Microsoft Announcing Price Adjustments For Both On-Premises & Cloud Products

Microsoft made some interesting price adjustments in October 2018. Microsoft is raising prices on all its products, both on-premise and in the Cloud. On October 1, 2018, they adjusted pricing for their licensing programs and made price adjustments to both on-premises and cloud products.

They are moving from a program-centric to a customer-centric pricing structure and creating more consistency and transparency across their purchasing channels. In the end, these changes highlight the benefits of their pricing for a cloud-first world.

Why Is This Change Happening?

Microsoft’s goal is to:

• Accelerate digital transformation with offers available in all the ways a customer buys.

• Build better contracting and pricing experiences

They want to give customers a consistent set of offers, available through the identified channels (through-partner, Microsoft assisted, and self-serve), supported by a modern commerce platform. The modern commerce initiative will provide a modern way for Microsoft to support their customers.

The price changes should create greater consistency and transparency across their purchasing channels. Their traditional licensing business is based on a low variable cost environment, where a price waterfall, discounts, and promotions are used to sell on-premises software.

However, the growing cloud business has pricing based on the number of users or service meter, availability, and/or consumption of the product or service. Pricing for cloud and on-premises don’t align well, nor do programmatic volume discounts align service. Microsoft is attempting to correct this.

How Much Will The Price Raise Be?

It will depend on the specific licenses you want to purchase. Please email Mitz@ctechgroup.net for an estimate.

How Do These Changes Make Pricing More Consistent?

Microsoft heard from customers that they often don’t understand how their price was derived, and why different programs have different starting points for price.

The modern pricing changes begin to address those questions through establishing a new price point called the Base Price used in Microsoft’s internal pricing engine. This price point is then leveraged in the new discount presentment section on the Customer Price Sheet (CPS) quote in the direct Enterprise Agreement program.

Additionally, they also want to continue to drive toward the long-term modern commerce vision. The steps they are taking–such as removing the entry-level discount to align with the Cloud Solution Provider (CSP) approach on online services and the government price changes to match the lowest commercial price–will bring Microsoft closer to making discounting consistent, licensing less program-centric, and help them get to the end goal of a single agreement with a single price list.

Does This Mean Microsoft Office 2019 Is Already Outdated?

Microsoft raised Office 2019 prices by 10 percent Microsoft just released its on-premise Office 2019 suite for Windows and Mac in September 2018. However, instead of promoting its new features and a perpetual license, they are saying that’s it’s inferior to Office 365 ProPlus, which they say is, “the most productive and most secure” with the “lowest total cost of ownership for deployment and management.”

Microsoft Office 2019 only provides Real-time presence and @ Mentions in Outlook on the list above. It’s a one-time purchase that comes with apps like Word, Excel, and PowerPoint for PC or Mac, but doesn’t include any of the services that come with an Office 365 subscription.

Plus one-time purchases like Office 2019 don’t have an upgrade option, which means if you plan to upgrade to the next major release, you’ll have to buy it at full price.

What Does This Mean For Our Business in Canada?

Microsoft Cloud-Based Solutions Like Office 365 Will Be The Most Cost Effective Even With The Price Increase

Although there will be price increases across the board for both on-premise and cloud-based solutions, Microsoft may have just made Office 365 a more attractive option than it was previously thanks to Office 2019’s higher prices. The steady and gradual price rises, combined with more feature updates for Office 365, should have the effect of making an Office 365 subscription more attractive, especially to Microsoft’s business customers.

It’s believed this is an attempt to move us all over the subscription pricing. Microsoft increased the pressure to ditch Office licenses in favour of Office 365. Office 365 subscriptions cost less than the base price for an Office 2019 Home & Student license.

And, although there will be a price increase of Office 365, it will cost less as long as Microsoft releases new versions of Office that require their own (and potentially gradually more expensive) license.

You Should Consider Moving To The Microsoft Cloud

Microsoft believes that these changes will create consistency and transparency, making it easier for customers and their IT providers to compare prices and make sound purchasing decisions together. They also hope you will realize the long-term cost savings by shifting to the Cloud where you can benefit from the costs and value propositions of their products and services.

How Do We Decide Which Microsoft Product Is Right For Our Business In Canada?

The best thing to do is to contact a certified Microsoft Partner like CTECH in Calgary, Edmonton and Saskatoon. We’ll consult with you to help you decide which Microsoft products provide the best value for your business. CTECH is focused on providing the best value for our clients in whatever we do. For more information contact us at (403) 457-1478 or email info@ctechgroup.net.

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