19th January 2022

Act now as Microsoft changes its pricing and licensing model

Sometimes, it isn’t just technology that can be bewildering – it’s the way you source and buy it that can be complex, too.

As a company that helps businesses of all shapes and sizes – both in the private and public sectors – we’re only too aware that the process of buying and licensing subscription-based services, for example, can entail a perplexing range of options.

You may have experienced this yourself: different purchasing platforms, from different vendors and resellers, and with different terms, can all add up to a lot of confusion. When looking at pricing, you may feel like you are comparing apples with oranges, wonder if you are getting true value for money, or have concerns that your new licensing setup might have hidden catches.

These challenges are especially relevant in light of Microsoft’s ‘New Commerce Experience’ (NCE), originally launched for Azure in 2019. The full model came into effect on 10 January 2022, launching an ongoing transition period (see below timeline), and affecting services such as Microsoft 365, Dynamics 365, Power Platform and Windows. With this shift towards NCE now underway, Microsoft is looking to move all purchasing and licensing processes to its new model.  

In its blog about NCE, Microsoft recognised the purchasing experience for its many products and services can be “fractured”, so the new model is designed to reduce complexity, offer simpler licensing, and reward long-term commitments. And that means you’ll see some changes to your Microsoft purchasing arrangements in the future.

One change concerns the Microsoft Customer Agreement: you’ll see it move away from fragmented programme-specific offers and instead find your services governed by one contract.

You’ll also find new financial incentives for annual subscriptions – but it’s worth noting that these new subscription models will not permit licence reductions, which are currently allowed with 30 days’ notice.

Should you want the flexibility to reduce user licences after NCE comes into effect, you will have to pay a 20 per cent premium. Additionally, some news coverage suggests that with NCE, Microsoft will offer a 36-month licensing model, where customers can ‘lock in’ pricing, in a similar way to fixing the repayments on your mortgage for a specified period.

Of course, some of these changes may pose some concerns – and we recognise that price increases are a challenge, especially in light of the pandemic. As such, transparency is vital – as is preparing for changes now – so we have set out below the most significant aspects of NCE, including a timeline of what’s ahead, and urge you to discuss these points with us sooner rather than later.

As a Microsoft Gold Partner, we’re assessed by Microsoft to ensure our knowledge is up-to-date and second-to-none, meaning we can take the general NCE developments as covered in this blog, and tailor our advice to your organisation, to make sure NCE works for you. We hope you’ll get in touch as soon as possible – do talk with your regular AdEPT contact, call us on 0333 4002490 or email enquiries@adept.co.uk

New terms

1. 12-month terms on 365 licensing with no seat reductions.
2. 12-month term paid annually or monthly.
3. Calendar month billing.
4. 24-hour cancellation refund policy.
5. Auto-renew or manual renew must be selected at the start.
6. 15-20 per cent price increase on six SKUs (see below) from 1 March 2022.
7. Mid-term SKU upgrades and add-ons are available.
8. New one-month term, with 30-day cancel/renewal policy, priced at 20 per cent premium to 12-month term.

Affected SKUs

Prices will increase on 1 March 2022 for the following SKUs: 

・Business Basic
Business Premium
Office 365 E1
Office 365 E3
・Office 365 E5
Microsoft 365 E3

These price increases, which will range from 15 to 20 per cent, only apply to corporate licensing – i.e. not charity or academic organisations.

Timeline and transition period

・10 January 2022 – “seat-based” subscriptions, meaning Office 365, Microsoft 365, Dynamics 365 are generally available within NCE

・10 January 2022 – two time-bound pricing promotions released within NCE – 5% off annual subscriptions and 20% off monthly (making this the price as of the time of publishing this blog – 19 January 2022)

・1 March 2022 – price increase of approximately 15% to 20% on six M365 products – Microsoft 365 Business Basic, Microsoft 365 Business Premium, Office 365 E1, Office 365 E3, Office 365 E5 & Microsoft 365 E3. This increase is approximately 15-20%.

・10 March 2022 – new customers will only be able to buy new subscriptions on NCE

・10 March 2022 – end of 5% annual promotion

・30 June 2022 – last day for existing customers on CSP to renew into legacy (until this time, existing customers would have been able to purchase additional licences without moving to NCE)

・30 June 2022 – end of 20% monthly promotions

・1 July 2022 – from this date, any customer looking to renew licence subscriptions must do so through NCE

・December 2022 – any remaining incentives within the “old” framework will be removed.

Written by Tim Scott

Chief Commercial Officer at AdEPT