Microsoft has notified partners that they are implementing a new commerce experience starting January 2022. They had also announced in August 2021 that a change with pricing to certain subscription packages was coming in 2022. SpireTech has been tracking these changes as Microsoft has already adjusted some of their terms after announcement in August 2021.
At this time, we can share what we know and how that may affect your existing subscriptions and will keep you updated as we learn more.
What is changing that impacts our clients:
- You can still pay monthly for annual term licenses, but cannot reduce the quantity purchased during that term.
- Microsoft will now enforce subscription terms to all subscriptions
- Microsoft will implement premium pricing for month-to-month terms
- Microsoft is raising the rate on certain subscription options regardless of terms
- Microsoft will implement a pro-rated refund for the first 72 hours of term only
- To date, Microsoft has allowed Partners to provision subscriptions for clients and raise and lower subscriptions counts at their leisure. Microsoft will be changing this effective March 1st, 2022. Going forward a client will now be required to choose monthly or annual terms with Microsoft. Any month-to-month subscriptions will have a 20% premium over the normal rates.
How does this impact my business?
Businesses will now need to make strategic decisions on how they issue licenses to users. Most businesses have a static set of ‘roles’ needed for the business, and it is easy to model and determine the number of licenses needed. Some businesses have natural additions and reductions of staff throughout a year based on business markers.
Businesses can choose different terms on multiple subscriptions. For an example, a business has twenty roles that are always needed in the business, so they subscribe to a yearly term for twenty licenses, choose to pay monthly at the annual rate, but have a need to add two interns for 3 months each year. Instead of the business committing to twenty-two licenses for the entire 12 months, it would be more cost-effective (even at the 20% penalty for a monthly term) to simply add two licenses on a monthly-term agreement and remove them when no longer needed. Then annually review the general business seat count and adjust accordingly for the following year.
Businesses have a 72-hour window during provisioning to adjust the counts before it locks in for the monthly or annual term. The same applies on an annual renewal. If your subscription renews on January 1st, you will have until January 3rd to make any adjustments to the license quantity before it locks in for the new term.
What license costs will have a price increase next year?
Currently, Microsoft intends to raise these subscription costs effective March 2022. The prices shown are for annual commitments billed monthly, which is the default behavior to receive the best pricing. SpireTech will continue to monitor for any changes and advise clients if necessary.
What actions does my business need to take to prepare for this change?
SpireTech will attempt to confirm with your firm’s primary contact in Q1 that you intend to continue with annual terms for your licenses. Since it is sometimes difficult to connect with everyone, please be proactive with us and let us know if you’d like to use monthly terms for some or all of your subscriptions. Of course, we are available to advise you on these decisions and determine the right plans going forward. Currently, you do not need to make any adjustments, but budget for increases if your business is using any of the specific six subscriptions:
- Microsoft 365 Business Basic
- Microsoft 365 Business Premium
- Microsoft 365 E3
- Office 365 E1
- Office 365 E3
- Office 365 E5