For about the last 10 years, we have seen a massive shift in how Microsoft delivers Microsoft Office and email to its customers. Flash back to 2011 – just about every business had its own Exchange email server and bought perpetual licenses of Microsoft Office.
Fast forward back to today – the vast majority of Microsoft customers get their Office and email through Microsoft 365 services.
Microsoft has invested heavily on getting businesses to switch. Until now, Microsoft 365 has been a very flexible program and was often cheaper than buying those services and software via the traditional volume licensing approach. That made migrating to Microsoft 365 an easy decision.
Now Microsoft is making the use of 365 more expensive and inflexible. And that is happening very soon.
The new program is called Microsoft NCE, or Microsoft New Commerce Experience. Various aspects of this program will be phased in between January 1st, and June 20th of 2022.
There are three main changes that are coming with NCE. First, the licensing will become more complex. Second, there will be higher costs and financial liability for 365 customers. Third, there will be much less flexibility to make changes to your subscription, especially any that would reduce your payments. Let’s review these in the opposite order.
The current Microsoft/Office 365 program made it very easy to add and remove licenses on a month-by-month basis, especially if you were going through a Microsoft Partner. But with the NCE program, you have the choice of a 1-year (or 3-year) commitment or paying a heavy premium for month-to-month flexibility. Moreover, with the 1- or 3-year commitment, you can no longer remove licenses – you can add, but you can’t remove. Furthermore, you are financially committed to paying that monthly subscription for the remainder of your term, regardless if your licensing needs go down. Only at the term renewal date can you adjust your licenses downward.
The new program will also come along with a price increase in two ways. First, some of the base pricing will increase, as below.
- Microsoft 365 Business Basic from $5 to $6
- Microsoft 365 Premium from $20 to $22
- Office 365 E1 from $8 to $10
- Office 365 E3 from $20 to $23
- Office 365 E5 from $35 to $38
- Microsoft 365 E3 from $32 to $36
This will take effect with any contacts that are entered or renewed starting March 1st of 2022. Second, for anyone who wants the flexibility of Month-to-Month terms, you will pay about a 20% premium over the 1-year term rate.
Lastly, because of the new terms and enforcement, the new program will come with a new licensing agreement that each customer will have to accept with each new subscription. With the current terms being so flexible, the agreement was a sidebar at best. But with the new financial commitments, each new subscription will become a more formal contract between the customer, the reseller and Microsoft. Expect to see it treated as such when a Microsoft/Office 365 renewal date occurs.
Moreover, in concert with these core Microsoft 365 changes, Microsoft is also terminating its Open Business Volume licensing offerings. Therefore, the only option left to most small businesses will be Microsoft 365 or Microsoft Open Value (perpetual licenses with a 3-year annual payment term and upgrade insurance).
If you have a current Microsoft 365 subscription, especially if you have Basic or E3 licenses, you might want to consider converting your current subscription into an NCE subscription to lock in the price for a year. Similarly, any licenses which you are confident you will keep for a year, you should take out a 1-year term to avoid the month-to-month premium (you can mix 1-year, 3-year, and month-to-month licenses).
One caveat – Microsoft is known to make abrupt changes to their programs based on customer reactions. Hence, if the new program generates enough negative customer reaction, there could be substantial changes to everything summarized above.
At SpotLink, as a leading San Diego Microsoft 365 provider, we are here to answer your questions, as well as help our clients meet their best balance between costs and flexibility for their business.
Robert Hood
CEO & Founder
SpotLink