Microsoft 365 and Office 365 Price Increases: Justified By Innovation?

Microsoft is raising prices for various Microsoft 365 Business and Office 365 cloud services. Amid the price hikes, Microsoft in a blog outlined its business case — focusing on innovation & platform expansion — for the new fees.

Microsoft says the following commercial products will shift to these monthly per-user prices starting on March 1, 2022:

  • Microsoft 365 Business Basic (from $5 to $6 per user);
  • Microsoft 365 Business Premium (from $20 to $22);
  • Office 365 E1 (from $8 to $10);
  • Office 365 E3 (from $20 to $23);
  • Office 365 E5 (from $35 to $38)l; and
  • Microsoft 365 E3 (from $32 to $36).

These increases will apply globally with local market adjustments for certain regions, the company said. There are no price changes for education and consumer products at this time, Microsoft added.

Microsoft 365 and Office 365 Price Increases: Big Tech’s Dominance In Focus

The price hikes surface as Microsoft appears to be gaining a firm grip on the SaaS application productivity market. No doubt, Google Workspace (formerly Google Docs) is giving chase. But Microsoft 365 and Office 365 feel like the “dominant” SaaS productivity application platforms across the global IT channel. (We’ll dig up and publish some market share stats soon.)

Among the potential dangers facing Microsoft: Attracting regulatory scrutiny from the U.S. federal government and additional anti-trust agencies worldwide. Indeed, Big Tech anti-trust concerns — mostly involving Amazon, Apple, Google and Facebook … and sometimes Microsoft — continue to swirl worldwide.

Microsoft 365 Product Additions, SaaS Innovations

Still, Microsoft made a strong business case for the price increases. The company noted:

  • Since introducing Microsoft 365, the company has added 24 apps to the suites—Microsoft Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard.
  • The company has released over 1,400 new features and capabilities to address (1) collaboration and communication, (2) security and compliance, and (3) AI and automation, the company said.

 

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6 Comments

Comments

    Jim Lippie:

    Joe, your statement about Microsoft taking a dominant position in the SaaS market at least with MSPs is supported by our SaaS Alerts platform metrics. Data from January to June demonstrates that only 2% of SaaS Alerts MSP partners are monitoring Google Workspace vs 93% monitoring MSFT 365. But, MSFT throws off almost double the amount of security alerts on a per user basis.

    Joe Panettieri:

    Jim: Thanks for the data points. Any thoughts on why Microsoft 365 throws off nearly 2X the alerts on a per-use basis? Is it because the Microsoft 365 suite has become so expansive — or do you have more sensors per 365 user compared to Workspace user?
    -jp

    Terry Rossi:

    As I understand it there are other parts to this story as well. the new program encourages users to lean into the annual SKU’s instead of the monthly subscription to avoid the bigger 20% price hikes and the billing headaches for Microsoft.
    But moving to the annual sku removes the ability to do prorated decreases and suspensions, a big reason for moving to CSP subscriptions in the first place. Clients like the ability to scale down if the need arises, now they will need to make a choice between lower subscription costs and flexibility in subscription changes.

    Joe Panettieri:

    Terri: Thank you for the additional context. Great points. Sort of ironic how SaaS was supposed to deliver freedom, yet the license agreements can make scale up/scale down steps with end-customers quite difficult for MSPs.
    -jp

    Jim Lippie:

    Joe, thanks for the follow up question regarding the nearly 2x number of alerts coming from 365 versus Google Workspace. Without getting into the architecture of each product, in my opinion I think it comes down to the fact that 365 provides a significantly wider attack vector at this point. With 365 approaching 300m paid users versus the 6-7m users on Workspace, the bad guys are looking at a total addressable market (TAM), just like a legitimate company would and they can make more money attacking 365 users right now. So, 365 is consistently getting more thrown at it, which I believe accounts for the increased number of alerts coming from 365 on a per event basis. But, SaaS Alerts is constantly tracking all of this data and will aggregate and share our findings twice per year via our SASI Report.

    Joe Panettieri:

    Jim: Thanks for crunching the numbers and providing the context.
    -jp

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