As of July 2022, all new and renewing Microsoft subscriptions must be purchased through the New Commerce Experience (NCE), with all incentives on Microsoft’s legacy CSP ending by the end of the year. By now, you should be aware of the Microsoft NCE and what it means for your business. However, in case your Microsoft partner has not talked to you about the encroaching changes and taken action to minimise the effects of Microsoft NCE price increases, we have created this blog to ensure that you are fully prepared for what is to come.
What is the Microsoft NCE?
The Microsoft NCE is a commercial model that was first launched in 2019 for Azure. Since that time, the NCE has expanded to include Microsoft 365, Dynamics 365 and the Power Platform. Microsoft state that the purpose of the NCE is to streamline the channels through which customers purchase Microsoft services, with the overall aim of reducing the complexity of licensing and creating a simpler buyer’s journey. As a result of the NCE, the prices of commercial Microsoft plans will increase by as much as 25%.
Although potentially frustrating for end-users, the Microsoft NCE price increases are not unfounded or unreasonable. Since launching Microsoft 365, Microsoft have added 24 new applications to the suite, including Microsoft Teams, Power Apps, Power BI, Power Automate, Stream, OneDrive, Planner and Visio. They have also launched more than 1,400 new features. Over the last few years, many of these features and apps have become invaluable to businesses everywhere, facilitating multiple remote working success stories. Despite this continuous innovation, Microsoft have not increased their prices in five years and thus the new pricing model is a reflection of their investment in new and beneficial developments.
While simplicity has been cited as one of the primary reasons for introducing the New Commerce Experience, for customers who are used to the legacy licensing model, there are several complications to consider regarding pricing, deadlines and contract lengths.
How will prices change?
As of March 2022, users subscribed to six key Microsoft licenses have experienced price increases. Both small business licenses (Microsoft 365 Business Basic and Microsoft 365 Business Premium) and enterprise licences (Microsoft 365 E3, Office 365 E1, Office 365 E3 and Office 365 E5) will be affected by the Microsoft NCE price increases, each at varying levels of between 8-25% increases. Despite this, Microsoft will lock the prices until the end of your contract so that further price increases cannot take place during this period.
It is important to be aware that several businesses will not be affected by the Microsoft NCE price increases. Education products, non-commercial home products, not-for-profit organisations and Microsoft 365 Business Standard users are not included in the NCE.
What do the Microsoft NCE price increases look like?
How is licencing changing?
Under the NCE, Microsoft are moving to a commercial seat-based offering meaning that the subscriptions are purchased per user, regardless of how many devices they are using for Cloud services. As per this new model, customers can increase the number of seats within their subscription at any time within their contract period but can only remove seats during the initial 72-hour cancellation window. Similarly, the cancellation window is now becoming stricter, as users need to cancel within 72 hours or pay for their entire term. The only way to receive a full refund is to cancel within 24 hours.
How are contract lengths changing?
Under the NCE, subscriptions will be available in 1, 12 or 36-month contracts. As they are now sold per-seat, businesses can choose whether to select one package or a mixture of all three, depending on their unique requirements. Additionally, under the 12 and 36 month contracts, you can select the payment model that is most appropriate for your needs, paying either upfront, monthly or annually.
Struggling with the Microsoft NCE price increases?
Has your Microsoft partner explained the actions you need to take to avoid being stung by the Microsoft NCE price increases? While there is no avoiding these new developments, your business can take action now to prepare for the upcoming changes. If you need additional guidance, get in touch with the experts at CMI today.