#Microsoft office 365 price update

Microsoft is betting that customers will stick around, in part because Google's Workspace bundle, previously known as G Suite, presents the only significant competition.

#Microsoft office 365 price update

The company said at the time that it's 'the first substantive pricing update since we launched Office 365 a decade ago.' Microsoft noted that the bundle now includes more collaboration, security and automation tools.ДЄdam Mansfield, who helps companies negotiate purchases of software from Microsoft, Salesforce and ServiceNow at consultancy UpperEdge, told CNBC that the hike announcement in August was unwelcome news inside some organizations. The change follows a publicly-announced increase in August, when Microsoft said it was raising prices in March 2022 for subscriptions to its Microsoft 365 bundles by 8.5% to 20% per user, depending on the tier. After that, the monthly increase kicks in. New orders will have to go through the New Commerce Experience starting in March, and renewals must use it beginning in July, Microsoft said in a blog post.Д«etween January and June, Microsoft will charge the same price for monthly and annual offers, the company said. Microsoft had planned to implement the New Commerce Experience in October but delayed it until January 2022. 'There's some people that are going to be upset,' Hammerschmidt said The inability to scale back subscriptions may be a bigger issue to customers than the higher prices, said George Hammerschmidt, executive vice president at Nortec Communications, a partner based in the Washington, D.C. That option proved to be valuable for organizations that reduced headcount during the pandemic because of lower demand. While Microsoft has not officially sold Office 365 subscriptions on a per-month basis, customers have, in practice, been able to go month to month and increase or decrease the number of users as needed, partners said. The new program 'introducesВ aВ monthlyВ term option thatВ will enable partners to provideВ customers withВ flexibility at a premium price,' the email said. 'Microsoft provides flexible purchasing options to meet our customers' diverse needs, and we don't publicly disclose information around our premium and pricing approach for partners,' a spokesperson told CNBC in an email. The backlash led to intense meetings between Microsoft and its partners, said a person familiar with the launch who asked not be named because of confidentiality. People have spoken out on Reddit, and more than 1,400 have signed a petition for Microsoft to rescind its planned price increase. Partners have pushed back in a number of forums. And Microsoft will expect payment for subscriptions even if customers decide they no longer want the Office services halfway through the term, according to an internal document obtained by CNBC. Microsoft's lack of clear information on the monthly price bump has complicated conversations with customers, Schenk said. 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. Its stock is up 46% this year, pushing its market cap past $2.4 trillion, while revenue growth topped 20% in each of the past two quarters.ДЄ majority of Microsoft's revenue comes from business customers, rather than consumers, and 95% of the its commercial revenue is derived through partners.

However, some smaller companies that are trying to preserve cash as they deal with pandemic-related challenges are frustrated by the changing model, which comes just after a price increase was announced in August for Microsoft 365, a bundle formerly known as Office 365. Software vendors commonly offer discounts for annual subscriptions compared to monthly sign-ups, and many larger enterprises prefer that option. For Microsoft, the opportunity to lock customers into longer arrangements means potentially better visibility into revenue and less concern about churn, a critical element of subscription businesses.