Overview
In January 2023, Microsoft announced a 9% price increase on all its products and services, effective April 1, 2023. This new pricing structure affects all Microsoft Cloud products and services.
The new Microsoft NCE pricing structure will allow customers to plan for the semi-annual cost alignment. This will provide customers with the visibility they need to budget and plan accordingly.
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Why is Microsoft Making These Changes?
Microsoft has implemented licencing changes due to pricing differences between regions. In some areas, customers have been able to access Microsoft products at a cost up to 40% lower compared to the global US dollar.
This brings regional prices closer to USD and moves to a more common pricing model in the industry. To better align prices with the USD, Microsoft will periodically assess them on a twice-a-year basis and adjust its fluctuations relative to the USD.
With this new structure, Microsoft intends to shift to a more transparent and predictable model that aligns with industry standards and benefits customers globally.
What is the Microsoft New Commerce Experience?
Back in January 2022, Microsoft launched their New Commerce Experience. Since then, the main change has impacted the way customers purchase licences to help reduce complexity and provide cost savings for renewal commitments.
Microsoft NCE Pricing Changes For the UK 2023
The new Microsoft NCE Pricing change will impact all Microsoft cloud products. For instance, M365 Business Basic’s annual price will increase by 9% from £4.50 to £4.91 while the Office 365 E1 price will increase from £7.50 to £8.18 as an example of UK local pricing. The Microsoft price increases are in line with Microsoft’s commitment to investing in its transformational journey to deliver a simplified engagement experience that will benefit both partners and customers.
NCE Monthly Subscription (Per Licensed User):
| Microsoft Product | Monthly Commitment (Current Price) | From 1st April 2023 | Budget to Allocate |
| Microsoft 365 (E3) | £38.04 | £41.46 | £497.56 |
| M365 Business (Basic) | £5.40 | £5.89 | £70.63 |
| M365 Apps for Business | £9.48 | £10.33 | £124.00 |
| M365 Business (Standard) | £11.28 | £12.30 | £147.54 |
| M365 Business (Premium) | £19.92 | £21.71 | £260.55 |
| M365 Audio Conferencing | £2.27 | £2.47 | £29.69 |
| Microsoft Teams Rooms (Standard) | £36.24 | £39.50 | £474.02 |
| Exchange Online (Plan 1) | £3.60 | £3.92 | £47.09 |
| Exchange Online (Plan 2) | £7.20 | £7.85 | £94.18 |
| Exchange Online Archiving | £2.76 | £3.01 | £36.10 |
| Office 365 (E1) | £9.00 | £9.81 | £117.72 |
| Office 365 Extra File Storage | £0.18 | £0.20 | £2.35 |
| Microsoft Defender for Endpoint (Plan 1) | £2.76 | £3.01 | £36.10 |
| Microsoft Defender for Endpoint (Plan 2) | £4.68 | £5.10 | £61.21 |
| Power BI Pro | £9.00 | £9.81 | £117.72 |
| Project (Plan 3) | £27.12 | £29.56 | £354.73 |
| Visio (Plan 1) | £4.56 | £4.97 | £59.64 |
| Visio (Plan 2) | £13.56 | £14.78 | £177.36 |
NCE 12-month Subscription (Per Licensed User):
| Microsoft Product | 12-month Commitment (Current Price) | From 1st April 2023 | Budget to Allocate |
| Microsoft 365 (E3) | £31.70 | £34.55 | £414.64 |
| M365 Business (Basic) | £4.50 | £4.91 | £58.86 |
| M365 Apps for Business | £7.90 | £8.61 | £103.33 |
| M365 Business (Standard) | £9.40 | £10.25 | £122.95 |
| M365 Business (Premium) | £16.60 | £18.09 | £217.13 |
| M365 Audio Conferencing | £1.89 | £2.06 | £24.72 |
| Microsoft Teams Rooms (Standard) | £30.20 | £32.92 | £395.02 |
| Exchange Online (Plan 1) | £3.00 | £3.27 | £39.24 |
| Exchange Online (Plan 2) | £6.00 | £6.54 | £78.48 |
| Exchange Online Archiving | £2.30 | £2.51 | £30.08 |
| Office 365 (E1) | £7.50 | £8.18 | £98.10 |
| Office 365 Extra File Storage | £0.15 | £0.16 | £1.96 |
| Microsoft Defender for Endpoint (Plan 1) | £2.30 | £2.51 | £30.08 |
| Microsoft Defender for Endpoint (Plan 2) | £3.90 | £4.25 | £51.01 |
| Power BI Pro | £7.50 | £8.18 | £98.10 |
| Project (Plan 3) | £22.60 | £24.63 | £295.61 |
| Visio (Plan 1) | £3.80 | £4.14 | £49.70 |
| Visio (Plan 2) | £11.30 | £12.32 | £147.80 |
The Difference Between Microsoft NCE Monthly and Annual
NCE Monthly Subscription:
A convenient monthly option for Microsoft services, eliminating the need for a long-term commitment. This flexibility allows customers to adjust their seat count and plans as needed, every month. Licenses can be decreased or cancelled within 72 hours of purchase or at the end of each monthly term.
