Tech

Microsoft Announces First 365 Price Increase In A Decade

Microsoft is preparing to release its first price increase for its Office 365 and Microsoft 365 companies in ten years. The price increase will have an impact on business users of Microsoft’s software program as a service (SaaS) choice plans. Microsoft stated in its announcement that it is not changing the costs for education and consumer products users “at this time.”

”It’s an interesting turn of events.  One could argue the fact that it’s been a tough 24 months for many people in business. Why would a large and entrenched business like Microsoft increase rates?  Conversely, I argue that I’ve seen many businesses thrive through COVID, adapter business processes, in some cases adjust their offering, change how they deliver that offering.  All that being said, maybe due to the market we’re in, many businesses, saw success in light of COVID restrictions.  Microsoft, like many businesses, are struggling to acquire good talent and keep talent that they have on staff. Combine that with the quickly adapting business and security market, you increase the cost of how you do business. It’s just the evolution of things. I applaud Microsoft for being able to maintain current pricing for almost a decade!

And for those of us that have a greater understanding of what the options were prior to Office 365, I think most of us would agree that compared to the upfront cost and management cost of legacy Exchange Server environments, this solution far exceeds those capabilities and at a price point that is less expensive over time.  I believe the simplicity and use, relatively small upfront cost, and a price point per user that allows a company to factor this cost into the employee cost, giving them a truer representation of employee cost planning provides most small businesses with a secure platform to manage documents, email, and the overall security landscape of their company. At this price point, it makes it attainable for even a small business to have the same solution in place as a Fortune 500 company might have.  If you look at the pricing tier, the most commonly used is the business premium, which is going up 10%. At an average of 1% per year over 10 years, it’s a nominal increase if you look at it from a bigger picture”, said Tommy Wolosin, Director of Sales and Marketing of Net Works.

”’I’d like to say that for both of us we will continue to experience an increase in the cost of doing business as a result of the changes in the labor environment and, while unfortunate, we can expect these costs to be passed on to the customer at some point in time. Kudos to Microsoft for holding this off for a decade and for bringing a platform accessible to all levels of the business spectrum”, added Wolosin.

Microsoft’s up-to-date pricing will go into effect on March 1st, 2022:

  • Microsoft 365 Business Basic (from $5 to $6 per user)
  • Microsoft 365 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)
  • Microsoft 365 E3 (from $32 to $36)

”This is the first real price increase Microsoft has done on Office 365 since its launch.  They have continued to increase the offerings and security within each of their SKUs over the years without an increase.  They have added support options that provide better support when needed.  Like all businesses, they need to attract and retain talent, which requires good salaries & benefits.  I think this is a fair increase based on the continual investment they are putting into these products”, said Michael Nelson of TLC Tech, a Sacramento managed IT support company.

”It has been a good 10 years with no price increases. Over these past 10 years, Microsoft has provided many new features as well as many upgrades”, said Michael Goldstein of LAN Infotech.

”Price increases are just a normal part of the cloud-based subscription model. As a subscription matures and additional functionality is added, the occasional price increase is inevitable. These price increases are implemented to offset the rising cost of further development and additional resources and overhead required from the provider to continue to provide the service”, said Kenny Riley of Velocity IT in Dallas.

”Seeing how Microsoft hasn’t implemented a price increase for Office 365 since 2011, I’d say this is no big deal. It’s the first price increase in 10 years, and it’s a very marginal one at that”, added Riley.

”Most of our clients use Microsoft 365 Business Basic, and for them, the price increase amounts to 20%.  Although it’s a pretty substantial percentage, the true dollar impact per client will be pretty minimal.  And if you look at the huge investments that Microsoft has been making in Teams in the past 18 months and still keep it as a “free” component of Business Basic, we support the increase.  From our perspective, it’s much better to do that than to pull Teams out of the subscription and make it a stand-alone product”, said Paul Bush, Principal Consultant of OneSource Technology, Inc.

These are the first major price increases to Microsoft 365 since it was launched a decade ago, according to Microsoft. The price changes also come as Microsoft has reported a record year of revenue growth. The price changes are sure to give Microsoft’s profits and revenues another boost in 2022. ”With the wide adoption of Office365 and more and more companies moving away from perpetual licenses, it was bound to increase at some point”, said Ashu Singhal of Orion Networks, specialists in IT support in Maryland.

Over the past ten years, while large businesses have benefited from price reductions, next year’s price increases could hit small businesses as the economy begins to recover from the COVID-19 pandemic. ”I understand the increase, but as a reseller, we are faced with pushing our clients to add more costs. Also, while Microsoft added more apps, our core users still take advantage of the more basic functionality like Office, Email, and Teams”, said Nick Allo of Semtech IT Solutions.

”It was only a matter of time before Microsoft raised the pricing on the Microsoft 365 suite.  The value that a business receives from the 365 suite is much larger than the pricing that Microsoft is charging for the suite.  As long as they actually use it or have a partner that knows how to implement, secure and enhance the product to take advantage of every feature set possible”, said Dan King, President of  K2 Technologies.

”It is not a set and forget product, there are so many small items that can really make a difference to a small business. Bookings, for example, is so easy to set up and use.  It is a valuable tool to interact with new prospects and existing clients. Forms is an application is used to collect data and use it for automation. Power Automate and Power Automate Desktop can save the cost of the subscription in the time savings they can provide by automating day to day tasks and processes”, added King.

”Microsoft 365 pricing for its basic business suites has not moved much in recent memory. They have been pretty rock steady. I think they are allowed a price increase when it is this infrequent, and after adding many cloud services to its offerings. I’m hoping the increase in cost will lead to further development of new products and more refinement”, said Joe Cannata of Techsperts, LLC in New Jersey.

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