Why Is Microsoft 365 Raising Prices, and What Does It Mean for Users?

Microsoft recently announced they are raising prices on subscriptions on most Office and Microsoft 365 subscriptions.

In a company blog post in August 2021, Microsoft 365 Corporate Vice President, Jared Spataro stated, “This updated pricing reflects the increased value we have delivered to our customers over the past ten years.” After launching Office 365 a decade ago across 40 different markets, the company has worked continually to improve the product.

Microsoft price increases go into effect on March 1, 2022:

  • Microsoft 365 Business Basic: up to $6 per user
  • Microsoft 365 Business Premium: up to $22 per user
  • Office 365 E1: up to $10 per user
  • Office 365 E3: up to $23 per user
  • Office 365 E5: up to $38 per user
  • Microsoft 365 E3: up to $36 per user

While there is a Microsoft price increase for the programs listed above, there will be no uptick for education and consumer pricing.

Adapting to Changing Times

Since its initial launch in June 2011, Office 365 has grown exponentially. In the original application, software included: Microsoft Word, Excel, PowerPoint, Outlook, Lync, Exchange and InfoPath. Now, as the impending Office 365 price increases are rolled out, there are 24 additional apps and 1,400 extra features.

With introductions of platforms like Microsoft Teams, individuals and businesses can now meet, chat and collaborate all on one multifunctional app. With over 250 million monthly users, Microsoft has reimagined the way people communicate and work.

As workplace dynamics continue to change as a result of events of the last few years, Office 365 has created an improved way to navigate the hybrid work environment. Spataro writes, “We’re committed to building on the value we’ve delivered over the past decade to continuously provide innovation that helps our customers succeed and thrive today and well into the future.”

Microsoft 365 combines Office, Windows and Enterprise Mobility and Security (EMS) into one, making it easier for businesses to manage their workplaces. The price increases may not affect larger corporations, but the same may not be true for small businesses.

What Does This Mean for Small Businesses?

In the last year and a half, the pandemic has created many obstacles, especially for small business owners. Shutdowns and restrictions have altered how businesses operate on a -day-to-day basis. Now the U.S. is facing a record number of job openings and struggling to find and keep employees.

As small businesses have had to pivot and budget over the last year because of the pandemic, the Microsoft 365 price increase is just one more thing they need to budget for. While Spataro justifies the price increases due to the thousands of new features added, small businesses that are barely scraping by may feel the effects.

A report from the Federal Reserve reveals that sales for 88 percent of small businesses have not returned to pre-pandemic levels. For small and medium-sized businesses that are barely paying their bills, every dollar matters. Rising rates like the Microsoft 365 price increase can cause financial strain. Luckily, price changes don’t go into effect until March 2022, so businesses have time to budget accordingly.

Final Thoughts

As these Microsoft price increases may concern struggling business owners, downgrading from a premium to a basic package, only subscribing to necessary services, or purchasing lifetime access can help to save money in the long run. While prices rise, Microsoft 365 has given business owners the opportunity to keep things running smoothly even as the workplace shifts.

Empowering your business with a hybrid work environment is still top priority for many business owners. Microsoft is committed to adding value and providing the tools to help your business succeed. 

If you have any questions regarding the upcoming changes, Ascent Data is here to help. Contact us today for more information and for all your Microsoft and IT solutions.