What You Need to Know About Microsoft 365 Price Increases

I am sure you have read that Netflix, Amazon Prime, and others are raising their monthly prices. It should come as no surprise that Microsoft is doing the same. Starting in March, Microsoft 365 licenses will be more expensive for business customers, representing what Microsoft has called its “first substantive pricing update” since the launch of Office 365 a decade ago. But in typical Microsoft fashion, it is just not that simple.

Microsoft 365 prices are increasing starting March 14, 2022. The hard-to-understand part is when this affects your organization. We put together a quick list of FAQs to help understand what exactly is happening.

Here are the products affected by the March 14, 2022 increase:

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

In addition to the product increase, organizations paying monthly will face a 20% increase unless they move to an annual subscription model.

What does this mean for you as a Microsoft 365 customer?

Well, it is not straightforward. It depends on your contract renewal date, among a few other things.

Will my cost increase on March 1, 2022?

If you have an active contract for licensing, your increase may be delayed to the date of your existing contract renewal.

When does my price increase?

The price will increase on the renewal date for your contract. Suppose your Microsoft contract was renewed in September 2021. Then, your cost for those existing licenses will stay the same until September 2022.

What is a Month-to-Month contract?

Month-to-month agreements are ones where the number of licenses can be changed each month. You will pay an additional 20%, too. Say you want to remove two licenses, under a month-to-month plan you can do it. With an annual agreement, that is not possible.

I am Month-to-Month and want to change to Annual, what does that mean?

You pay the total of your license fees upfront for that year. You cannot reduce your license count until the next renewal year. You can increase your licenses and keep the same renewal date, but you cannot reduce your charges.

Can any product be Month-to-Month?

No, not all products can be month to month. Some products such as exchange online or Microsoft Defender(to name a few) are only available Annually. We can help with any others.

Can I add Licenses to an Annual agreement?

Yes, you can, but you cannot reduce your license count until your annual renewal date.

Can I have some licenses month-to-month and others on annual agreements?

Yes, you can mix and match your contracts if you prefer to have some month-to-month and others renewed annually.

Can I reduce the license count of an Annual Agreement?

No, you must wait until your annual contract renewal to reduce those licenses.

When is month-to-month the best choice?

If you have many changes in your monthly staff counts, then a month-to-month contract may be the best approach. Temporary or seasonal workers, for example.

My contract does not renew until 2023 does this affect me?

Eventually, yes, all contracts expire on 12/31/2022.

We know it is complicated, and many of you do not know your expiration date, but we are here to help. If you want to discuss what this means for your organization and your best path forward, please reach out to us.

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