On January 5th, Microsoft announced its intention to adjust the pricing of its cloud products globally on a biannual basis. With the first of these adjustments coming in April this year, pricing will be altered to reflect each local currency’s relationship to the US Dollar (USD).
What is the purpose of the semi-annual price adjustments?
The move aims to coordinate pricing globally, and give customers more stable and consistent pricing that reflects and accounts for economic changes.
In the past, Microsoft adjusted its prices on a periodic basis, but due to seismic global events such as the covid pandemic and the war in Ukraine, these adjustments were put on hold. This has thrown Microsoft’s pricing regime completely off-balance, leading to significant pricing disparities between regions and countries. UK pricing for example, has not been adjusted to account for GBP-USD exchange rate fluctuations since the beginning of 2017.
What services are affected?
All Microsoft Cloud services, so yes, that includes all Microsoft 365 subscriptions and add-on services. Azure Products taken on the basis of a Microsoft Customer Agreement however, are already charged in dollars, and are therefore unaffected.
When will the increase occur and what will the change be?
The first of the biannual adjustments will occur on April 1st 2023, and this will see UK prices increase by 9%. It is worth noting that subsequent price adjustments are likely to feature less significant changes, as the one scheduled for April accounts for 6 years of currency fluctuations.
Does each semi-annual adjustment mean a price hike?
Not necessarily. Each adjustment will reflect the pound’s relationship with the dollar, so prices may go up or down.
I’m an existing Microsoft customer, when will the price hike affect me?
The new prices will take effect on your first renewal date after April 1st. This means that if you’re paying on the basis of a yearly commitment, and you’ve recently subscribed to a new product, you won’t be affected by the new pricing regime for quite some time. If you’re paying on the basis of a monthly commitment, then the new pricing is likely to affect you much sooner: on the first monthly renewal date after April 1st.
If you are still paying for your Microsoft subscriptions via the Cloud Solution Provider programme (CSP) – as opposed to the New Commerce Experience licensing model – then the pricing alterations won’t come into effect until your next annual license anniversary after April 1st 2023.
I’m considering adopting new Microsoft products, should I move now to avoid the price hike?
In short, yes! By taking out new product licenses now you could lock-in at the current price for 12 months, or even 36 months if you commit to the 3-year subscription.
Conclusion
For any cost-conscious business, licensing price increases are never welcome news. However, resumption of price adjustments was a long time coming, and Microsoft hopes that the move provide pricing predictability with prices that reflect local economic changes. We’d encourage our current customers who are concerned about the impact of the price changes to get in touch, and one of our experts will discuss ways to mitigate the increased costs.
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