Understand Microsoft 365 Enterprise Pricing ArcLight Group

Guide to Microsoft 365 Enterprise Pricing

Hello. We are going to keep these really short and sweet, and in this one, we’re going to be talking about the Microsoft new enterprise pricing. A modern, new commerce experience, modern commerce experience, whatever you want to call it, and I’m going to be going through what that means to anyone who is using Office 365, specifically if you’re buying through a company like us, like ArcLight where we resell that solution.

So, historically the way that works is you could buy Microsoft on a month-to-month basis, you could increase, decrease the number of subscriptions that you had. It was a monthly program. There was no benefit or reason to buy an annual or yearly commitment to that product. Microsoft has decided that they don’t like that anymore. They would rather get paid upfront. For whatever reason, there’s been a big uproar in our industry, in the IT services industry, about that.

There’s been a lot of petitions signed, there’s been a lot of people trying to pressure Microsoft into giving this up because it really does reduce the value of service that we can provide our clients on Microsoft Office 365. If you have a business that has a lot of fluctuation where and employee coming and going, you have a call center or something like that, it’s really not something you want to buy 1,000 licenses, commit to a year $20 per license per month, and then maybe you have a massive reduction in force and you’re stuck with those licenses.

So, it’s not really friendly, but you could go back month-to-month. I’m sorry, let me restate that. You can do annual or you can do month-to-month. Now, the change that Microsoft’s made, and this is what I’m trying to get at, is they have increased the price by over 20% on every license if you want to remain month-to-month. On the annual commits, you can get some discounts short-term for those annual commitments, but you are locked into that licensing.

We were advising our clients initially to go month-to-month and let’s see where Microsoft takes this because they could back off, they could change, there could be an uproar once it actually becomes into effect. So, we are advising to stay month-to-month for the time being. One of the things that has changed is, excuse me, the pricing on a few products has increased. I’m going to share my screen here. This is a brief breakdown of some of the things going on. So, two ways to buy Microsoft 365 subscriptions, monthly and an annual paid in full.

You cannot decrease license counts if you pay in full and are stuck with the licenses you purchased for the full term, but monthly comes at a premium, but you can increase decreased license counts throughout the year. That can be very valuable to companies, maybe even much more valuable than the 20% that Microsoft is charging. All this will take effect March 1st, 2022 is when these price increases happen. So, Microsoft 365 Enterprise offerings, the E1, E3, E5 and Microsoft 365 E3 will be going from these prices here to these prices. So, it’s a pretty big increase. If you’re E1, that’s an email only for Enterprise $8 to $10, I don’t think we have any clients on that one right there, but we do have a few clients on the E3 and it’s going from 20 to $23 a month. Now, if you’ve got 10 employees, $3 a month for 10 employees, $30 a month, you really probably don’t care about this that much, just move on, let’s keep things going business as usual and that’s what we’re advising.

If you’ve got 1,000 employees on the other hand, this can be a little bit more of an impact to you and you need to be prepared for, and then you’ve got these others, of course they’ve gone up some as well. Microsoft 365, small and medium business offerings, that’s what most of our clients are on. Microsoft business basic is going from $5 to $6, that’s their email only client. Again, it’s a dollar increase. If you’ve got a lot of employees, that matters, but if not, I would just say, hey, this is just the price of doing business. Microsoft 365 business premium is going from $20 to $22. All right, so we don’t sell the business premium very often. We sell Microsoft 365 business standard, which is the Office suite and includes email.

It’s a great platform that ‘s going to go up by 20%. So, here’s the way this works. These are their stated increases right here in March, and then shortly after that, they’re also going to do a 20% increase across the board on everything else. Now, that’s a pretty big increase. The one thing I do want to give Microsoft a little credit for is they’ve been out with Office 365 well over probably 10 years now, I think maybe even 13 years, it’s been so long, they’ve been a viable product for about 10 years. And in that time, they’ve not really increased rates at all. They’ve added more products, they’ve added more features, but the rates… We don’t see the rate increase is really so much of a problem, it’s the way they’re doing it, forcing everyone to do an annual commitment is really just disruptive to the IT servicing companies and the companies who need to buy these products.

Having a penalty for doing month-to-month, it’s just not a good way for them to make friends in the IT industry as well as with their clients. So, I think it’s a bad choice on their part to do that, but as far as the pricing goes, I think the pricing is a fair increase. It’s long overdue, they should have been doing small increases along the way. It’s always hard whenever someone does a 20% increase. It’d be one thing if they were matching inflation or something along the way. So, that’s kind of it in a nutshell. So, that’s what you have to be prepared for. If you have any questions about this, feel free to reach out to me directly. We’d love to talk to you about it. We pass through with our clients. We don’t sell Microsoft Office 365 standalone to anyone along with support because when you sell Office 365, Microsoft, if you’re a partner, expects you to provide tier one support for those products. The way our client handles that is we include the support in those products in your basic month-to-month service agreement.

So, we’re not doing an add on price on Office 365. So for that reason, we’ve not sold it standalone to anyone. We only sell it to customers who are on our managed service agreements. And so, the prices you see here are the prices that Microsoft charges retail on their website. We’re not marking it up at all. We do get a discount as a Microsoft partner on those, I think it’s 16% that we get to keep for the effort of managing those for our clients. That’s really not enough to cover all the support that goes into Office 365, the management, the account creation, deletion, archiving of data and so on, but we do bill that into our service agreements. So, that’s why it’s good for us to do that, and that way you can see exactly what you pay for. What Microsoft says on their website is the price is the price that you pay through us as well.

So, it makes it nice and clean for our customers to understand. Again, to kind of recap, Microsoft’s changing their pricing. It’s going to go up by these numbers right here for any products that you have in these SKUs, and then it’s going to go up shortly after that another 20% across the board on all products at Microsoft has. So, just be prepared for that increase. Again, if you’re a larger company, you’re going to notice this pretty quick. If you’re a smaller company, it’s probably going to fly under the radar and not be a big deal to you. If you have questions, reach out to us. Glad to help, have a rest of your day.