UPDATE 02/03/22: Microsoft announce grace period – you now have until 15th March to move to NCE. Learn more here.
Starting January 2022, Microsoft will provide seat-based cloud offers via their New Commerce Experience (NCE) for Microsoft 365, Dynamics 365, Power Platform, and Windows 365, this will replace the current agreements most businesses are now on.
As your trusted IT partner, we wanted you to be across this.
What is changing?
Traditionally you have purchased licensing on a per-user basis, paid monthly on a yearly term, that remains the same. The main change has added flexibility for true monthly-based pricing for those that need ultimate flexibility.
But at what cost you ask?
The easy answer is a 20% price premium is added to the base license fees to be able to increase/decrease your Microsoft 365 licensing on a month by month basis. For example, if you are using Microsoft 365 Business Premium today, paying $27.50 ex GST per month, this will now be $33.00 ex GST per month if you choose flexibility over price point (20% premium for flexibility).
To avoid the 20% premium, you can access 1 and 3 year agreements to ensure pricing protection for that term at the rate you are currently paying. This will lock in your current price point and removes any risk of price increases during the contract term.
***Please note the 1 and 3 year terms are a lock-in contract with Microsoft, you are not able to reduce the number of licences during that period and are expected to continue to pay for the entire term (no matter what). You must calculate your needs carefully so you are not paying for something you are not using. You can increase licencing during this period***
Our thoughts on the new NCE changes
As you can mix terms, if you have a workforce that expands and contracts seasonally, we suggest setting up your core team on the 1 year or 3 year term (still paid monthly) and the rest on a monthly license type. This will give you a balance of flexibility plus pricing protection.
Separate to the NCE change above Microsoft is raising their prices
Since its launch a decade ago, Office 365 has grown to over 300 million commercial paid seats. Along the way, Microsoft has continuously re-invested to meet the changing needs of customers. Four years ago, Microsoft introduced Microsoft 365 to bring together the best of Office, Windows, and Enterprise Mobility and Security (EMS). That same year, they added Microsoft Teams as the only integrated solution where you can meet, chat, call, collaborate, and automate business processes—right in the flow of work.
In fact, since introducing Microsoft 365 they have added 24 apps to the suites—Microsoft Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard—and have released over 1,400 new features and capabilities in three key areas.
In line with the increased value being added into the packages, and separate to the upcoming changes to NCE, Microsoft is looking to increase their pricing on all Microsoft 365 product sets across the range around the 15% mark from March 2022.
To Recap
- Microsoft 365 pricing will remain the same until March 1st 2022
- Your Managed IT company should take care of the change from CSP to NCE licences and discuss options with you
- On March 1st 2022 pricing will rise across all Microsoft 365 products on average 15% if you have not changed to the new NCE agreement before then
- By June 2022 all Micrsoft agreements must be on a new NCE agreement
Where to from here?
If you are a Future IT Services customer, we will migrate you to the NCE and reach out to you to discuss an early renewal to avoid the price changes expected on March 1st 2022.
If you’d like to discuss this article in more details, please reach out to our team.
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