Microsoft price increases — the detail behind a headline

Photo by Nejc Soklič on Unsplash

In close pursuit of my last blog: Microsoft CSP — the New Commerce Experience — one year on, Microsoft announced a foreign exchange rate alignment to accommodate fluctuations of value against the US Dollar for cloud programme licenses to create greater price harmonisation globally. This is essentially a price increase in certain areas and of varying degrees, dependent on customer location, for new and renewed subscriptions to end user subscriptions (Microsoft 365, Dynamics 365, Power Platform etc) and some Azure consumption motions from 1st April 2023.

Impacted local currencies include:

UK +9%

EU +11%

To break this down into the two key component areas:

Microsoft Azure:

Azure transacted through a Microsoft CSP partner under the current new commerce experience (ie not legacy CSP) which is under a Microsoft Customer Agreement is not affected by the local currency increase.

This is because partners are charged in US Dollars for customers’ Azure consumption which is then converted to the local currency (dependent on customer’s account location) using a monthly variable foreign exchange rate mechanism and the partners invoice their customers accordingly.

Customers transacting directly with Microsoft for consumption through Azure.com, in UK and EU currency locations, will see prices increase on 1st April 2023.

Enterprise Agreement (EA) customers receive price protection up to a baseline price point for the duration of their agreement. Pricing may therefore increase for some EA customers but only up to and not above the baseline price point stated within their agreement.

Azure Commitment Discount (ACD) customers in the UK and EU currency locations will see prices increase, but not above their baseline price protection.

Because ACD is a fixed discount and does not affect the baseline price, customers will continue to receive the discount percentage specified in their contract and will be applied to the current month’s EA list price.

Microsoft end user subscriptions:

For customers purchasing Microsoft end user subscriptions through a Microsoft Cloud Solution Provider (CSP) under the new commerce experience (the Microsoft Customer Agreement) are price-protected for the duration of each subscription, whether this is monthly, annually or tri-annually (where / when applicable).

Therefore, any monthly-committed subscriptions will increase in price from 1st April 2023.

Any new product subscriptions (monthly, annual or tri-annual terms) added or renewed after 1st April 2023 will be charged at a higher (per subscription) price when compared to today’s prices.

Summary:

Again, the importance of practising effective software asset management is called to the fore — knowing what you have, who has it, why they have it and how long do they need it for — are key questions that should be answered in relation to an organisation’s licensing estate.

Ensuring current and usable information is obtained and routinely updated, verified and used to maintain an effective and optimal asset management position helps prevent unnecessary expenditure and provides greater return on investment for the assets that are needed.

The Version 1 Software Asset Management team have depth and breadth of experience and expertise with specific regard to Microsoft CSP, and helping customers overcome the complexities and challenges surrounding effective license management — we really can help.

As a starting point, we can help customers mitigate against some, if not all, the price harmonisation increases to Microsoft CSP subscription costs for up to a full 12 months by acting before 1st April 2023.

We have a deep understanding of the operational processes and methodology for most-effectively managing Microsoft CSP subscriptions and can help customers at least minimise the impact the price increases may have on their total cost of subscription ownership.

Call to action:

The call to action, to follow-on from my previous post: Microsoft CSP — the New Commerce Experience — one year on — is for customers and non-customers alike to speak to the Version 1 SAM team so we can, on a case-by-case basis, help towards alleviating some, or all, cost increases from 1st April 2023 for up to 12 months and help ensure an optimal license position is obtained.

As a Microsoft Direct (Tier-1) CSP partner, Azure Expert Microsoft Service Provider (MSP) and Microsoft licensing specialists, we can advise and guide you on the appropriateness of CSP for your business and offer the full CSP lifecycle for optimal cost management and license compliance.

Contact us if you have any questions or go to our website for more information.

About the author:
William Nelson is a Sales Specialist with the License Management Practice at Version 1.