The Microsoft Price Increase Problem

The Microsoft Price Increase Problem

The Microsoft price increase problem
Microsoft may be the software juggernaut of the IT world, but their prices are rapidly rising alongside their success. Earlier this year, Microsoft announced a 9-15% price increase for all Cloud services in the UK and Europe.

Just one month ago, they announced a “consistent pricing” change that would increase costs for three different countries. Over the next four years, they are forecasted to increase the cost of their Unified Support services by 95%. Where should you, as the consumer, draw the line?

International Price Impact

On April 1, 2023, the new Microsoft Cloud pricing increase went into effect. The price increase affected all Microsoft cloud services, including popular options like Azure, Dynamics 365, and Microsoft 365.

The adjusted rates lay between 9-15% as seen below.

Currency Microsoft Price Increase
Swedish Krona 15%
Norwegian Krone 11%
Danish Krone 11%
Euro 11%
British Pound 9%

These price adjustments hit everyone, from commercial and governmental to educational. While companies already in running agreements were spared from this drastic increase, many weren’t so lucky. Even those that avoided the upcharge now will have to suffer through it in the future upon renewal. Because there is a maximum semi-annual price adjustment, they could update these prices again later in the year.
On September 1, 2023, that change came in the form of a “consistency adjustment” to their prices for certain countries. While one was lowered, the rest were increased to “account for inflation.”

Currency Cloud Change OnPrem Change
Australian Dollar 9% 9%
Canadian Dollar 6% 6%
New Zealand Dollar 7% None
Swiss Franc -9% None

While good for Swiss and, to an extent, New Zealand users, everyone else suffers from “inflation.” This has been going on for years now, but the changes have been gradual, as to not force too many clients away. However, as each year passes, new cost increases surface with more on the way. The current state of Microsoft Unified Support is expensive and unfulfilling.

Price Increase Impacts

Back in March 2021, Microsoft changed their licensing model to the New Commerce Experience (NCE). The NCE introduced three different commitment terms: monthly, annually, and triennially.

The same rule of maintaining a subscription’s price applied like any other contract but could now be adjusted based on the terms. If you had a monthly contract, they could change the subscription price monthly. While this would almost certainly cause backlash, the option is there should they feel the need to “correct” their prices again in the future.

The changes made on April 1, 2023, have a resonant effect on Azure pricing and Microsoft end-user pricing. European customers making direct transactions with Microsoft for Azure consumption had their prices increased, while those buying through a Microsoft Cloud Solution Provider (CSP) under the NCE were spared. This is because Microsoft CSP partners are charged in US Dollars for their customers’ Azure consumption and the cost is converted to the local currency using a monthly variable exchange rate.

As for end-user pricing, customers who purchased annual end-user subscriptions through a Microsoft CSP under the NCE were price-protected for the duration of their subscription. Once that ends, they are at the mercy of the market.

Is There a Silver Lining?

For the April price changes, some customers were able to avoid the price hike by adding new subscriptions before the change, giving them an extra year before the increase affected them. Others could avoid these prices by purchasing Azure plans through an NCE program.

Extending subscriptions to encompass the next 12 months gave many companies a window to collect themselves and forecast their budgets around this increase. When the price increase in September hit again, it became clear that pricing shifts wouldn’t slow down anytime soon.

Microsoft customers in Europe that were impacted by price adjustments on cloud products saw their Azure spend grow, leading to an increase in Unified Support costs over the next few months. The support cost increase is set to grow by nearly 100% in the next few years, and it isn’t solely due to the influx of support needs. The Azure rates were the crux of the issue and are only the tip of the iceberg.

As prices continue to rise in the future and the quality of Premier/Unified Support continues to decrease, third-party options are becoming increasingly more effective at getting the support you deserve for prices that make sense. US Cloud provides 30-50% savings on Microsoft Premier/Unified Support in the first year alone, with additional cost avoidance opportunities over the course of the EA lifecycle. We have fully domestic engineers and financially-backed SLAs that ensure a 15-minute response time to any ticket submitted. Stop letting Microsoft dictate the price of your support because it will only end in disappointment. Take charge of your Microsoft support with US Cloud.

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