Office 365 small business
Microsoft 365

Microsoft Office subscription changes 1st March 2022

If you have been using Microsoft Office 365 products for a while, you may not have heard but on 1st March 2022 the prices are increasing for several core products.  Microsoft are also changing the way they sell giving you a choice of 1-month commitment and 12-month commitment for Microsoft Office subscriptions. 

What products will be affected?

Microsoft announced in August 2021 that they are increasing their prices for some of the key products including:

Small Business Products:

  • Microsoft 365 Business Premium (+10%) RRP £16.60+VAT

Enterprise:

  • Microsoft 365 E3 (+13%) £31.70+VAT
  • Office 365 E1 (+25%) £7.50+VAT
  • Office 365 E3 (+15%) £20.20+VAT
  • Office 365 E5 (+9%) £33.40+VAT

The exact GBP prices have not yet been confirmed due to the USD to GBP exchange rate however it will affect most businesses.

New Commerce Experience (NCE) Changes

Along with these price increases Microsoft have also changed to the way the contracts.  Previously you would have flexibility with the 365 products, which you could increase and decrease the amount of each license during the month, for most this was once of the attractions of the products. 

This New Commerce Experience will change this.  If you commit to an annual 12-month subscription you will be able to lock in your pricing for the 12-months, however if you need to reduce the licensing then you will still have to pay until the end of the 12-month contract.

Microsoft can provide a 1-month commitment however this comes at a 20% premium!  So not only are you subject to the price increases of the core products you then get hit with a 20% premium. 

Locking in

Most IT providers will be providing your Microsoft Office subscription so its worth checking with them to preform a review so that you are on the right subscriptions before March 2022. 

If you decide after March 2022 to change IT providers, then you may end up with a hefty increase to your licensing costs.

What does NCE mean for small businesses?

Microsoft announced the increases in August 2021 which was a hard time for most small businesses. The UK was only recently out of lock down and the announcement did not reach most companies. A 20% increase is quite a lot and most companies will ask what you are getting for that? In short, Microsoft have held off price increases on an annual basis. With a huge number of companies now working from home and relying on Hosted Email, OneDrive, SharePoint and Teams which has been developed over the past years. Microsoft continue to provide security and compliance of their products.

The biggest changes will affect users who have a high turn over of staff each month, with NCE you can set a minimum number of licenses however some of the flexibility that we enjoyed has been removed, forcing businesses to think about a longer term strategy. If you have 10 permanent staff and have 5 flexible staff who only work 1-6 months then you maybe better off having 10 licenses on a 12-month subscription and then 5 on a 1-month subscription as you will not need to pay for the licenses during the months they are not needed. (So long as you remove them from subscription)

We are expecting further details over the next few weeks so please visit again and we will update this article.

If you would like us to review your office licensing before these changes take effect, then contact us on 0333 332 6600 and speak to one of our Microsoft specialists.