Microsoft 365 and Office 365 Prices Set to Go Up

With the current global situation causing many people to work from home, Microsoft 365 has become an essential staple for many. Unfortunately, Microsoft has decided to increase prices on several Microsoft 365 and Office 365 subscription plans in March 2022, with the most significant increase going as high as 25%. The price increase will be the first substantive pricing update in a decade.

Microsoft 365 Prices Going Up In 2022

What Exactly is Changing?

Microsoft is specifically changing the commercial pricing for Microsoft 365 and Office 365, affecting most enterprise and business plans. Consumer pricing isn’t changing at all, so if you subscribe to the service personally, you won’t see any change in your monthly or annual bill from Microsoft. Also, pricing for education, the relatively recent F-series for frontline workers, and Microsoft’s most expensive, comprehensive subscription plan, Microsoft 365 E5, which sells for $57 per user per month, will not increase.

The changes go into effect on March 1, 2022. Here’s a rundown of the coming changes to the monthly prices:

  • Microsoft 365 Business Basic will go up from $5 to $6 per user per month.
  • Microsoft 365 Business Premium will see an increase of $22 from $20 per user per month.
  • Office 365 E1 will increase from the current $8 to $10 per user per month.
  • The Microsoft 365 E3 will be $36 per user per month compared with $32 today. (Unlike the other products on this list, it includes a version of Windows.)
  • Office 365 E3 will see a rise to $23 from $20 per user per month.
  • The premium Office 365 E5 tier will cost $38, up from $35 per user per month,.

Microsoft didn’t go into a lot of detail about overseas pricing, but it did state that every country will also get a price hike in accordance with local market adjustments.

Justification for the Price Increase

Microsoft first launched Office 365 in 2011 across 40 different markets and Microsoft 365 in 2017, and the company has been improving it ever since. According to Microsoft’s Corporate Vice President, Jared Spataro, this updated pricing reflects the increased value the company has delivered to customers over the past 10 years.

Since launching Microsoft 365, Microsoft has added 24 apps to the suite, including Microsoft Teams, Power BI, Power Apps, Yammer, Power Automate, Planner, Visio, Stream, OneDrive, and Whiteboard. Additionally, the company has released more than 1,400 new features in three key areas:

1.    Collaboration and Communication

In terms of communication and collaboration, Microsoft rolled out its Teams software in 2017 as the only integrated solution for chatting, meeting, calling, collaborating, automating business processes, and managing projects and tasks —with the power of the Office apps—all within the workflow. In 2020 as the coronavirus pandemic forced organizations to work remotely, Teams received more than 300 new features, including Together mode, live reaction, background effects, large gallery view, raise hand, live captions with speaker attribution, Fluid components, and breakout rooms.

Microsoft introduced a new category of collaboration applications in Teams, empowering people and organizations for hybrid work through deep integrations with SharePoint, Whiteboard, Power Platform, Lists, Shifts, Forms, and Planner. The company further introduced real-time collaboration in Word, PowerPoint, and Excel desktop apps while introducing a new set of features such as assign tasks, auto-save, modern comments, and @mentions, which have streamlined the collaboration experience.

AI-powered innovations across Microsoft 365 productivity and collaborative apps allow users to achieve more, while AI-powered real-time translation, captions, and transcription make collaboration and communication more accessible and engaging for everyone. Companies like Workday, Salesforce, SAP, ServiceNow, Atlassian, and Adobe, have built apps that deeply integrate with Teams, bringing business processes and functions directly into the flow of work.

2.    Compliance and Security

Looking at security, Microsoft said that it added new attack surface reduction capabilities to Microsoft 365 to help organizations and businesses defend against ransomware and other threats. These features include sensitivity labels, message encryption, and data loss prevention (DLP) for email and documents.

Built-in mobile device management (MDM) and other management tools like Microsoft Endpoint Manager help admins support hybrid and remote workforces, while powerful compliance features on Microsoft 365 help organizations reduce risk and respond to increasing regulatory requirements.

3.    Unlimited Dial-In Capabilities

Microsoft also announced that it will add unlimited dial-in capabilities for Microsoft Teams meetings across its paid business, government, enterprise, and frontline worker suites over the coming months. This move is designed to help people dial in and join Teams meetings when they’re on the go or grappling with a poor internet connection from almost any device regardless of location.

This will enable users to get a dial-in number and use Teams like a conferencing bridge without downloading the app and joining a meeting over the Internet. This nifty feature will be available with subscriptions in over 70 countries and with interactive support in 44 languages and dialects.

Impact on Microsoft’s Bottomline

The price hikes will boost Microsoft’s total revenue and profit, given the Office line remains the company’s top product in terms of sales, and most Office revenue is tied to business use. While Microsoft still sells licensed versions of Office for use on-premises, the company has been getting the majority of commercial Office revenue from subscriptions since 2017.

Microsoft has more than 300 million paid seats for Office 365 and Microsoft 365, so the price changes will certainly bump Microsoft’s profits and revenue even further. When the price increase is fully rolled out, the 300 million existing subscribers will be paying at least $1 more per month, but $2 or $3 in most cases.

And since the price increases for the lower tiers of service are more substantial (on a percentage basis) than the higher tiers, it could push more businesses to opt for higher-tier services, producing further revenue growth. An average increase of $2 per user would translate into $7.2 billion in additional revenue. That’s on top of any organic subscriber growth the company can produce.

Wrapping Up

While Microsoft 365 and Office 365 are going to cost a little more than they used to, they come with a massive amount of capabilities as well. When you consider the additional functionality they’ve included, this is fair enough – the challenge is for you to make sure you’re using the extra functionality to increase value from their products. If you need any help with your IT needs in Baton Rouge, New Orleans, and across Louisiana, Essential Solutions can help. We provide comprehensive IT solutions ranging from Managed IT services, Helpdesk services, IT consulting, Cybersecurity, Employee IT Training, Software, and Website Development, Network Design and Implementation, and Server Migration Services. Contact us today to schedule a consultation.

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