How to navigate the Microsoft 365 price rise

How to navigate the Microsoft 365 price rise

Last year, Microsoft announced changes to the pricing model for most of their enterprise licenses. The change comes ten years after the initial release of Office 365, and since then, Microsoft prices have remained the same.

For a company that has focused on innovation instead of driving up prices every year, Microsoft 365 (M365) delivers a lot of value. Even though I recommend sticking with your investment in the M365 suite, there are a few things you should consider before the next time you renew your subscription. Namely, how will it impact your business, and what actions can you take to optimise spending?

What products will be affected by the price rise?

Personal and educational plans for Microsoft 365 will remain untouched. Interestingly, the enterprise plans Microsoft 365 Business Standard and Microsoft 365 E5 will not increase either.

You can expect price increases starting on the 1st of March 2022 for the following plans (in USD):

  • Microsoft 365 Business Basic ($5 to $6 per user per month)
  • Microsoft 365 Business Premium ($20 to $22 per user per month)
  • Microsoft 365 E3 ($32 to $36 per user per month)
  • Office 365 E1 ($8 to $10 per user per month)
  • Office 365 E3 ($20 to $23 per user per month)
  • Office 365 E5 ($35 to $38 per user per month)

Please note that Microsoft has not released the official prices in AUD at the time of publishing this blog. We can only estimate Microsoft 365 price increases in Australia at the moment based on the USD prices. We will keep our customers updated when Microsoft provides more information.

Why has Microsoft bumped up their prices?

In Microsoft’s official blog on the price rise, they cited their innovation since the launch of Office 365 in 2011 as one of the reasons for increasing their prices.

In the last decade, Microsoft has delivered upgrades in:

  • Cyber security and compliance safeguards: Microsoft introduced capabilities to combat threats in the cyber security landscape. Capabilities added in the last decade include data loss prevention (DLP) and message encryption. Features such as eDiscovery have enabled businesses to comply with strict data security compliance regulations in Australia and worldwide.
  • New apps and capabilities: The first release of Office 365 included seven apps. Their library has expanded to thirty-one, including OneDrive, SharePoint, Access, Forms, Published, Power BI and Power Apps. Microsoft released Teams, which saw a significant increase from 32 million users in February 2020 to 115 million that October.

The Microsoft 365 price rise taxes flexibility

Monthly prices for their commercial products will increase by 20 per cent, a much higher increase than the annual or bi-annual subscriptions.

Because the annual plans will appear more enticing for businesses, the run-on effect may be Microsoft locking more businesses into contracts for longer.

If you buy 50 licenses on a specific plan, you will not be able to remove the licenses paid for or move to another plan until you have fulfilled the yearly subscription. If your business needs or your number of users changes, you may be paying more than you need for quite some time. However, if you need to increase your number of users or upgrade a licence, you can do so at any time.

Examine usage to reduce costs

In the past two years, many businesses have taken severe financial hits. Some markets have shrunk, global mobility has slowed to a trickle, and leaders have filed down costs where they could to survive. For some of our customers, Microsoft has provided desirable options for cutting costs with their per user per month pricing and access to tools that have become business staples.

Now, with Microsoft’s pricing increase rolling out in March, IT leaders have begun rethinking their subscription renewal and planning the business’ technology roadmap. Because the new Microsoft 365 contracts and pricing place a serious tax on month-to-month flexibility, your tech roadmap will need to cover multiple years and, as much as possible, avoid paying for licenses you will not need.

The right time to start planning your subscription renewal would have been months ago. But, there is no point dwelling on what you should have done; let’s focus on what you need to do starting now. The best place to start is by deeply analysing your staff’s current usage.

For example, if you leverage Microsoft 365 Apps for business (paying AU$12 per user per month), most of your team might not leverage Publisher or Access. Upon renewing your subscription, you can save costs by moving those people to Microsoft 365 Business Basic (AU$6.90 per user per month). Then, you only pay the subscription fees for people leveraging all of the capabilities of Microsoft 365 Apps for business.

Microsoft delivers excellent usage reporting capabilities. The data harvested will likely need some refinement before you get a clear idea about staff usage, but it will provide the data required to optimise your costs.

Take inventory of your licenses

I recommend taking the opportunity to review your licenses and optimise spending in light of the price increases. Not all of your staff need access to the same software, and if you are currently operating under that model, you could stand to cust costs even after the prices rise.

You can save costs on your Microsoft 365 licenses by taking inventory of the licenses you have and which users leverage them. You will inevitably bring new employees into the business and need to assign them licenses. Even long-time staff members might need access to new applications.

Rather than buying new licenses to fulfil demand, I recommend reviewing what you already have on hand. Perhaps you have unused licenses or have assigned an office365 license to someone that does not require all of the functionality within that license.

VISITS can help you choose the right licensing

Our experts know the Microsoft 365 licences inside and out. We can review your current licenses and usage to advise you on whether you are overspending on Microsoft software you do not need.

Please visit our Software and Subscriptions page for more on optimising your costs.

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