How will Microsoft’s changes to their subscription model affect me?
Microsoft has created the New Commerce Experience which is a change to their subscription model. From March 2022 any Microsoft 365 customer (including Office 365, Windows Enterprise and EMS), will need to consider how this will impact on their current Microsoft agreements and how this will affect overall cost.
This means unavoidable change for Redcentric and for their customers, who have until now been protected against price increases on the anniversaries of their Microsoft agreements by a model which has allowed us to assist customers with greater flexibility and protect them from price increases within term.
However, from March 2022, for some customers, wishing to retain much the same flexibility around licensing, Microsoft rate card prices will now mean price increases of 20%. But it’s not all as gloomy as it would first appear, because customers do have other options and they will be able to protect themselves against these price increases subject to a commitment of either 12 or 36 months.
What is the Microsoft 365 New Commerce Experience (NCE)
It’s a more fixed subscription model where the customer loses some flexibility over the volume of their licences, but you can maintain current prices based on a longer commitment of either 12 or 36 months.
The good news
If you’re opting for a 12- or 36-month commitment, prices under NCE will remain broadly the same as the current prices.
The not so good news
However, if you want the flexibility to increase or decrease licenses monthly and don’t want to commit to a longer term, customers will see their prices rise by 20% compared to the current monthly price. That’s a hefty price increase you need to consider.
What you need to know about the Microsoft 365 New Commerce Experience (NCE)
At first sight, it comes down to a choice between retaining flexibility to increase and decrease your licences on a monthly basis or making a commitment to a minimum number of licences.
If you choose either a 12- or 36-month commitment, you will lose the flexibility to reduce subscriptions within the committed term. However, monthly subscriptions can be mixed with annual subscriptions to the same products.
A minimum commitment of a month will be the most expensive rate at which to purchase licences, but if you need to have the flexibility to reduce licences, say at seasonal lows or if your business is permanently reducing staff, then this may still be the most cost-effective option for you. And you still have some options which will reduce your overall cost. We’ll explain these below.
What are my options for Microsoft 365 licensing?
Option 1 – Retain the flexibility to reduce subscriptions within the term. You’ll pay monthly in arrears at the highest rate and taken in isolation, overall, this is the most expensive option. But you’ll still be able to reduce your licence costs by varying the number of licences to allow for seasonal fluctuations for example.
| Term | Price fixed for | Billing frequency | Example monthly cost | Example annual cost |
| 1 month | 12 months | Monthly in arrears | £15 | £180 |
| 12 months | 12 months | Monthly in arrears | £12.50 | £150 |
| 36 months | 36 months | Monthly in arrears | £12.50 (TBC) | £150 (TBC) |
Option 2 – Under NCE, commit to a 12- or 36-month term, pay monthly in arrears, and get billed annually or monthly, but the number of subscriptions cannot be reduced within the term.
| Term | Price fixed for | Billing frequency | Example monthly cost | Example annual cost |
| 1 month | 12 months | Monthly in arrears | £15 | £180 |
| 12 months | 12 months | Monthly in arrears | £12.50 | £150 |
| 36 months | 36 months | Monthly in arrears | £12.50 (TBC) | £150 (TBC) |
How to get best value from the Microsoft 365 licensing changes
Flexibility is important, as is cost effectiveness, so Redcentric recommends that customers use a mix of 1-month and 12-month commitment license subscriptions to meet their needs. For example, we’d suggest an 80/20 split which might be varied based on to what extent seasonality or peak trading periods affect an individual customer.
In this way, a customer will commit around 80% of their licence subscriptions at the lower price and retain 20% of licence subscriptions as a flexible number.
The customer can increase and decrease the non-committed levels without penalty as business needs change. As the business grows, the committed quantities can be increased to remain as cost-effective as possible.
Getting instant access and control and a breakdown of Microsoft 365 billing
We’ll be giving all our customers access to our self-service portal to facilitate greater control and access to their Microsoft subscriptions. There’s a number of benefits to customers. You’ll be able to see a full rate card for all the products we support. You’ll be able to increase and decrease subscription quantities, get a breakdown of your Microsoft subscriptions billing, and add new products and product add-ons based on the rate card.
What does this mean for you?
We pride ourselves on being a ‘trusted partner’. We’re here to help and guide you and advise you based on your unique requirements. We’ll be contacting you to help you to manage this transition and offer our Microsoft expertise to help you to plan ahead.
