Microsoft 365 prices to soar by 20% for pay monthly subscribers

Microsoft has told managed service providers (MSPs) that it will charge a 20% premium on Microsoft 365 products unless customers choose to be billed annually.

The news has angered many in the MSP community, saying they stand to lose out if a customer goes bankrupt or chooses to decrease the number of licenses they need, for example. In this case, the MSP will still have to pay Microsoft, regardless of the alterations or complexities on the customer side.

Month-to-month billing affords customers the flexibility they often need and in some cases allows MSPs to budget more efficiently with other month-to-month billing products in their stacks.

The news comes as prices for individual products are also set to be increased too by a margin of up to 15% each.

Recently delayed until 1 March 2022, Microsoft's New Commerce Experience (NCE) will soon increase the prices of Microsoft 365 Business Basic, Microsoft 365 Business Premium, Office 365 E1, Office 365 E3, Office 365 E5, and Microsoft 365 E3.

"To provide our customers with more options, we expanded our Microsoft 365 subscription terms to include a new month-to-month offering in addition to our annual subscription," said Microsoft to IT Pro. "As is typical with subscription models, the annual term offers a lower rate, whereas the month-to-month subscription provides greater flexibility at a higher monthly cost."

First reported by CNBC, the move to force customers into either paying a higher price for flexibility or a lower price for a longer-term has not been greeted warmly and a Change.org petition protesting Microsoft's decision has reached more than 1,000 signatures.

Discussions between MSPs have taken place on a Reddit thread where the feedback has been largely negative, though some recognised the move could provide some benefits to larger value-added resellers (VARs) but may hurt smaller businesses.

The Pax8 reseller said the NCE can help businesses prepare for future growth "thanks to improved revenue predictability, reduced licensing complexity, multiple term options, and features that enable new sales capabilities and operational efficiencies."

One of the key pushbacks MSPs are lobbying Microsoft to implement is for it to allow pooling of licenses.

In doing so, it will allow the partner to re-distribute a license should a tenant leave the company without having to pay Microsoft for an unused service after they leave during a one-year commitment period, for example.