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Microsoft Office costs are increasing by 20% for some corporate customers unless they switch from monthly to yearly subscriptions.

December 20, 2021

Microsoft 365 and Office 365 prices to increase next March 01

Many consumers of Microsoft's Office suite are being forced to make a tough decision: pay more or sign up for an extended subscription.

Microsoft plans to overhaul the way users purchase its software via business partners in 2022 with the introduction of the "New Commerce Experience for Office." Companies that pay by month would see a 20% increase in their subscription fees unless they switch to yearly memberships, according to a business statement that hasn't been made public.

In subscription companies, churn is a big issue, and Microsoft's ability to lock consumers into long-term contracts might help manage the issue. Many major companies choose yearly subscriptions versus monthly subscriptions because of the savings offered by software suppliers.

A price rise for Microsoft 365, formerly known as Office 365, was announced in August, and several smaller businesses who are attempting to save money while they cope with pandemic-related difficulties are dissatisfied by the change in paradigm.

Microsoft, on the other hand, is booming. Since the beginning of the year, its stock has risen by 46 percent, putting its market value at more than $2.4 trillion.

One-third to one-fourth of Microsoft's profits are generated by corporate clients rather than consumers, and 95 percent of the company's commercial income comes from its partners. According to Microsoft's Cloud Solution Provider program, only those customers who directly purchase via the program are impacted by the subscription plan change.

Microsoft's lack to provide precise data about the monthly price increase has impacted interactions with consumers. Microsoft will require payment for subscriptions although if users decide halfway through the term because they no longer need the Office services.

While Microsoft has not formally offered Office 365 subscriptions on a monthly basis, clients have been permitted to shift or lower the number of subscribers as demanded for monthly. This strategy proved effective for firms who cut workforce due to decreasing demand during the epidemic.

Microsoft had intended to launch the New Commerce Experience in October; however, it was postponed until January 2022. Starting in March, purchase applications will be required to use the New Commerce Experience, and renewals will be required to use it beginning in July, according to Microsoft in a blog post.

Microsoft will consider charging the same amount for monthly and yearly offerings during January and June, according to the firm. Following that, the monthly rise takes effect.

The adjustment comes after a publicly stated hike in August, when Microsoft said it will raise rates for subscriptions to its Microsoft 365 packages by 8.5 percent to 20 percent per user, based on the tier, in March 2022. It is, according to the business, "the first major price modification since we introduced Office 365 a decade ago." Microsoft said that the package now has more collaboration, security, and automation technologies.

Microsoft expects users to keep around, in part since Google's Workspace package, formerly recognized as G Suite, is the only major competitor.

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