The office 365 price hike. It’s a common game plan for SAAS software manufacturers to offer their products free or at a very low price. They build a large subscriber base, and eventually start charging for their product or increase prices to grab a massive revenue boost.
Microsoft for years has been working on transitioning all their clients from on premises versions of exchange and their popular office products. They’ve done this in a couple of ways. One is that they’ve been continually making the on-premises versions of their software more and more expensive. Essentially, they wanted to make sure the economics of it didn’t work for small and medium business.
At the same time, they’ve made Office 365 affordable to incentivize/force adoption. To their credit the office 365 suite of products is innovative and came at a great time. With so many folks working from home this last year the ability to work from anywhere was crucial, and Microsoft delivered on that with their O365 suite.
Now that they’ve reached a critical mass with the adoption of 365, it’s time to raise the price.
The Office 365 Price Hike
Microsoft announced that it plans to raise the per user subscription costs of all of it’s popular O365 plans except for the E5 plan. The increase will begin on March 1, 2022. How much the bill will increase depends on your plan with the highest being the E3 plan that will jump up $4/mo.
Here is a quick rundown of the coming price hike.
- Microsoft 365 Business Basic will go up to $6 per user per month from $5
- Microsoft 365 Business Premium will move to $22 from $20
- The Microsoft 365 E3 variant will be $36, compared with $32 today. (Unlike the other products on this list, it includes a version of Windows.)
- Office 365 E1 will be $10 instead of $8
- Office 365 E3 will rise to $23 from $20
- The premium Office 365 E5 tier will cost $38, up from $35
Microsoft was quick to comment that they haven’t substantially raised the prices on O365 since it was first released in 2011. This announcement comes on the heels of a record year of revenue growth due to cloud services like Office 365.
Who does this hurt/help?
Large corporations that subscribe to O365 have had quantity discounts for the last 10 years and will continue to enjoy them with the price hike. Once again, small businesses will feel the brunt of this price increase as they struggle to come out of the pandemic.
Microsoft has no concerns over this however, as they know how critical their applications are to their over 300 million subscribers. Most business owners will have no choice but to suck it up and pay the bill. That’s exactly what Microsoft is hoping for with the Office 365 price hike.