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What You Need To Know About Microsoft 365 Price Increases

Starting in March, Microsoft 365 licenses will cost more for business customers, especially those buying from cloud service providers.

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What You Need To Know About Microsoft 365 Price Increases

Starting in March, Microsoft 365 licenses will be more expensive for business customers, representing what Microsoft has called its “first substantive pricing update” since the launch of Office 365 a decade ago.

This is old news, as the company announced this in August.

But for enterprises and small-to-medium businesses, price increases are across the board.

Here’s a look at the monthly per user fees customers will be paying for Microsoft 365 services come March 1:

  • Microsoft 365 Business Basic: $6; up from $5
  • Microsoft 365 Business Premium: $22; up from $20
  • Office 365 E1: $10; up from $8
  • Office 365 E3: $23; up from $20
  • Office 365 E5: $38; up from $35
  • Microsoft 365 E3: $36; up from $32

According to Microsoft, those increases will apply globally with local market adjustments for certain regions.

Distributor Pax8 has a detailed explanation of the increases, and notes that the company is not changing pricing for Microsoft 365 E5, Microsoft Business Standard, or the Frontline SKUs.

Also, not included in the price increases are education and consumer customers.

See also: How to Maximize Microsoft 365 ROI

A potential 20% monthly rate hike

However, the company is also making changes to its New Commerce Experience (NCE), a new per-seat model for customers to purchase Microsoft products through its third-party partners.

Essentially, the program is designed to help partners simplify licensing and manage subscriptions.

According to Pax8, that started with Azure in 2019 and expanded this fall to include Microsoft 365, Dynamics 365, Windows 365, and Power Platform. The company launched technical preview 2 for NCE in October and will make it generally available on Jan. 10, 2022.

However, organizations paying monthly will face a 20% increase unless they move to an annual subscription model, according to Pax8 and multiple media reports.

Customers buying through this program can also sign up for annual or tri-annual plans and pay those upfront or split that up in monthly payments.

According to Pax8, cancellation period is now three days, including day of purchase. There will be a full refund issued if canceled on day one, and a pro-rated refund if cancelled on days two and three.

CNBC has a good report from earlier this month on how this impacts most of Microsoft’s customers.

A majority of Microsoft’s revenue comes from business customers, rather than consumers, and 95% of the its commercial revenue is derived through partners. Clients that specifically buy through Microsoft’s Cloud Solution Provider program are the ones affected by the subscription plan change, and Microsoft doesn’t disclose what percentage of its customers buy products that way.

To encourage partners to migrate to the NCE, Microsoft is offering 5% off annual subscriptions through March 2022, and monthly subscriptions will be available at annual pricing from January through June 2022. These two promotions will apply to all new commerce seat-based commercial offers for subscriptions of up to 2,400 seats.

Pax8 says Windows 365 subscriptions will not be eligible for these two promotions. Windows 365 subscriptions will only be available via the monthly term offer on NCE and will not be subject to the 20% premium.

These increases are still a few months away, so now is the time to prepare for those rate hikes in your 2022 budgets.

A version of this post originally appeared on our sister site My TechDecisions.