Ever since Microsoft brought us O365 over a decade ago, they have continuously added value to their products through new applications and security features. As a result, last year Microsoft announced their first “substantive price update” since its first release. The price increase applies to these specific commercial products:
- Microsoft 365 Business Basic
- Microsoft 365 Business Premium
- Office 365 E1
- Office 365 E3
- Office 365 E5
- Microsoft 365 E3
This update goes into effect March 1, 2022. If you missed their full announcement in the Fall, you can view it here. Read below to learn about other changes that accompany this price increase, specifically Microsoft’s New Commerce Experience.
Shortly after their pricing announcement, Microsoft also shared a surprising update on their purchasing process. What they refer to as the “New Commerce Experience” will change the way companies like yours and ours purchase their products.
Businesses have previously had two options to purchase O365 licensing – either through a Cloud Solution Provider (CSP) which is the role we fill for our clients or directly from Microsoft. To know for sure how you’ve purchased in the past, you could refer to an invoice from a provider like us, as we note “O365” as a line item.
If you are a company who purchases directly from Microsoft, you are probably used to a minimum 1-year commitment for the service. If you are a company who purchases through a CSP like ABS, you’re used to the flexibility of month-to-month agreement terms. The New Commerce Experience will impact the latter group of people most.
Beginning in March, if you purchase through a CSP like ABS, you will be required by Microsoft to commit to a minimum 1-year subscription. During the 1-year commitment, there is no flexibility to reduce licensing counts. This means you can’t cancel a license if you have an employee leave, however, you can redeploy it.
There is a way to avoid this year-long commitment and remain month-to-month, however, Microsoft will charge a 20% convenience fee, per license. This option could mean facing up to a 40%+ price increase. We understand this change in their subscription model, along with the factors organizations must consider, may cause frustration.
If you are a larger company, you may consider mixing these purchasing options for a custom approach that best suits your company’s financial needs. For others, the cheapest way is to estimate licensing as best you can, move your licensing to a 1-year Subscription, and avoid the convenience fee from Microsoft. We’d be happy to discuss this decision with you if you’d like to talk with one of our team members.
While we shared the highlights we believe are most impactful to businesses, there are other aspects to know about the New Commerce Experience. You can view all of that here.
