Microsoft announced changes to their Office 365 pricing structure that come into force 1st March 2022 so what are the changes?
Price rises but only on Monthly Subscriptions
Microsoft are pushing users of their Office 365 products to a yearly commitment, that is where the smart money is if you want to keep your costs down.
Monthly subscriptions are available on most Office 365 licenses but be prepared for a 20% price hike if you want to stay on a monthly subscription.
For example, say you currently have 20 x Microsoft 365 Business Standard Licenses at £9.40 per licence per month this is going to rise to £11.28 per licence per month. Based on your 20 licenses that is an increase of £37.60 per month. You can however reduce the number of licenses you need every 30 days if necessary. Extra licences can be added anytime (obviously!) but will then run on a 30 day term.
Committing to a Yearly Subscription saves money
If you go to a yearly commitment on your Office 365 licenses, you get to lock in your current prices for 12 months. I mean, why wouldn’t you go to a yearly commitment? Is any business thinking of cancelling their Companies email in the next 12 months! Of course not.
In the example above a Microsoft 365 Business Standard Licence at £9.40 per month currently will stick at £9.40 for the next 12 months if you agree to a 12-month commitment.
One gotcha to be aware of when moving to a Yearly Subscription
Ok, here is the big takeaway and one to watch out for, if you agree to a yearly commitment, you cannot decrease the number of licenses you agreed to start with during the 12 month contract.
You can add to the number of licenses you first agree to (obviously!) but those additions are then tied to the end of the existing agreed term. So, for example 1st January you agree to take 20 x Microsoft 365 Business Standard licenses which cost £9.40, you have got to pay for 20 x Microsoft 365 Business Standard licenses until 31st December of that year, any licenses you add will also be tied in until 31st December that year.
Reducing Licenses on a Yearly Subscription
If you suddenly lose a number of staff or downsize the business, you obviously want to off load some Office 365 licenses as soon as possible to save the cost. Once your 12 month annual commitment is in place you will only have 72 hours (3 days) to cancel any licenses added incorrectly before it is committed to the annual term..
For example, using the same dates as above you start your yearly commitment on 1st January 2022 then you can reduce the number of licenses on either 1st January 2nd January or 3rd January in 2023, once those days have passed you are locked in for 12 months at the current licence levels. Be aware of this especially if your renewal falls on a Friday, come Monday morning you are all locked in again.
Changing your IT Provider mid term on a Yearly Subscription
This is another big one for you to consider, if you want to offload your current IT provider and move to Leap IT 😊 you cannot move your Office 365 licenses over to Leap IT until the end of the Yearly Commitment…….shocker! Maybe you should take a look at your current IT Provider as well before 1st March 2022 in case you want to move?
Are all licenses available on a Monthly Subscription?
No in a word. Some of the smaller Office 365 Licenses are no longer available on a monthly subscription, these so far include the following: –
Exchange Online Plan 1
Exchange Online Plan 2
Microsoft 365 Defender
Other plans such as Azure Active Directory Premium, PowerBI and Windows 10 Enterprise, are only available with an annual commitment. For example, Exchange Online Plan 2 is £6 a month, or £72 a year, both are annual commitment. There is no monthly commitment option for these standalone plans.
Do I need to pay for a year’s licensing upfront then?
No, you don’t, your IT Provider can still collect the money monthly from you. Like I mentioned before, be aware you cannot move your Office 365 licenses over to Leap IT 😊 whilst you are in a 12-month commitment with your current IT Provider.
What happens if I can’t pay for my Office 365 licenses anymore
This is a massive one but not for you to worry about, if you can no longer pay for your Office 365 licenses that you have committed to for 12 months, then your IT Provider still has to pay Microsoft. From our side of the fence this is a real problem for us, particularly if a client goes bust on us. So be prepared to have to sign contracts with your IT Provider for Office 365 licenses as well at IT Support.
What would we recommend?
Look, nobody is planning on cancelling their Companies email system in the next 12 months surely? As much as you might wish you didn’t have to answer emails it isn’t going away so just get on board with a 12-month commitment and dodge the Microsoft price increases (for at least 12 months).
If you are planning mass redundancies, you might want to consider your 12-month commitment with Microsoft (and your IT provider) and maybe go monthly until you have sorted out your staffing numbers and then go yearly commitment?
You can also do a mix and match setup as well so some of your “core” licenses that you know you are going to need can go on a yearly commitment and the ad-hoc ones you need such as Microsoft Project go monthly.
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