Microsoft Offers Details On Coming Office 365 Price Hike For Enterprise Customers

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Microsoft is preparing to raise its Office 365 pricing for enterprise volume licensing customers, and some will be paying around 15 percent more for the suite of cloud-based apps.

Starting in August, Microsoft will raise Office 365 prices for its Enterprise Agreement customers that don't have an active Software Assurance (SA) plan. SA is a 3-year subscription that lets organizations upgrade to the latest versions of on premise software released during the period.

The new Office 365 pricing is included in Microsoft's August price list, which the Redmond, Wash.-based vendor published Tuesday.

Lars Johnson, director of Microsoft Office licensing, told CRN in a recent interview that 15 percent is a "general range" for the Office 365 price increase, which will only apply to EA customers without SA.

[Related: After Office 365 Cloud Outages, Partners Calling For Better Communication From Microsoft ]

Johnson said the "vast majority" of Microsoft customers won't be affected by the Office 365 price increase, which he described as a way for Microsoft to "reward" SA customers for their previous investments in on premise software. 

"We have many customers coming from an SA world. They invested in perpetual licenses to get into that world," Johnson said.

Customers that buy Office 365 direct from Microsoft or through its Open licensing program won't see any pricing changes. Existing Office 365 customers won't have to pay the higher rates when they renew their subscriptions, according to a Microsoft spokesperson.

With the change, Microsoft is moving to ensure that its Office 365 pricing for non-SA customers is aligned across EA, Open and its direct web site, the spokesperson said in an email.

While Microsoft's non-SA customers will be paying more for Office 365, those with active SA subscriptions will be getting even bigger discounts, according to Johnson.

Microsoft last year launched a promotion in which customers that make the transition from on premise Office to Office 365 ProPlus -- the version that installs locally but is sold through a monthly subscription -- receive discounted pricing.

Starting in August, Microsoft will expand this discount to its Office 365 E1, E3 and E4 subscriptions, Johnson said. These plans are priced at $8, $20 and $22 per user per month respectively.

It's not clear how much of a price break Microsoft's SA customers will be getting, however. Microsoft didn't respond to requests for clarification.

Paul DeGroot, principal analyst at Pica Communications, a Camano Island, Wash.-based Microsoft licensing consultancy, sees the SA discounts as a sales tactic.

"Since a lot of agreements come up for renewal in June, if customers renew SA on Office, Microsoft will give them relief from the price increase," DeGroot said.

Subtracting the cost of SA when customers purchase cloud services is an approach Microsoft has used since launching Office 365's predecessor -- known as Business Productivity Online Services, or BPOS -- in 2008, DeGroot said.

NEXT: Why Microsoft Is Raising Office 365 Pricing

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