Microsoft Announces Pricing Changes - Microsoft 365 and Office 365 Platforms

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Microsoft recently announced some changes across the Microsoft 365 and Office 365 platforms. Microsoft will be instituting contract term changes in addition to the commercial pricing changes. As your preferred Microsoft partner, LBMC Technology Solutions has been in communication with Microsoft to fully understand the changes and how these changes will affect our clients. The changes highlighted below will affect a majority of clients, while additional changes may only affect a few.

Beginning March 1, 2022, price increases will be applied to the following products:

  • 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)

For clients under a Cloud Service Provider agreement for licensing, these price increases will take effect on the renewal of a new licensing agreement.

Microsoft will also be changing the contract term structure. Current contracts will continue as-is until their expiration date. Upon expiration of current terms, clients will have three term options to continue Microsoft 365 licensing. The three options will be based on the term of commitment – 36 months, 12 months, and Month to Month.

For 36-month and 12-month commitments, the following are key items to know:

  • Pricing is fixed for the term, protecting you from additional increases within the duration of the term
  • Licenses can be increased during the term, but cannot be decreased during the term; additional licenses will be co-termed to the expiration date
  • Licenses can be upgraded within the term (i.e., E3 to E5), but not downgraded
  • Transfer to another Microsoft Cloud Service Provider is currently not permitted during the term

For Month-to-month commitments:

  • Pricing will be at a 20% premium of standard prices
  • Pricing fluctuations may present budgeting challenges
  • Licensing can be increased or decreased as needed
  • Licensing upgrades can be performed as needed

These changes will increase the complexity of many organizations’ office systems. If you would like to review and discuss how Microsoft’s changes to Microsoft 365 will impact your organization, please contact your vCIO or send an email to [email protected].

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