The ominous “I” word – inflation – has been largely unseen for the past decade but is now being prominently featured in headline after headline. The consumer price index rose 7.5 percent in January – the largest increase in 30 years – and prices for everything are on the rise.
Microsoft is following suit by announcing price increases of up to 25% on its M365/O365 enterprise and SMB cloud licenses. The new pricing, which kicks in on March 1 includes:
- Microsoft 365 E3 ($32 to $36/user)
- Office 365 E5 ($35 to $38)
- Office365 E3 ($20 to $23)
- Office 365 E1 ($8 to $10)
- Microsoft 365 Business Basic ($5 to $6/user)
- Microsoft 365 Business Premium ($20 to $22)
WHAT YOU CAN DO ABOUT IT
You can lock in your current pricing for 12 months by converting to annual prepaid licenses before the new prices go into effect on March 1.
New Commerce Experience (NCE) Changes
Changes to Microsoft’s NCE program could also result in increased costs depending how you structure your licenses. NCE was launched in 2019 with the goal of giving customers greater choice and flexibility in how and where they purchase licenses. Starting March 22, new M365/O365 subscriptions must be purchased in the NCE backend ordering tools. Beginning July 1, 2022, existing M365/0365 subscriptions must be renewed into the NCE tools.
The changes to NCE are not related to the general price increases that will begin on March 1, but they will impact all O365/M365 plans and could result in a 20 percent increase depending on your licensing choices.
The biggest hit comes on month-to-month commitment O365/M365 plans. Beginning in June 2022, you will still be able to increase or decrease licenses inside of a year, but those changes will now come at a 20% price premium. The annual price for a given plan will be 10 times the monthly price (10x the price for 12 months = 20% more expensive for monthly).
What you can do about it
A common customer scenario is having a portion of headcount as static FTEs and another variable portion for seasonal staffing needs. This enables customers to use the same pool of licenses for all employees.
To offset some of the 20% premium, you can choose to have two pools of licenses, one for static annual and another for variable monthly. You can also opt for a fully annual plan with a buffer or a full month-to-month plan depending on how much your headcount changes throughout the year. You can remain on a monthly payment plan on annual licenses and get the annual rate, as long as you commit to a yearly plan. Up-front annual payment is not the only option.
If you will be affected by these increases, we suggest you contact your DynTek Sales representative or Account Manager. They can explain how the price increases and the NCE changes will impact you and work with you and your specific situation to find the most cost-effective options for your organization.