The latest news on upcoming Microsoft 365 pricing changes and timeline

Microsoft have announced that from March 2022 there will be a pricing increase on most if not all of the Microsoft 365 products that they supply.

At the time of publication of this blog they haven't declared what those price rises look like for the UK market, but based on the US pricing that has been announced we're expecting a rise of between 10 - 25% depending on the particular product SKU.

Although a price rise is never a pleasant thing, we at 1-Fix feel this one was probably overdue as Microsoft have been continuously adding value to the 365 offering and the pricing has been static for a number of years.

However, on top of this price rise there is another scenario occurring at the same time which will either have pricing or commitment consequences for your Microsoft 365 licensing.

"What's happening?", I hear you ask.

Microsoft are now going to be pushing all Microsoft 365 subscriptions to a 12 month contract, unless you decide to opt for a monthly commitment.

If you do decide to take a monthly commitment, there will be a price premium for doing so - currently the talk is that this will again be around 20%.

What this means, in basic terms, is that to keep the Microsoft pricing increase to a minimum you will need to commit as many of your licences to annual plans as possible.

Is there any good news?

Yes! We have been advised that if you change your subscriptions over to an annual subscription once the new SKUs are available (in early January 2022) and before the mandatory enforcement of the 12 month agreements in March 2022 then your current pricing will be locked in for a year. This will hold off the 10-25% price increase for 12 months and will cushion the effect of the changes.
However, any new licences added past this point are likely to be charged at the new rate.

Can I switch now?

No, we advise waiting until at least the launch of the new subscription SKUs in January as otherwise there is no additional benefit to switching earlier than needed.

What happens with licence cancellations?

Whereas currently you can decrease your licensing without penalty, once the annual plans are in place you will only have 72 hours to cancel an incorrect M365 licence before it has been committed for an annual term. This means that you will need to forecast your staffing and licence requirements to ensure you are not over-committing licensing.

What do we do about flexible or contract staff?

These users can be put onto monthly licensing going forwards if you are prepared to pay a pricing premium for this flexibility. Otherwise, if you purchase an annual licence and a staff member or contractor leaves, the licence will stay in your M365 licence pool and can be re-allocated to a new member of staff at any time - so it's not lost, you just can't cancel it and stop paying for it.

Can we still pay monthly?

We can't speak for other suppliers and vendors, but at 1-Fix our intention is to continue charging for all M365 licensing on a monthly basis. You will be contracted for the annual licences for the fixed term, but we will continue to bill the annual amount in 12 interest free monthly payments to aid with your cashflow and to keep the currently established billing cycles in place.

We will be in touch with all of our clients regularly over the next 3 months to help ease the transition to this new Microsoft pricing model, but should you need assistance in the meantime please contact us and we'll be happy to help!