price hike applies to customers taking out an annual agreement. So we have to assume the monthly term offer will be higher still – in other words, a double increase.

And, unlike the annual and multi-year options, there’ll be no price protection for pay-monthly customers. Further increases could therefore become a regular (Netflix-like) occurrence.

Flexibility – mainly just for Microsoft

Cloud computing has always offered the ability to flex up and down. So, some of these CSP changes feel like a backwards step.

There’s a period of 7 calendar days after signing up to cancel or make changes. So if you’ve ordered too many licences, you’ll have to pay for them all until the end of the term. You can add more, of course! But you can’t reduce. Similarly, you can upgrade products (e.g. from E3 to E5), but you can’t downgrade.

All in all, it’s a head scratcher

It does feel like the benefits are stacked in Microsoft’s favour. And the goal of creating a “simplified purchasing experience” is conversely creating a lot of confusion for partners. We’re still waiting for clarity on a lot of T&Cs ourselves.

Your thoughts?

What do you think about the announcements? How will they affect your business? We’re always up for a chat about the intricacies of Microsoft licencing – so do get in touch!