Microsoft 365, Office 365 price hikes delayed

Customers staring down the barrel of Microsoft's price increases for Microsoft 365 and Office 365 suites from the start of this month have been given a reprieve but only until 15 March.

The hikes were confirmed last August by corporate VP for Microsoft 365 Jared Spataro and were due to be introduced from the start of this month.

Instead, at the eleventh hour Microsoft announced a special set of temporary discounts for cloud service providers that sells its wares.

"This temporary offset of the March 1 price increases will be in effect in CSP new commerce until 12 a.m. UTC on March 15, 2022, and is intended to allow partners to clear the backlog of orders for these SKUs due to high demand in advance of the March 1 price increases," Microsoft said.

"The Modern Work pricing changes were activated on time on March 1, and the temporary offset is made possible through additional discounts via new commerce promotions. These discounts are in addition to the current promotional discounts on annual and monthly term commercial seat-based offers in CSP new commerce that have been in effect since January 10, 2022," the company added.

The new pricing includes an increase from $5 to $6 per user for Microsoft 365 Business Basic to a jump from $32 to $36 per user for Microsoft 365 E3.

For Office 365 E1 customers, prices will rise from $8 to $10, with the E3 and E5 flavours bouncing from $20 and $35 respectively to $23 and $38. The price increase do not impact consumers and education customers.

The price change does not apply to consumer or education products.

Last August, Spataro tried to justify the price hikes by pointing to the extra features customers had been lavished with. He pointed to 24 apps including Power Apps, Planner, OneDrive and Yammer.

It was, the company said, "the first substantive pricing update since we launched Office 365 a decade ago" and "reflects the increased value we have delivered to our customers over the past 10 years."

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Not mentioned by Microsoft was the need to keep those dollars rolling in and ramping up. Microsoft's revenues grew by a fifth – to $51.7bn – in its last reported quarter, fiscal Q2 2022 ended 31 December 2021, and operating income went up 24 per cent to $22.2bn from $17.89bn.

Although server products and cloud services have been the main engine for Microsoft of late, the Productivity and Business Processes segment that houses Office 365 (up 22 per cent to $15bn last quarter) has some legwork to do to keep numbers on that incline, especially as Surface keeps limping along (8 per cent increase in Q2 2022, 17 per cent decrease in Q1 2022). ®