DISCLAIMER – All information in this piece is accurate as of the writing of this article and contains no legal advice in terms of purchasing or agreements. This is offered as helpful information to guide our clients and other companies who own and use Microsoft/Office 365 licenses.

Many have seen the industry buzz around Microsoft increasing their prices and their licensing structure between March and July 2022. When writing this post to clarify a few things, we first thought “Let’s give a history and explain the story that led us to these changes.” But we thought twice. The goal of this article is to simply show you the current pricing as of February 2022 and the future pricing (after March 1, 2022).

What Is Microsoft New Commerce Experience (NCE)?

It’s a fancy way to say “a new way to buy”. Basically, Microsoft has restructured how their licenses are sold to partners (us) and the options that are available to the license customers (our clients and the marketplace). This restructuring requires Microsoft partners like us to jump through some additional hoops to provide licenses to our clients. It’s also forcing a few price increases which is why this post exists. So, for the purposes of this article, we’ll just jump right into…

Which Microsoft Licenses Are Affected By NCE?

There are many license types affected by the introduction of NCE, but we’ll focus on the types that will affect the majority of our client base as well as the companies that approach us for help. These are:

  • Microsoft 365 Business Premium
  • Microsoft 365 Business Basic
  • Office 365 E1
  • Office 365 E3

*It’s important to note that Microsoft 365 Business Standard pricing will not be affected.

What Are the Price Increases that Will Hit the Above Microsoft Licenses?

There are two major price increases hitting all companies that hold the licenses mentioned above as well as many others. Here’s a breakdown of the four license types we mentioned.

March 1, 2022 – Standard rate increase

Microsoft will increase its standard rates on licensing by about 10% – 18% (depending on the license). This is a typical, occasional price increase based on inflation and other factors that happen to all products and markets everywhere:

License type Old Price NCE Price Increase
Microsoft 365 Business Basic $5 $6 $1
Microsoft 365 Business Premium $20 $22 $2
Office 365 E1 $8 $10 $2
Office 365 E3 $20 $23 $3

All costs above are on a per license, per user basis and are pre-tax.

July 1, 2022 – Markup on month-to-month plans

Microsoft will add an additional 20% markup on the above new pricing to all plans that stay on month-to-month terms. The industry speculates on the reasoning behind it, but many feel that it’s in an effort to incentivize customers to switch to a 1-year or even a 3-year plan. (Microsoft has yet to release incentive information on 3-year plans as of the writing of this article.)

It’s reasonable to assume that Microsoft is looking to better forecast resources so it can focus on improvements, optimization, and increased connectivity. At any rate, companies that elect to keep any licenses on month-to-month plans will experience a rate increase of:

License Type March 1 NCE Price Total w/20% Markup Increase
Microsoft 365 Business Basic $6.00 $7.20 $1.20
Microsoft 365 Business Premium $22.00 $26.40 $4.40
Office 365 E1 $10.00 $12.00 $2.00
Office 365 E3 $23.00 $27.60 $4.60

All costs above are on a per license, per user basis and are pre-tax.

How Do I Avoid the Price Increases?

This is the million-dollar question. And you’ve probably already guessed at the answers.

March 1, 2022 – Standard rate increase

The short answer is that you can’t, but you can delay the date that this price increase hits you.

The longer answer is that, as a standard rate increase, this will hit all Microsoft/Office 365 license owners everywhere either on March 1, 2022, or on March 1, 2023.

Interested in pushing your price increase out to March 1, 2023? Any company that currently is on a month-to-month plan for any of the discussed licenses (and others) can delay the price increase by changing their plan to an annual one before March 1, 2022. You can choose if you wish to pay that annual plan in one lump sum or monthly over the 12-month term of your plan.

July 1, 2022 – Markup on month-to-month plans

This can be totally avoided by moving all month-to-month plans to annual plans (see the grey box above). To avoid it altogether, plans must be converted to annual by June 30, 2022. If for any reason, a company misses that end of June deadline, that’s ok. You can always move a month-to-month plan to an annual plan and drop that 20% markup at any time.

Here’s a simplified look at the cost savings if you move to an annual plan after March 1, 2022:

License Type Month-to-month Annual Cost 1-yr Plan Annual Cost 1-yr Plan Savings
Microsoft 365 Business Basic $86.40 $72.00 $14.40
Microsoft 365 Business Premium $316.80 $264.00 $52.80
Office 365 E1 $144.00 $120.00 $24.00
Office 365 E3 $331.20 $276.00 $55.20

All costs above are on a per license, per user basis and are pre-tax.

Take Action Now to Save Money

These are the more straightforward answers for companies who’s licensing needs don’t change often. If your company is one of them, there’s no reason why you should wait to save money now.

If your company has more complex needs, like a seasonal model that scales up and down at various times in a year, then your plans need more scrutiny. Contact LMJ for more information.

Microsoft Corporation is an American multinational corporation headquartered in Redmond, Washington, United States.  Microsoft Computers are an industry standard in the IT field, and LMJ Consulting partners with Microsoft to provide your business excellent support.

 

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