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Microsoft 365 Licensing Update

Expert Insight

Introducing the new Microsoft 365 Licensing

The Microsoft 365 commercial license has had the same price tag since the Office 365 suite was established, over 10 years ago. The tools and solutions available within the M365 suite have been streamlined, enhanced with new additions continuously included – in fact there have been 24 new additions with over 1400 features and capabilities. As such, Microsoft has decided it’s time to announce a new price, in line with their current commercial offerings.

Launched in 2011, Office 365, also formally known as Microsoft 365, has grown to over 300 million users worldwide, and has arguably become one of the most popular business technology solutions for organisations around the world…

So, what licensing updates shall we expect for Microsoft 365?

Firstly, the new prices, are effective from 1st March 2022, and are as follows (dollars):

Annual Commitment
  • Microsoft 365 Business Basic: going from $5 to $6 per user per month
  • Microsoft 365 Business Premium: going from $20 to $22 per user per month
  • Office 365 E1: going from $8 to $10 per user per month
  • Office 365 E3: going from $20 to $23 per user per month
  • Office 365 E5: going from $35 to $38 per user per month
  • Microsoft 365 E3: going from $32 to $36 per user per month
Monthly Commitment

Microsoft has not yet published the increase in price for monthly licencing, but current indications are that monthly commitments will incur an additional charge of 20% per user per month.

How will the Microsoft 365 licensing changes impact my organisation?

The first significant change will be to the Microsoft commercial licensing “terms”. This introduction of terms refers to the length of time you are committed to using Microsoft 365 technology.

There will be an introduction of three terms:
  • Monthly: This is ideal for customers who need user flexibility.
  • Annual: A solution for those that have a regular customer base, who want to take advantage of competitive rates.
  • 3 year: This agreement essentially has the same benefits as the annual term option, however is only available from March 2022.
  • Microsoft has also allowed the option to blend short and long-term requirements for those with seasonal or business-volume fluctuations.

If you’re already purchasing your Microsoft 365 licensing through Stripe OLT, we will be reaching out with further information about this.

In addition, the following information, applies to all term lengths:
  • The price will be fixed during the entire term
  • You will no longer be able to reduce the amount of seats you have during your term, however you can upgrade to more users/seats or higher licenses (e.g. from E1 to E3) anytime.
  • You will not be able to transfer your subscription to another CSP until the current term is finished

Microsoft has allowed a 72-hour period where you can cancel or change your commercial M365 License – if for any reason you have selected the wrong license or are unhappy with your Term choice.

The implementation of these new Microsoft 365 terms also affects Microsoft CSP Partners – as such, third party providers may introduce their own cancellation charges.

At Stripe OLT, we recommend you consider the above when deciding on the term type you need once these changes come into effect.

There will also be user/seat changes:

Microsoft is encouraging customers to think about commercial flexibility and how many users or seats they have, or will need, during their term. This essentially means planning ahead and integrating the new M365 terms in your annual technology strategy.

So for a business of roughly 100 staff – which may fluctuate by as much as 20% during the course of the year – Microsoft’s recommendation is to purchase

  • 80 x Microsoft 365 Business Premium on an annual commitment @ $22 per user per month
  • 20 x Microsoft 365 Business Premium on a monthly commitment, which based on the estimated 20% increase, would be @ $26.40 per user per month – allowing you to flex the monthly number up and down as staff levels fluctuate.
  • All Microsoft 365 subscriptions, regardless of the term chosen, can be paid either monthly, or yearly.
  • Subscriptions for consumption services, like Azure, are still billed as standard per calendar month.

What should my organisation do to prepare for the Microsoft 365 commercial licensing changes?

As mentioned above, thinking about your annual strategy moving forward will be key, and asking the following questions will help you prepare for the changes:

  1. Have you thought about your business growth over the next few years?
  2. Would you consider committing to a longer term to take advantage of lower charges, or would you prefer a mix of Terms to remain flexible?
  3. What other business technology tools are you currently using, external to those provided by Microsoft, that could be replaced by those in the Microsoft 365 ecosystem? This could help improve your existing return on investment…
  4. If your existing subscription renewal is due before the changes come into effect, in March 2022, would you consider choosing a longer term and lock-in current low pricing?

How can Stripe OLT help?

As a Microsoft Gold Partner, we enable our clients with cutting edge cloud technology and ensure they take full advantage of the power and value provided by the Microsoft 365 ecosystem.

If you are yet to purchase a Microsoft 365 commercial license and want to take advantage of the current low prices, please get in touch with our experts here.

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