New Pricing and Changes from Microsoft
In the coming months there will be significant changes* made to Microsoft 365 in what the company is calling "the first substantive pricing update since it was launched a decade ago". Their New Commerce Experience (NCE) makes changes that are two-fold. The first change will affect the prices of some small business and enterprise licenses and the second change will affect the billing and contract terms.
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*Please note that the following changes are as we understand them and given Microsoft's history, are subject to change.
The following licenses will be increasing in price starting March 1st, 2022, for all new subscriptions:
Small Business Licenses
Business Basic: From $5 to $6
Business Premium: From $20 to $22
Office 365 E1: From $8 to $10
Office 365 E3: From $20 to $23
Office 365 E5: From $35 to $38
All Prices Changes quoted above are "per month" costs, but they require an annual subscription
On average, this increase in price is about 10% if a company is utilizing one of the licenses listed above, but the price changes could be much higher with the second set of changes.
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The second set of changes in Microsoft's new program affects the billing and contract terms. There are two terms to choose from: Annual and Monthly.
The annual contract term is a commitment for the whole year. Companies will pay once, upfront, to cover the next 12 months. Companies can add or upgrade licenses at any time during the term for a prorated price but cannot remove or downgrade licenses until at least 30 days prior to a new contract term. The cancellation period for this term is 3 days, including the day of purchase. If any or all seats are cancelled on day 1, a full refund will be given and if cancelled on day 2 or 3, the company will get a prorated refund. No refund will be given following a full 72 hours after activation.
The monthly contract term is the most impacted as it included an additional 20% monthly premium for the benefit of flexibility. Companies can add or upgrade licenses at any point during a term for a prorated price and can remove or downgrade licenses at the beginning of the next monthly term. The cancellation period for this contract term is the same as stated above; a company has 3 days to cancel and receive a refund, but their license count will be stagnant for the full term unless it is to add or upgrade licenses.
Additionally, Microsoft's new program allows companies to have more than one contract term. This means that a company can hold an annual term of licenses for their full-time employees and a monthly term for any seasonal or contract employees.
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So, what does this mean for you?
Companies who are currently on a yearly contract term can expect changes on their invoices if they are utilizing any of the 5 small business or enterprise licenses listed above and plan to renew any time after March 1st, 2022. If you have already renewed your yearly contract term licenses for this year, you can expect to see these changes next year.
Companies who are currently on monthly contract terms can expect changes on their invoices if they are utilizing any of the 5 licenses listed above starting in March and expect an additional 20% monthly premium to be added if they want to retain the ability to make changes to their license count frequently. As mentioned above, this additional premium begins July 1st, 2022.
If you would like to switch form a monthly to a yearly plan to avoid the extra costs of the monthly plan, please reach out to us within the next few weeks to make the necessary changes to your account.
Please bear with us in the transitional phase and we thank you in advance for your patience and understanding.
To read a related article from CNBC, Click Here.