10 Aug 9% Microsoft 365 Price Increase for Australian Businesses
Everything you need to know about the Microsoft 365 price increase
On July 5, 2023, Microsoft announced new pricing changes that will affect customers in Australia, New Zealand, Canada, and Switzerland. To be implemented on September 1, 2023, these changes aim to create greater global pricing consistency, reflecting Microsoft’s practice of adjusting pricing according to local currency fluctuations against the USD.
Read the official announcement here
In this post, we will delve into the specifics of how this change will affect Microsoft 365 and Azure customers.
The Increase Explained
For Australian Microsoft users, both cloud and on-premises solutions will undergo a price increase of 9%, while New Zealand will see a 7% hike. This increase follows a broader 15% aggregate rise in March 2022, ending a decade of stable pricing. This earlier change saw Microsoft 365 and Office 365 licenses’ costs rise and introduced the New Commerce Experience (NCE) model.
The NCE Model
Under the New Commerce Experience (NCE), Microsoft presented an opportunity to save on costs for subscribers who commit to annual terms. A 12-month subscription will lock in your pricing for the whole term, safeguarding you from any price increases within that period, but only if you pay for the entire term upfront. This agreement allows the number of seats to increase but not decrease.
Conversely, customers who opted for monthly billing and flexibility in decreasing licenses midterm encountered a 20% fee or penalty increase on their 365 licenses.
Compound Effect
The upcoming 9% price increase, combined with the NCE model’s 20% monthly subscription rise, could lead to a total cost increase of 29% for some organisations compared to their current baseline.
Who Does This Affect
This change will impact cloud and on-premises licensing costs for commercial, government, academic, and non-for-profit customers. Small businesses purchasing licenses directly through Microsoft or via their IT provider (usually set up as a CSP) will also be affected, as they fall under the commercial umbrella.
When Does my Invoice Change?
For monthly billing, expect to see the increase reflected in your next monthly bill after September 1, 2023. For annual billing, the increase will be apparent in your next annual bill after September 1, 2023.
How to Counteract Increased Costs
Understanding these changes and strategically planning can mitigate the potential impact.
Firstly, it’s important to determine your current NCE status: Check directly or with your IT provider or by referencing your invoice from Microsoft if you purchase direct.
NCE Annual Subscription: If locked in, you’ll benefit from the pre-September prices until your term ends, provided you paid the full term upfront.
NCE Monthly Payment: If paying monthly under an NCE agreement, the price rise will apply on September 1st.
Monthly (Non-NCE): Act now!! Renew your agreements before September 1st to save up to 29%. You must commit to a full term and pay in full to receive the full benefit, otherwise you’ll only enjoy the standard 20% decrease.
Need More Information?
At Aus Advantage, we consistently review cloud services licensing costs for suitability and cost optimisation. If you’re not already working with us, get in touch today to discuss how you could save up to 29% on your Microsoft 365 cloud services subscriptions.