Microsoft Support Costs Rise Again in Q2 2024.

As of April 1st, Microsoft has sent out another price increase for their software in services, support included. This will hit Asian markets the hardest, with Japanese customers seeing an increase of 20% for both cloud and on-prem wares. Other countries see anywhere between 7-12% adjustments, with only Brazil getting a discount adjustment at -7%. This comes on the heels of Microsoft announcing it will be making local currency pricing assessments twice a year to ensure everything is priced with USD fluctuations considered. What awaits businesses moving forward?

The recent price increases for all Microsoft products and services in Japan are driven by a few key factors:

1. Currency Fluctuations: Microsoft Japan has increased prices for its products due to significant currency fluctuations. To maintain consistency with the pricing in US dollars, adjustments were necessary. This change impacts the prices for both on-premises software, which has risen by 20%, and online services, which have increased by 20%.

2. Global Pricing Policy: Microsoft is aligning its prices globally to match the US dollar charges, following a practice of making such adjustments twice a year. This move is to ensure consistency and predictability in pricing across different regions.

3. Specific Product Increases: The Xbox Series X and Series S consoles, for instance, saw a price hike of 5,000 yen each. This decision was based on a thorough evaluation of the market conditions in Japan and aims to maintain price consistency across different regions.

Per Microsoft, these adjustments are part of a broader strategy to align local prices with global standards, which Microsoft revisits periodically based on market conditions and currency valuations. This helps ensure that the pricing of Microsoft’s products remains competitive and reasonable across different markets.

While they say that they are making adjustments twice a year, those changes don’t roll out at the same time. As you can see on the above graph, pricing adjustments are confirmed by February 1st for most countries that will see a change, but some countries like Japan and China see those go into effect later. You can expect to see something similar this fall when Microsoft reassesses its prices and how they stack up to inflation.

Support costs are rising each year, and this isn’t a trend that is going to stop anytime soon. With all of the new products that Microsoft are introducing to the market, such as Copilot, there will be more support tickets coming in, which means higher costs due to larger cloud and on-prem use cases. When it comes to metrics, Microsoft tracks cloud consumption the closest. Notice that cloud prices see an adjustment across the board, while on-prem are situational.

Microsoft Premier/Unified support costs are directly related to your Microsoft Cloud spend. As your Cloud service consumption rises, so do your support costs. On a typical Unified Support Performance Plan of $175k minimum, you will a portion of your charged spend will be Servers and Cloud at 12% and Users at 10%. While the data above can imply that cloud consumption is on the rise across the world, which is likely, this also sets the precedent that prices will only increase like they have for the past few years.

In 2022, it was forecasted that Microsoft Unified Support prices would increase by 95% by 2027. Now two years later, we’ve seen a roughly 20% price increase each year, with a projected nearly 30% by the end of 2024. We are fast tracking to exceed the estimates by a decent margin if Microsoft continues at its current pace, and these estimates don’t account for the global price adjustments that happen twice a year.

These price increases aren’t isolated either. Unified Support renewal prices are documented to rise faster than inflation, especially with more companies being grandfathered in from their Premier support account to a Unified account. Many won’t have the discounts that Premier provided, having used most to make the transition as painless as possible. Without these discounts, the full weight of Microsoft prices is left to you to handle.

If you remember, around April 1st last year, international prices were adjusted to account for inflation and impacted multiple countries around the world. Sweden and Norway saw a price increase of 15% and 11% respectively. Now one year later they see another price hike of 10% and 12%. These price adjustments affect every industry equally, but its slowly rising above a sustainable rate for some businesses.

Microsoft end-user pricing is in the middle of a downward spiral. Changes made on April 1st, 2023, have had lasting effects on Azure and support pricing for end-users. If a business overseas deals with Microsoft directly, their prices increase at the whim of Microsoft, while those buying through a CSP are spared. This is because CSP partners are charged in US Dollars for their customers’ Azure consumption and support use, so the cost is converted to the local currency using a monthly variable exchange rate.

Any subscriptions through a Microsoft CSP under the NCE were price protected initially, but once that price-protection duration ends, they are at the mercy of the market. These protections are running out for many companies, leaving them to deal with Microsoft’s price problem alone or seek out alternatives to help them save on support costs.

At the time of this blog publishing, the Dynamics 365 price increase has been confirmed and the Microsoft 365 price increase announcement is imminent for Q4 2024.

The anticipated price increase for Microsoft 365 in 2024 can be attributed to several factors that reflect a strategic evolution and enhancement of the service offerings. Microsoft highlights that this is the first significant pricing adjustment since the launch of Office 365, intended to match the considerable value added through continuous innovation over the past decade.

These enhancements include the introduction of new applications and over 1,400 new features focused on improving communication, collaboration, security, compliance, AI, and automation capabilities. The additions and upgrades are designed to better meet the complex and changing needs of users, particularly in a hybrid work environment.

This isn’t the first or last time Microsoft will increase its prices, meaning that either your company will have to grow fast enough to meet the financial demands of Microsoft support, or you will have to sign longer contracts to lower the yearly cost. Third-party options are gaining popularity since they provide similar services to Microsoft, but at a lower price point. Most third-party options only provide specific support services to their clients, such as only consultation, or only Azure support. However, there is a third-party option that can save you time, stress, and money while covering all of your Microsoft support needs.

US Cloud is the only third-party Microsoft support alternative in the world that offers fully domestic engineers, 15-minute SLA guaranteed response times to tickets of all severities, and 50% or more savings on your annual support spend. Our solutions are twice as fast as Microsoft at a fraction of the cost. We support businesses across the world with 24/7 support and help you avoid additional costs over the course of your EA lifecycle with proactive services. Not only are we a proactive services provider, but we offer the entire support package for your company. You will be getting the same or better Unified support from our team of industry experts as you would with Microsoft, while guaranteeing that all of your support engineers are stateside.

Don’t let Microsoft dictate the price of your growth. Your business could put those extra funds to good use in other tech initiatives across the company. Take charge of your Microsoft support spend today with US Cloud.