UPDATED 1 July 2022. Many Australian organisations faced a significant price increase earlier this year as Microsoft made big changes to how it bills, terms and renews Microsoft 365 and Office 365 subscriptions and licences.
After a decade of consistent pricing, on 1 March 2022 Microsoft increased the cost of its Microsoft 365 and Office 365 licences, and also moved term subscriptions into its New Commerce Experience (NCE) model.
Microsoft announced its global licence price increases in the middle of 2021. They were expressed in US$ and varied from $1 to $4 per user per month dependent on the plan. This equated to a 20% increase for lower tier licences and a 12.5% increase for the more expensive high end tier licences.
Exactly how the US$ increases would translate to AUD was not announced prior to D-day but we can now see the monthly increase has followed the American dollar rise.
| PLAN | PRICE INCREASE US$ | OLD PRICE AUD per month per user | NEW PRICE AUD per month per user |
| Microsoft 365 Business Basic | $1 | $6.90
|
$8.20 |
| Microsoft 365 Business Premium | $2 | $27.50 | $30.20 |
| Office 365 E1 | $2 | $11 | $13.70 |
| Office 365 E3 | $3 | $29 | $33.30 |
| Office 365 E5 | $3 | $50.70 | $55.00 |
| Microsoft 365 E3 | $4 | $46.40 | $52.50 |
Microsoft did not increase the pricing on every plan. It has left the Microsoft 365 F3 for frontline workers, as well as it's most expensive, comprehensive subscription plan, Microsoft 365 E5, untouched.
Also unaffected are consumer and education-specific plans, although these are expected to increase sooner rather than later.
Microsoft made a strong case for its price increase pointing out that Office 365 was first released in 2011 and 24 apps and 1,400+ new features have been added since — without any substantial price increases. The most noticeable of these additions include
The second big shift by Microsoft was the expansion of its New Commerce Experience subscription term/renewal model to include Microsoft 365, Dynamics 365, Windows 365, and the Power Platform.
Under the NCE model, subscribers who commit to annual or 3-year terms will avoid a new 20% premium that will be applied to monthly subscriptions.
Subscribers who lock into 12-month or 36-month terms will have guaranteed pricing over that term, but only with payment of the full term upfront.
Microsoft positions the NEC model as a 20% cost saving to counter the fact that there are no options to decrease seat counts during the term (although increases and upgrades are possible mid-term).
On March 1, 2022, Microsoft 365 licences increased in price by, on average, 15%.
At the same time, organisations who chose to remain in a monthly billing status with NCE faced a 20% fee/penalty increase on top of their 365 licenses.
The compound effect of the NEC monthly subscription increase of 20% plus the baseline Microsoft 365 licence price hike of ≅15% will add up to a price increase of 35% for some organisations.
There has been some initial pushback against NCE with some Microsoft Partners believing it goes against the ethos of cloud computing. Scalability is one of the hallmarks of the cloud and the primary driver of its exploding popularity with businesses.
The decision by Microsoft to charge 20% extra for the monthly subscription which provides the flexibility to increase or decrease licence counts, is seen as counter-productive. Certainly, during the Covid pandemic this flexibility was invaluable as entire industries contracted or expanded significantly.
Microsoft 365 licensing is often one of the larger expenses in the IT budget. This increase in pricing will be a challenge for many businesses, especially SMBs on lower tier plans which have seen the biggest percentage increase.
The price hike also arrives as many industries are still struggling to adapt and recover from Covid loss of trade, and compromised supply chains.
Microsoft License optimisation is going to be increasingly important as is having access to real-time 365 Licensing information. This will allow organisations to:
MobileCorp offers professional services to scope, procure, deploy and manage Microsoft 365 tenancies.
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We also offer an ongoing managed service, which may be charged on your Telstra bill, and delivers:
MobileCorp is an Australian communications technology company providing Microsoft 365 professional and managed services, Microsoft Endpoint Manager MDM, Managed Mobility Services, Complex Data and IP Networks, and solutions. We have a proven track record providing solution architecture, build, deployment, and managed services for Australian enterprise and business.