Microsoft 365 Price Increases

From March 2022, some Microsoft 365 and Office 365 subscriptions will be more expensive for commercial users. In this article, key information about Microsoft's price increase is summarised:

• Who’s affected? What licenses are affected by Microsoft’s price increase?
• Who’s not affected?
• What is the new price for Microsoft 365 and Office 365 in the UK?
• Are there new contract terms and conditions?
• When will the price increase and new T&Cs come into effect?
• Will there be any discounts?
• Why is the price increasing?
• Can I shop around for a cheaper Microsoft 365 deal?
• What are we doing?
• How can I get more out of Microsoft 365?

Who’s affected? What licenses are affected by Microsoft’s price increase?

Organisations subscribed to six of Microsoft’s most popular commercial products will be affected by the price increase from March 2022:

Enterprise Licences:

• Microsoft 365 E3
• Office 365 E1
• Office 365 E3
• Office 365 E5

Small Business Licences:

• Microsoft 365 Business Basic
• Microsoft 365 Business Premium

Who’s not affected?

At the time of writing, price increases will not impact:

• Education products
• Non-commercial, home products.
• Not-for-profit organisations
• Microsoft 365 Business Standard users

What is the new price for Microsoft 365 and Office 365 in the UK?

There is between an 8% and 25% price increase for some Microsoft licenses, depending upon the license, as outlined in the table and infographic below:

Are there new contract terms and conditions?

Yes, there will be changes to the contract terms and conditions.

Aside from the price increase, Microsoft is also transitioning all licenses to a new subscription model, with new terms and conditions. The new subscription model is called New Commerce Experience (NCE).

Microsoft will eventually move all licenses to the ‘per-seat’ model, New Commerce Experience (NCE). Contract terms and conditions will vary, depending on the license. Expect to find new changes/choices in:

• Committed term (duration)
• Cancellation policy
• Flexibility to add and remove licenses
• Price
• Payment option (monthly, annual or prepay)
• Price lock

The New Commerce Experience (NCE) terms and conditions are summarised in the table below:

committed Term (contract duration)

There are three new license terms; monthly, annual, or multi-year agreement. Businesses can opt for one or a mixture of license terms to get best value. For example, an annual agreement is best value for permanent, core team members. For contracting/temporary employees, the monthly agreement is best value,  up until the 9th consecutive month, due to the 20% premium.

Cancellation policy

The cancellation policy is changing, and it’s not as flexible. Any cancellations must be made within 72 hours of purchase. Expect to pay for the entire term if you do not cancel within 72 hours of purchase.

Add and remove licenses

During annual or multi-year terms, customers can increase the number of users in their subscription, but they are unable to decrease the number of users (until the end of the term). Only with a monthly term can you decrease users at the end of the month.

Price

Those opting for a monthly term will pay a 20% premium from 1 July 2022, compared against annual and multi-year options.

Payment option

When opting for the monthly term, you pay monthly. If you opt for the annual term you can pay either upfront or spread the cost monthly. For multi-year agreements, payment can be made either monthly, annually or prepaid.

Price lock

Microsoft will lock prices up until the end of the agreed term (contract length). If you sign up for a 36 multi-year term, it's guaranteed to be no price increase within that period.

When do the price increase and new contract changes come into effect?

This is where it gets grey. Microsoft has made the transition complex, and it's impossible to provide one standard piece of advice. It depends on when your existing legacy agreement ends and what licenses you opt for moving forward. We would advise you to Contact Us to discuss the changes.

New licenses

From the 10th March 2022, all new licenses will be under the New Commerce Experience (NCE) subscription model, which includes a price increase and new T&Cs, as summarised in the table above. 

Legacy licenses - expiring before 1 July 2022

If your existing licenses auto-renew on or before 30 June 2022, you can remain on your legacy agreement for a further 12 months, from the renewal date. You will incur a price increase when your annual Microsoft 365 subscription renews. While you remain on a legacy license, your T&Cs will not change, and you can continue to add or remove licenses whenever you want. After this 12 month term, in 2023, you will have to move onto the New Commerce Experience (NCE) subscription with new T&Cs.

