Microsoft is always adapting its offering to meet the evolving needs of businesses. It is currently in the process of making big changes to the way you purchase Microsoft licences, which will result in price increases and contract changes for organisations that use various products such as Office 365.
In this article and video below, we explain what the changes involve and what you can do to avoid an immediate price increase, so that your transition is as smooth as possible.What are the changes?
Recently, Microsoft announced two major changes in the way Cloud Solutions Provider (CSP) products will be consumed and billed, which will affect product pricing, terms, cancellations, and agreements. These changes will come into effect from the 1st of March 2022.
- There will be price increases for certain Microsoft products, such as some Office 365 and Microsoft 365 options. It is important to note that these price increases are separate from the New Commerce Experience announcement.
- There will be a new licensing model called New Commerce Experience (NCE), affecting Office 365, Microsoft 365, Dynamics 365, Windows 365 and Power Platform subscriptions. You will be able to purchase licences monthly (this will attract an additional 20% premium on top of the price increase) or under a committed, fixed-term agreement paid for upfront, annually, or monthly.
Price increases for Microsoft products
From the 1st of March 2022, Microsoft will be incorporating a price increase between 8.5% and 20% across all licencing programs. The following licenses are affected:
- Microsoft 365 Business Basic
- Microsoft 365 Business Premium
- Office 365 E1
- Office 365 E3
- Office 365 E5
What is the New Commerce Experience?
The New Commerce Experience (NCE) is a new ‘per-seat’ model for Microsoft 365, Dynamics 365, Windows 365 and Power Platform subscriptions.
Here are the main points:
- New subscription term options: Customers can choose to commit to monthly subscriptions, annual subscriptions (paid monthly or upfront), or 36-month* subscriptions.
- New monthly term offers: For a 20% premium, Microsoft will offer monthly subscriptions allowing customers to cancel or reduce seat counts on a monthly basis, and these can be combined with annual subscriptions to help balance costs.
- Consistent cancellation policies: You will no longer be able to decrease the number of seats you have purchased mid-term – any cancellations must be made within 72 hours of purchase.
*36-month terms are available for Dynamics 365 from January 2022, and for select Microsoft 365 subscriptions from March 2022. 36-month subscriptions with upfront payment will be available from March 2022.Timeline of changes
- 1st March 2022: A price increase between 8.5% and 20% across all licencing programs. Any new subscription orders must be purchased through the NCE model
- 1st July 2022: An additional 20% premium on top of the price increase will come into effect for a monthly subscription through the NCE model.
- February 2023: All Microsoft customers still using legacy subscriptions will be transitioned to the NCE per-seat model.
Why are these changes happening and how will they affect my business?
Though these changes will result in a price increase for most businesses, there are plenty of benefits to the new system which will help to:
- Simplify the licensing process
- Provide cost savings for longer-term commitments
- Allow greater choice and flexibility in how customers purchase
- Enable growth through digital transformation and flexible buying opportunities
How to avoid hefty price increases?
Unfortunately, there is no fits all solution. However, depending on your business, there are multiple ways to mitigate the impact of the NCE changes.
If your business still requires the flexibility of the monthly subscription but wants to avoid the potential 20% price increase across all licences. In that case, we recommend mixing and matching the 12-month subscription with the monthly subscription. For example, if your business currently has 150 users, but you are looking to reduce your staff numbers by 20 over the next 12-month period, you could purchase a 12-month subscription or 130 seats and buy a further 20 subscriptions on a monthly subscription. This allows you to decrease licences whilst keeping most licences at a locked cost.
FAQs about Microsoft's NCE answered:Want to know more?
If you have any queries about the NCE or the price increase, or Microsoft cloud solutions in general, please don’t hesitate to get in touch and we’ll be happy to help ensure you get the best possible value from your products and services.JTNDZGl2JTIwaWQlM0QlMjJzbGlkZUJ1dHRvbiUyMiUyMGNsYXNzJTNEJTIyc2lkZS1idXR0b24lMjIlM0VHZXQlMjBJbiUyMFRvdWNoJTNDJTJGZGl2JTNF
