Microsoft have announced that on 1st April 2023 they will be increasing the pricing on their cloud subscription products. Microsoft are doing this as part of a global alignment of pricing adjustments to reflect changes in exchange rates against the dollar.
For us here in the UK this is going to mean that we will see an increase in licensing prices by 9%. This will affect the price of all Microsoft 365 licences.
As part of this global alignment, they are also introducing a pricing review twice a year. This will be a check and an alignment of exchange rates against the US dollar and any necessary adjustment will be made. This could actually mean that if the GBP strengthened against the USD there would be a possibility that pricing could also see a reduction – we will have to wait and see.
You can read the Microsoft announcement here:
Consistent global pricing for the Microsoft Cloud - Microsoft News Centre Europe
Microsoft has stated that the price increase is necessary to ensure that it can continue to invest in its products and services, as well as in research and development. They have also pointed out that their prices in the UK remain competitive.
What this price rise will mean
If you are currently in an NCE annual agreement your price will be fixed for the duration of the existing contract. This means you will not be immediately affected by the price rise on the 1st April if you anniversary date is later in the year. At that point, when the annual subscription renews, it will renew at the new increased pricing.
If you are currently on a monthly rolling Microsoft subscription, now would be a good time to look at moving to an annual commitment before March 31st, and thereby lock in today’s pricing for the next 12 months, thus avoiding the immediate price increase in April 2023. It’s worth mentioning that even though you would be committed to the annual subscription, you can still opt to pay on a monthly basis. This makes looking at this option of locking in your subscription price very attractive.
There is one thing to bear in mind when committing to an NCE annual contract. You cannot reduce the number of licenses during the contract, only increase them. This means that if you feel that you will likely need to reduce the quantity of licenses at some point over the next 12 months it may be a good idea to split them. As an example, if you currently require 60 Microsoft licenses but in 5 months’ time you will only need 50, then put 50 licenses on the annual commit and put 10 licenses on a monthly rolling term. This way, as and when you no longer need the 10 licenses, simply cancel them without penalty.
As soon as Microsoft officially publish the new pricing, we will update this blog and add the pricing table for the most commonly used licenses.
In summary
- Microsoft will now review all pricing every 6 months to ensure consistency with USD pricing
- Businesses on a 12-month contract will not see any price changes until the contract renews
- Businesses on a monthly contract will pay the new rate set by Microsoft on 1st April 2023
- Change from monthly to annual commit before 31st March and lock in today’s pricing and avoid the price rise on 1st April 2023
If you are unsure of which Microsoft licensing plan you are currently on, please speak to your IT support company or call us here at PS Tech and get advice on what is the best option for you and your business.
