Microsoft announced its first price increase for its Office 365 and Microsoft 365 services in a decade. The price increases will affect commercial and business users of Microsoft’s software as a service (SaaS) offerings next year including commercial subscriptions to its Microsoft 365 bundles of productivity apps such as Word and Excel, formerly known as Office 365. There will be no changes in pricing for education or consumers.
The price hikes will boost Microsoft’s total revenue and profit, given the Office line remains the company’s top product in terms of sales, and most Office revenue is tied to business use. While Microsoft still sells licensed versions of Office for use on premises, the company has been getting the majority of commercial Office revenue from subscriptions since 2017.
This marks “the first substantive pricing update since we launched Office 365 a decade ago,” Microsoft 365 corporate vice president Jared Spataro wrote in a blog post. The bundle has expanded to include the Teams communication app, the Whiteboard collaboration app and Power Platform application-development tools for non-developers, among other assets, Spataro wrote.
The changes go into effect on March 1, 2022. Here’s a rundown of the coming changes to the monthly prices:
- Microsoft 365 Business Basic will go up to $6 per user per month from $5
- Microsoft 365 Business Premium will move to $22 from $20
- The Microsoft 365 E3 variant will be $36, compared with $32 today. (Unlike the other products on this list, it includes a version of Windows.)
- Office 365 E1 will be $10 instead of $8
- Office 365 E3 will rise to $23 from $20
- The premium Office 365 E5 tier will cost $38, up from $35
While larger businesses will have benefited from bulk discounts and deals over the past decade, it’s the small businesses that will feel the effects of an increase in pricing as the economy starts to recover from a pandemic. Either way, Microsoft has added more than 20 apps to Office 365 since it originally launched, including Microsoft Teams, OneDrive, SharePoint, and To-Do.
If you have any questions or are interested in learning more about Microsoft 365, contact Lighthouse Technology Partners today for a free consultation.