Legacy licenses - expiring from 1 July 2022

If your existing license expires on 1 July 2022 or after, you will move to the New Commerce Experience (NCE) subscription at the end of your existing agreement.

The new New Commerce Experience (NCE) agreement will incorporate new T&Cs, as summarised in the table above. The New Commerce Experience (NCE) subscription model will lock in the number of licenses you have at the start of the 12-month subscription, and you will only be able to increase the quantity during this period. Removing licenses will not be possible until the term ends.

What Microsoft contract do I have?

The Superfast team will get in touch with you shortly if you are affected by the price increase. We will inform you:

• What licenses you have.
• The number of licenses you have.
• When your existing, legacy contract expires.

All Superfast IT clients affected by the price increase have 12-month contracts with Microsoft. It's something you may not have paid much attention to previously, as licenses could (and while you remain on a legacy license, still can) be added and removed at any time - you only pay for the licenses you need.

Please see What are we doing? to find out what we are doing next.

Are there any discounts?

There are no discounts, other than signing an annual or multi-year agreement to avoid the 20% premium on the month term license.

Why is there a price increase?

Microsoft has not had a price increase for Microsoft 365 in 5 years. In Microsoft’s announcement, they describe that the price rise "reflects the increased value we have delivered to our customers over the past 10 years". We are essentially paying for their innovation. Over the past decade, 25 new apps and more than 1,400 features have been added, including:

• Teams
• OneDrive
• Security features
• Automation capabilities

They are also adding unlimited dial-in capabilities for Microsoft Teams meetings across enterprise, business, frontline, and government suites over the next few months.

Can I shop around for a cheaper Microsoft 365 deal?

The price increase is directly from Microsoft, so there is no option to shop around. What you can do is consider the best value licenses for your business. We can guide you through:

• What’s essential in Microsoft 365 to maintain business operations and efficiency?
• How many annual, long-term licenses do I need (at the cheaper rate over 12 months)?
• How many month term licenses do I need for short-term, temporary workers (cost-effective for intermittent or short employment stints)?
  
  
  

What are we doing?

To make migration to Microsoft's new pricing structure as easy as possible, the team and I will get in touch with you in due course and:

1. Let you know the licenses you currently have and when your legacy contract ends.
   
   
2. Recommend what combination of licenses and levels would provide best value without compromising business operations and efficiency.
   
   
3. If we handle your Microsoft 365 licenses, we will make the adjustments on your behalf via the New Commerce Experience interface.

How can I get more out of Microsoft 365?

With the pending price increase, it is a good opportunity to consider how to get better value from your licenses. Microsoft Cloud Solutions have evolved tremendously over the past decade. With so much added functionality, it is difficult to keep on top of every new advance. I would highly recommend:

1. Using Microsoft’s learning resources to upskill and ensure you are getting the most out of your Microsoft 365 subscription. Here are a few pre-recorded webinars that are insightful and useful:
   
   File storage and sharing with OneDrive and SharePoint
   Get more done with Office across all devices
   Engage employees with Microsoft Teams, Viva, and Yammer
   
   
   
2. Also, look at Microsoft employee, Kevin Stratvert, YouTube Channel for ‘how to’ and explanation guides of all Microsoft apps. He has created a number of introductory guides to less familiar apps, to help to get you started.
   
   
   
3. View our Microsoft 365 apps guide for an overview of apps and what they do.
   
   
   
4. If you need further help, then you could benefit from IT consultancy. Get in touch and we can ensure your business is making the most out of Microsoft 365.
   
   

For further details about Microsoft 365 licenses and pricing changes, schedule time with me. Otherwise, I will get in touch with all Superfast IT clients in due course.