NCE 12-month Subscription:
A 12-month plan for Microsoft services, with the option for either an annual commitment or monthly billing. This provides customers with the flexibility to choose their preferred payment method, unlike the previous CSP model that only offered a 12-month commitment.
With this option, customers are locked in for the duration of the term, providing them with additional cost savings and protection against potential price increases. It’s important to note that seat counts can be increased during the 12-month subscription but not reduced.
NCE Cost Savings Case Study:
In 2022, our team took a consultative approach with all our clients to discuss the best NCE licensing strategy for them to take for the next year.
The Challenge – While a lot of businesses were growing, some were also downsizing, which meant that some of the challenges they had to figure out were knowing how many licenses, and the type of licenses they would need.
Our Solution: Throughout the discussions with this challenge, our team recommended purchasing a mixture of monthly and annual licenses to balance costs against any changes they may go through in the period. The benefit of taking this flexible approach was that several users may not need a certain plan, i.e., “M365 Business Premium,” and just need “M365 Business Basic,” giving them cost savings each month or over the year.
NCE for Businesses in 2023:
Most businesses would have transitioned over by 1st March 2022 to take advantage of these benefits before NCE fully transitioned later in the year. This also helps to conduct license audits, to help businesses review payments of licences they do not need or overpay for features they do not use.
Partnering with Microsoft 365 experts, like Edge IT, helps organisations navigate and make the most of their licences. With our expertise and the use of various tools, we can provide a licence optimisation review and advice on how to maximise savings.
Historically, Microsoft 365 subscriptions were sold with an annual commitment, but there was some flexibility to make changes; however, with the New Commerce Experience, the terms have changed as explained above.
When Did the Microsoft NCE Changes Start?
Before Microsoft NCE Pricing came into effect, the new commerce experience became available to the public in 2022. A brief timeline is outlined as follows:
- October 2021 – A technical preview for NCE went live
- January 2022 – General availability to the public
- March 2022 – NCE became mandated (New subscriptions)
- June 2022 – Customers could renew via the existing ‘legacy’ route
- October 2022 – All customers were now purchasing through NCE.
How Did the Licencing Change?
Microsoft moved to a commercial seat-based offering, which changed the way licences are purchased and managed.
One of the key changes under the NCE is the move towards a commercial seat-based model, where subscriptions are purchased per user, regardless of the number of devices they use for cloud services. This new model allows customers to increase the number of seats within their subscription at any time within their contract period, but they can only remove seats during the initial 72-hour cancellation window.
It’s important to note that the cancellation window has become stricter, as users need to cancel within 72 hours to avoid paying for the entire term. The only way to receive a full refund is to cancel within 24 hours.
Microsoft 365 Contract Lengths
New subscriptions are currently offered as one-month or 12-month contracts. This provides businesses with the flexibility to choose the package that best suits their needs, whether it be a single package or a mixture of all three. Under the 12-month contracts, organisations can choose the payment model that works best for them, such as paying upfront, monthly, or annually.
Overall, the changes aim to provide businesses with greater flexibility and control over their license subscriptions. By offering a seat-based model, companies can easily scale up or down their subscription as their needs change, and by offering different contract lengths and payment options, they can choose the package that works best for them.
By making licensing more straightforward and flexible, the New Commerce Experience helps our clients and other growing businesses to stay ahead of the curve and fully leverage the power of cloud services.
Choosing Edge IT as Your Cloud Solution Provider
To sum this all up, Microsoft has made significant changes to the way their Microsoft 365 licences are priced and managed since introducing the New Commerce Experience (NCE). This shift presents both challenges and opportunities for MSPs, who will need to adapt their licensing practices to stay competitive and meet the needs of their clients.
Here at Edge IT, we can help. As one of Microsoft’s partners and team of experts, we are well-positioned to help businesses navigate these changes and make the most of the discounts and licencing options available. Current clients and new businesses can simply reach out to Edge IT, and benefit from our expertise, licence optimisation review services, and the latest updates on the NCE program.
We are proud Microsoft partners with a team of certified specialists, who are dedicated to their careers and provide organisations with the support they need to meet their business requirements. Whether you’re a current customer seeking a new solution directly with Microsoft, exploring options as part of a professional services project, or just getting started, we have the right technical solution.
If you have any questions or would like to learn more about our licensing services or other managed services, simply reach out and let us know to discover how Edge IT can help.