Changes to Microsoft 365 licensing in 2022
Contents
There are 2 main changes to Microsoft licensing coming in March 2022 for commercial customers that business owners need to be aware of:
- The purchase price for certain Microsoft 365 licensing is increasing for the first time in nearly 10 years.
- The purchase agreement options for Microsoft 365 are also changing, deterring monthly subscriptions.
We breakdown the proposed changes, the coming New Commerce Experience (NCE) and what they mean for you, below.
In addition, we (Lantech), will be running a Q&A session on 03/02 @11am to assist with any questions you may have. To register for this Microsoft Teams webinar, please register your interest using the button below. If you would like to speak to us directly please contact us today
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The price increases.
Having not changed their pricing in the past decade, Microsoft has announced sweeping changes to the pricing in the Microsoft 365 platform
The following licenses are affected:
The Agreement Changes and Options.
In Summary, Microsoft M365 agreements under their new commerce experience (NCE) will now (from March 2022) be either a Monthly or Annual subscription through a cloud solution provider. (CSP partner)
- Annual – Commitment to a minimum number of licences when the Agreement starts in March 2022 and paid for upfront.
- Monthly – Commitment to a minimum number of licences on a monthly basis
The Annual Agreement (Contract).
The new Microsoft 365 annual agreement will require the customer to agree to a minimum number of licenses for the term of the contract, which is 1 year and paid for upfront.* If you pay upfront then your licence price is locked in for the year.
The minimum number is the number of purchased licenses on the date the agreement begins.
During the year, you are unable to reduce the number of licenses below the minimum number. You can at any time add additional licenses to the agreement that are of the same type and these will co-term to the renewal date.
Any new license types added (eg a product that is not currently in the agreement) will form a new agreement for 12 months from that start date.
The Monthly Agreement (Contract)
You can continue to purchase Microsoft 365 subscriptions on a month to month basis, however, with this flexibility, comes a higher price. Microsoft will levy an additional 20% on subscription products purchased on a month to month basis.
It is important to note that some Microsoft 365 products are available on an Annual Agreement only and are not available for this monthly agreement. These are:
- Exchange Online Plan 1
- Exchange Online Plan 2
- Exchange Online Kiosk
What we Recommend you Do Now.
We recommend that an audit of all Microsoft 365 licenses that you currently have is completed with your IT partner ahead of the upcoming changes.
If you are a Lantech client, we will be in touch with a full itinerary of your tenant.
If you currently purchase monthly subscriptions from Lantech the list of users and assigned licenses are on your invoice.
In advance of the end of February 2022, we strongly advise that you audit your required subscriptions and make any license reductions to ensure that when you begin your new agreement, you are only paying for what you need.
As a certified Microsoft Partner and Cloud Solution Partner, we can assist you with any queries you have.
Frequently asked questions:
If I opt for the Annual agreement, do I have to pay upfront for the full year?
Yes, The terms of an annual Microsoft licensing agreement include upfront payment for the year.
How much extra will I have to pay if I choose to pay monthly?
If you opt to purchase your Microsoft 365 subscriptions monthly, the increase will be 20%.
When is this happening?
The current indicated start date is the 1st of March 2022. If anything changes with this, we will update you as soon as we know.
What happens if I want to terminate my contract?
If you are on an Annual contract, you are committing to a 12-month term. If you wish to terminate, you will still have to pay the licence fees for the remainder of your contract term.
So, I cannot reduce or increase my licences if I opt for the Annual Agreement?
If you opt in to the Annual Agreement, no, you cannot reduce your licences. However, you can increase them. If you add to an existing licence type, then they will co-term with your existing contract until the renewal date. However, if you add a new licence type, the 1-year contract starts for those, on the day that they are added.
Example:- If you have 10 Exchange Online Plan 1 licences on 01/03/2022, their expiry date will be 28/02/2023.
- If you then wish to add 4 more in August, the additional 4 licences will also expire on 28/02/2023.
- If you then decide to add 2 x Microsoft 365 Business Standard to your account on 01/08/2022, this will be the beginning of a new contract for Microsoft 365 Business Standard only, expiring on 31/07/2023.
I'm an educational Customer, am I affected?
Good news! No, not at this time. Microsoft has not announced a price increase for educational customers of their Microsoft 365 subscriptions.
Why is this happening?
Microsoft has launched their new Commerce Experience as of the 10th January 2022 as a new subscription platform. It has been a decade of a price freeze which they say materialises a reduction over the same period especially with all the additional features and benefits that have been added over time.
*Microsoft does have a payment plan option so please speak to us if you wish to avail of this.
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