Key takeaways from the New Commerce Experience.

Microsoft announced the first substantial price increase to its licencing programs for over a decade. From 1st March 2022, Microsoft will be incorporating a price increase between 10% and 20% across all licencing programs. License types affected include: –

• Microsoft 365 Business Basic
• Microsoft 365 Business Premium
• Office 365 E1
• Office 365 E3
• Office 365 E5
• Microsoft 365 E3
• No change to education pricing
• New monthly, yearly or multi-term subscriptions
• 20% fee for monthly subscriptions on top of the 10 % – 20% price increase equals 30% –40% increase for some customers**
• Discounted pricing on annual agreements
• Discounted pricing on multiyear agreements
• The cancellation period is 3 days, including the day of purchase*(it used to be 30). This means that if a license is ordered at 11:59 pm, that will count as the first day in the cancellation period.
• Windows 365 SKUs will only be available in the monthly term agreement option but will not incur the 20% premium.

The new licensing options within the New Commerce Experience will be divided into three separate categories:

Monthly Subscription

The number of seats can be increased or decreased each month or terminated at the end of each month allowing users to tailor their licenses to their changing business needs. This will incur a 20% price premium; due to the flexibility it provides. Price increases are not protected and will increase with price changes by Microsoft.

12 Month Subscription

Committed to a 12-month subscription. Cancellation is limited to the first 3 days of the subscription. The number of seats cannot be decreased within the 12-month term but can be increased with pro-rated billing. Price protection from cost increases for the full 12-month term.

36-Month Subscription

Committed to a 36-month subscription. Cancellation is limited to the first 3 days of the subscription. The number of seats cannot be decreased within the 36-month term but can be increased with pro-rated billing. Price protection from cost increases for the full 36-month term.

When will the New Commerce Experience come into play?

Although the New Commerce Experience launches in January 2022, it will not be enforced until 1st March 2022. Any new subscriptions that are added on or after 1st March 2022, can only be transacted through the new model. This also applies to all renewals on or after the 1st March 2022; any existing licenses will continue as normal until their annual renewal.

Can you mix Microsoft subscriptions?

Microsoft subscriptions can be mixed so customers can have both monthly-term and annual/multiyear-term subscriptions.

Everything else you need to know!

Important Deadlines

• January 1, 2022: NCE for Modern Work and Dynamics 365 will reach general availability
• March 1, 2022: All subscriptions for Modern Work and Dynamics will be required to be procured through the NCE Platform.
• October 1, 2022: Incentives & rebates are only available for NCE transactions.
• February 1, 2023:All remaining subscriptions must be moved to the New Commerce platform

Internal Considerations

• We can pay monthly and therefore bill our clients monthly for the 12 or 36-month subscriptions but if the client goes bust we still have to pay
• Anniversary hell as we will have different anniversary dates for customer subscriptions
• Customers that need monthly and annual terms

Recommended Actions

• For month-to-month contracts, get all customers to agree to one-year terms as payments can still be made monthly. Customers will need to align with this price increase and the ultimatum here is locking them into an annual agreement to avoid an additional 20% price increase on top of the 15% that’s coming
• Create separate products in Dattowith descriptions that reflect monthly vs Annual
• Move as many customers subscriptions as possto NCE on the same date
• Document Anniversary dates