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Microsoft announces Price Increase for Microsoft and Office 365

Brad Sams

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Microsoft’s Office 365 suite is the crown jewel of Software-as-a-Service. The productivity suite was launched a decade ago and now has more than 300 million paid commercial seats and today, the company is announcing a price increase for many of the tiers of the service.

During the past decade, Microsoft has improved the suite by adding new tools and features like Teams, Power Apps, Power Automate, Planner, Vision, Yammer and more without directly increasing the price of the service. But that is about to change with the new pricing for the services listed below.

The updated pricing will go into effect on March 1st, 2022:

  • Microsoft 365 Business Basic (from $5 to $6 per user)
  • Microsoft 365 Business Premium (from $20 to $22)
  • Office 365 E1 (from $8 to $10)
  • Office 365 E3 (from $20 to $23)
  • Office 365 E5 (from $35 to $38)
  • Microsoft 365 E3 (from $32 to $36)

The reason I stated above that this is the first direct price increase is that companies who were purchasing a large number of licenses were not paying list price for the software. It is quite common that Microsoft will discount software for bulk purchases and during renewals, that discount would be reduced with the result being a price increase of some customers.

The new pricing provides Microsoft additional headroom to increase the “paper” discount while continuing to slowly raise the price on customers who are purchasing hundreds or thousands of licenses.

The news isn’t all bad, though, Microsoft will be adding unlimited dial-in capabilities for Teams meetings across enterprise, business, frontline, and government tiers during the next few months. I’m not sure if this will make the messaging any easier for those paying the bills but it’s better than nothing.

The biggest impact will likely be felt and the small and medium-sized segments of the market. Shops that are paying for a 365 service from Microsoft are oftentimes not large enough to get bulk discounts, but these fees are still a sizeable portion of their monthly budgets which means these price increases are taken at face value.

During the past decade, Microsoft has increased the value that Microsoft/Office 365 provides and a price increase like this has been expected. And with many corporations headed to a new hybrid style of operations, the future continues to look bright for the company’s productivity suite.

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