Microsoft recently announced price changes to its Office 365 (O365), Microsoft 365 (M365) cloud products available in the Cloud Solutions Provider (CSP) program, effective from March 2022. This includes a price increase on certain M365 & O365 products, a new licensing option that may impact customer budgets. This guide summarizes the changes and potential impacts on your Microsoft licensing strategies.
The most recent changes address two main concerns:
1. New pricing for Microsoft 365
- Enterprise: Office 365 E1: $10 ($8), Office 365 E3: $23 ($20), Office 365 E5: $38 ($35), Microsoft 365 E3: $36 ($32).
- SMB products: Microsoft 365 Business Basic: $6 (from $5), Business Premium: $22 (from $20).
- Price increase for commercial customers effective 01 March 2022; Government phased in over several years.
- No impact currently on Education or Consumer products.
- Exceptions in APAC, India, LATAM for (1) Office 365 BB, and (2) lead status EM-specific SKU.
2. Extending unlimited audio-conferencing dial-in across the suites to complete the Teams usage scenario
- Allows customers to dial-in to Teams meetings from +70 countries virtually on any device.
- Currently included with Microsoft 365 E5 and Office 365 E5 or available as an add-on.
- Enterprise: Microsoft 365 E3, Office 365 E3, Office 365 E1 (already include with M/Office 365 E5).
- Frontline: Microsoft 365 F3, Microsoft 365 F1, Office 365 F3.
- SMB: Microsoft 365 Business Basic, Business Standard, Business Premium.
- Government (GCC, GCCH, DOD): Microsoft 365 E3, Office 365 E3, Office 365 E1, Microsoft 365 F3, Microsoft 365 F1.
Changes will be effective in March 2022; as Microsoft has extended the $0/user promo through the end of May 2022 to bridge the gap between announcement and availability.
The Price Increase for M365 SKU’s:
Microsoft’s August 2021 announcement explained that Office 365 hasn’t had a substantive price increase since its launch in June 2011. They added 24 applications to the suite during this time, including Teams, PowerApps, Power BI, Planner, Visio, and OneDrive and released over 1400 new features across the suite, including security, AI, and collaboration improvements,
Alongside the pricing increase, Microsoft now also includes unlimited dial-in capabilities (Audio Conferencing) for Team Meetings to meet the needs of remote and mobile workers.
Examples of new value added to Microsoft 365 Business Premium since that product was first launched include:
- Azure AD Premium Plan 1
- Azure Information Protection Premium Plan 1
- Office 365 DLP
- Microsoft Defender for Office 365 Plan 1
- Shared Computer Activation
- Azure Virtual Desktop (WVD)
- Universal Print
Microsoft will begin enforcing annual agreements for all direct purchase, CSP, and Open Value customers with the shift to the New Commerce Experience. The ability to purchase licenses monthly will still be available (for some licenses) with a 20% premium price. License purchases made under the annual agreement will qualify for the standard price model, and customers may reduce license counts during their annual renewal window. Licenses may be added at any time. Microsoft is referring to annual term pricing as P1Y (Pay 1 Year) and monthly term pricing as P1M (Pay 1 Month).
The monthly P1M term, while more expensive than annual, is going to remain useful for organizations that have seasonal workforces, contractors, or during provisional employee onboarding periods.
To address common concerns, we have jolted down FAQ that can help you make a decision on the new pricing model.
- Which licensing programs does the new pricing apply to?
The new pricing applies to commercial Volume Licensing, CSP, and Web Direct.
- How will this price change impact existing customers?
Existing customers are not impacted until their next renewal on or after March 1, 2022.
- Will there be any changes to the Education or Consumer list prices?
No, this announcement does not impact the education or consumer products.
- Will there be changes to licensing or usage rights?
No, this announcement does not include any changes to the licensing or usage rights of the Microsoft 365 or Office 365 products, outside the specific changes that impact Audio Conferencing.
- Will Microsoft ever raise prices on Microsoft 365 again, or is this a “once every 10 years” thing?
Microsoft’s first priority is to continue adding value to Microsoft 365 to address the evolving needs for customers. This is the first substantive update to their list price since Office 365 was released in June 2011 and reflects the significant value that Microsoft have added over that time. They regularly evaluate the pricing of their offerings based on the value that Microsoft is delivering to customers.
- What is changing with regards to audio conferencing and dial-in?
Beginning on March 1, 2021, Microsoft will be rolling out a new $0 audio conferencing add-on SKU for unlimited dial-in for eligible Microsoft 365 and Office 365 suites.
A separate SKU will be available for customers who want to purchase dial-out; more information to follow. There will be no change to Microsoft 365 E5 or Office 365 E5, both of which already include both unlimited dial-in and 60 minutes dial-out.
Being Microsoft Gold Partner for M365 and SSPA complaint CSP, we can help evaluate your M365 licensing requirements and suggest the most suited licensing model tailored for your organization.