Dec 2021 – Updates at the end
You may have heard the recent news that Microsoft’s commercial seat-based licences (User Subscription Licences) will be moving to the new commerce experience. But what exactly does this mean for Microsoft customers?
Microsoft have already moved Azure Plan, Server Software, Azure Reserved Instances and third-party marketplace offers to the new experience in 2019 and perpetual software in 2020. The new commerce experience brings Microsoft 365, Dynamics 365, and Power Platform onboard as of 14th October 2021 for a technical preview and for general use from January 2022. There is a window where the old and new way of buying will be running side by side before the legacy platform is no longer available in June 2022.
The bad news is that this new change is likely to make your licensing more expensive and take away some freedoms around freely changing billed active user numbers. But, to help navigate this new introduction, we’ve asked our team of experts to share their advice to get the best out of the new commerce experience.
What does this mean for you?
The new commerce experience will change the way CSP currently works from pricing to terms and subscription durations. It aims to reduce complexity and provide cost savings for longer term commitments, whilst also introducing additional features to make CSP comparable to other standard licensing models offered throughout the IT industry. One of the biggest changes is the introduction of monthly subscriptions to run alongside the existing annual subscriptions. From March 2022 a new 36-month subscription is expected to be launched as well.
How are subscription terms changing?
At present, subscription terms are one year, paid either monthly or in full. Up until now, you could freely reduce your billed active users at any time, even down to zero. This was very useful for some businesses weathering the pandemic.
This will change to a choice of monthly, yearly or three-yearly terms which Microsoft say can also be paid monthly, annually, or in advance in full. Microsoft will however be charging a 20% premium to use the monthly term (and pricing will not be protected against increases). The one-year and three-year commitment will offer price protection and avoid the 20% increase, but the new terms mean you can’t reduce your licence count during the whole term (although you can increase at any time). With the monthly-term subscriptions, you can reduce your licence count on the monthly renewal date each month.
Flexibility to have multiple terms
The new commerce experience allows for more than one subscription of the same service. As an example, for your permanent staff you could agree to a longer-term commitment to get the price protection and discount, and then set up a monthly subscription for the other flexible staff. This gives you both the price protection and flexibility to adjust.
Amending your licensing count
You are currently able to amend your licence count as required by either increasing or decreasing the number of user licences. With the new subscriptions, if you need the flexibility to decrease licences then the monthly subscription term allows you to adjust at the end of the month.
All plans will allow you to increase the licence count and the subscription end date will remain the same.
You can no longer suspend a subscription as you will continue to be invoiced, but you do get the option to cancel within the first 72 hours after the initial order.
To help you make a decision for the best approach for your business, we have broken down the new CSP subscription options:
Price increases for ‘standard’
The last thing to be aware of is that the standard pricing goes up from 1st March 2022. Microsoft wrote about this in a blog post in August. This is another factor in timing your next renewal. Microsoft may introduce some pricing incentives over the next few months,
but nothing is announced at the time of writing see below.
At the time of writing, the new UK prices have also not been announced yet, but the US increases are in the 10-25% band.
If you’re still unclear on the best option for your business or if you have any questions about the new commerce experience, our friendly and knowledgeable team are on hand to help. Simply call 01392 205095 or email email@example.com and we can discuss your individual business needs.
UPDates Dec 2021
In November 2021, Microsoft announced a pricing promotion for the monthly subscription, removing the 20% higher price point between January and June 2022. The discount only lasts until the end of June. (Source)
In November 2021, Microsoft announced a 5% reduction in the price of annual subscriptions taken out from January-March 2022, where extra seats added during the annual term will also get the reduced price. We reckon this promotion is best bought before the 1st March price increase. This promotion may be extended until June. (Source)
New subscriptions will have to use the new commerce experience from March 2022.