Octobits Blog – This year has brought about a few changes for a lot of Microsoft 365 users. One notable change is the Microsoft 365 price increase 2024, which has made waves in both the business and consumer markets.
This price change comes at a time when Microsoft is making big changes to how it operates around the world.
That’s why we need to take a look at our IT budgets now, as the price hikes are affecting lots of Microsoft products, especially those related to Team integration.
Details of the 2024 Price Increase
First of all, these price adjustments are not just minor changes here and there.
They’re part of a bigger plan to make Microsoft’s product range more efficient and in line with what customers want globally.
One of the most significant changes is the removal of Microsoft Teams from the core Office 365 and Microsoft 365 suites for new subscribers in regions outside the EEA and Switzerland.
This means that businesses and enterprises subscribing to Office 365 E1, E3, E5, or Microsoft 365 E3 and E5 won’t automatically get Teams as part of their package.
Instead, these organisations will have to buy Teams as a separate product if they want to keep using it, which adds a lot of cost to the equation.
Office 365 E3 (without Teams) is now $20.75 per user per month, which is a big drop from what it used to cost.
The downside is that you lose access to Teams unless you buy it separately.
Microsoft 365 E5 (without Teams) is now $54.75 per user per month. This premium suite also follows the new structure, where Teams is no longer included. This could end up costing more in total if Teams is added back in.
If your business still needs Teams, Microsoft offers it as a separate SKU at $5.25 per user per month.
This pricing model is a big deal for companies who use Teams a lot for communication and collaboration because it adds to their overall IT costs.
The Press Release & Webcast Earnings Release FY24 Q2 further emphasises the financial implications of these changes.
The report says Microsoft’s revenue from cloud services, including Office 365, has grown a lot, with Office 365 Commercial revenue up by 17% compared to last year.
This shows how important these products are to Microsoft’s overall business strategy, which is why it makes sense to adjust the pricing to match the value of these services.
For insight on how to balance price and the output, please refer to “Microsoft 365 Premium Price: Features, Details, & Comparison.”
Reasons for the Microsoft 365 Price Increase 2024
The price increase for Microsoft 365 and related services in 2024 is down to a number of different factors, all of which are part of Microsoft’s wider plans.
If we take a look at Microsoft’s financial documents, particularly the Press Release & Webcast Earnings Release FY24 Q2 and FY24 Q4 reports, we can see these reasons in more detail.
The main reason for the price increase is Microsoft’s big investment in AI and cloud infrastructure.
Microsoft’s CEO, Satya Nadella, has often said how important it is for the company to use AI in all areas of its technology.
This includes making products like Microsoft 365 more intelligent with AI-driven features like Copilot, which is designed to help users get more done and make their workflows more efficient.
It costs a lot to develop and deploy these advanced AI tools. There’s a lot of investment in research and development (R&D), as well as in the cloud infrastructure that’s needed to support these innovations.
On top of it, Microsoft’s purchase of Activision Blizzard in 2023, as shown in the Q2 FY24 earnings report, has also led to the need for a price change.
The purchase, worth almost $69 billion, was a smart move to strengthen Microsoft’s position in the gaming industry, especially through the Xbox platform.
This acquisition not only expanded Microsoft’s gaming portfolio but also increased its overall operating costs and R&D commitments.
So, to keep making a profit while still innovating in both gaming and productivity software, Microsoft has had to put prices up across its product lines.
We can also see Microsoft expanding and scaling up its cloud services, especially Azure.
The Q4 FY24 earnings release shows there’s been a 24% year-on-year increase in Microsoft Cloud revenue, which is proof that companies all over the world are relying more on cloud-based solutions in current years.
Azure is a key part of Microsoft’s cloud strategy, so it needs to keep investing in data centres, cybersecurity, and global infrastructure to keep up with the demand for scalable, secure, and efficient cloud services.
This ongoing expansion is important for staying ahead of the competition, but it also adds to the company’s operational costs.
And Microsoft’s decision to realign its global pricing structure is a big reason for the 2024 price adjustments.
The idea behind this realignment is to make things more consistent across different regions, particularly outside the European Economic Area (EEA) and Switzerland.
By making its pricing and product offerings the same across the globe, Microsoft is trying to make its licensing models simpler and reduce the complexity of product management.
Impact on Businesses and Consumers
These Microsoft 365 price increase 2024 are going to have different effects in different sectors.
Businesses – especially those heavily reliant on Microsoft’s ecosystem – will need to think about their subscription models and look for more cost-effective alternatives.
The changes to licensing terms, especially the move to separate Teams from the main Office 365 and Microsoft 365 suites, are making IT budgeting more complicated.
For big companies, this could mean a lot more money spent, especially if they decide to keep using Teams on its own.
On the consumer side, the impact is a bit more complex. The price rise might make people think again about whether Microsoft 365 is right for them, especially for smaller businesses and individual users.
However, for those who’ve already got a lot out of Microsoft’s ecosystem, the benefits of keeping access to the latest features and having everything work together across platforms might be worth the cost.
In the end, this price change, while tough for some, shows how Microsoft is dedicated to innovation and its long-term plans.
As the company keeps on improving its products, the higher prices are seen as investments that will help the Microsoft 365 ecosystem to keep growing and changing.
For the lowdown on the price of the email product, kindly read “Microsoft 365 Email Essentials Price: Details, Features, & Comparison With Other Plans“
How to Deal With the Microsoft 365 Price Hike
With the 2024 price increase for Microsoft 365 on the horizon, using Octobits as part of your IT strategy can be a great move. How can Octobits help your business?
Octobits gives you a centralized dashboard where you can manage all your IT services, including Microsoft 365, in one place.
This makes things easier to manage overall and lets you keep a closer eye on your costs.
By keeping an eye on how the software is being used and making licence management automatic, you can spot any licences you don’t need or aren’t being used.
Another great thing about Octobits is how well it works with all the big IT vendors, including Microsoft 365, Azure, AWS, and more.
This is a real bonus for businesses who use a lot of Microsoft products.
We’re also really focused on keeping your data safe. Octobits has got some great security features, including access control and consolidated alerts.
That way, your IT departments can stay on top of things and deal with potential issues before they happen.
At the end of the day, by using Octobits, you can make sure you’re spending your money in the right way, to meet your operational needs and achieve your strategic goals.
And for another good news; Octobits is free for you until December 2024. Yes, we’d love for you to explore every detail of our license management platform and see what you think.
In Closing
The price increase for Microsoft 365 has had a noticeable impact on businesses and consumers alike.
This price hike offers more options but also presents new challenges. As technology keeps on developing, we’ll see more clearly what impact this pricing strategy is having.
If you’re looking for a way to manage these changes effectively, you might need to try Octobits.
This free SaaS management platform can help you handle the Microsoft 365 price increase 2024 and any future adjustments.
