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Microsoft delays Office 365 and Microsoft 365 price hike

There will now be a transitional grace period for those businesses worst hit by the changes

Microsoft has announced that it will be delaying the planned price increase on Office 365 and Microsoft 365 products by a few weeks due to high demand for the services in the run up to the changes.

First announced in August 2021, the “substantive” price increases across a number of Modern Work products was due to come into effect on 1 March 2022.

Microsoft said the “transitional grace period” was implemented to “provide partners with additional lead time for adapting business processes”. It added that it does not believe partners will use the additional time to pull forward demand for the products.

All new commerce transactions will need to be submitted to Microsoft by no later than 14 March 2022 at 5 PM Pacific Daylight Time, or midnight at Coordinated Universal Time (UTC), in order to be eligible for the February 2022 pricing.

The price increases range between $1-$3 per user, depending on the product, but in large companies this can amount to a sizeable increase to IT departments’ overhead costs.

The six Modern Work products affected by the price changes include: 

  • Microsoft 365 Business Basic: $6 per user per month, up from $5
  • Microsoft 365 Business Premium: $22 per user per month, up from $20
  • Office 365 E1: $10 per user per month, up from $8
  • Office 365 E3: $23 per user per month, up from $20
  • Office 365 E5: $38 per user per month, up from $35
  • Microsoft 365 E3: $36 per user per month, up from $32

In the initial announcement, Microsoft said it represented the first major pricing adjustment for Office 365 and Microsoft 365 since it was launched in 2011, a decade previously.

Higher demand for cloud services brought on by the ongoing trend of home and hybrid working prompted the tech giant to make the change, said Jared Spataro, corporate vice president at Microsoft 365.

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In December 2021, four months after the announced price increases, Microsoft also said it would be raising the prices of pay-monthly Microsoft 365 products by 20% unless partners chose to be billed on an annual basis.

Managed Service Providers (MSPs) complained at the time that they could stand to lose money if a customer went bankrupt or chose to decrease the number of licenses they needed if they opted for an annual subscription.

The move prompted heated online discussions and a Change.org petition lobbying Microsoft to reconsider the decision, which garnered more than 2,000 signatures.

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