Microsoft has recently announced a change in how customers purchase and manage their licences through their Cloud Solution Provider (CSP) Program – if you’re reading this most likely it will be us, Cloudservices.
In January 2022, Microsoft launched New Commerce Experience (NCE). This change will impact the way you purchase Microsoft 365 licences. Microsoft has launched the NCE intending to reduce complexity and provide cost savings for long term commitments, whilst introducing additional features to make CSP a comparable alternative to the longstanding Enterprise Agreement (EA) which is traditionally only been available to large enterprises.
Microsoft’s goal with (NCE) revolves around giving greater choice and flexibility to how and where customers purchase software. Microsoft 365, Dynamics 365, Power Platform and Windows are now available through Microsoft CSP for commercial customers.
In addition to the NCE, there will be a price increase that will take effect from 1st March 2022 for the following licences:
Microsoft is offering a 5% discount for annual Microsoft 365 commitments. The annual discount will be available until the end of March 2022. Committing to your licences before the end of March 2022 will not only allow you to benefit from the discount, but also avoid the price increase.
Customer IT Strategist
While dates may be subject to change, the table below gives an indication of Microsoft’s NCE timeframes for adoption. Here are a couple of key dates you should be aware of:
1st March 2022 – the price increases across Microsoft 365 licences come into place. From March all new and renewing subscriptions will be purchased through NCE.
1st October 2022 – All customers will now have to purchase through NCE.
Microsoft will be introducing monthly subscriptions to run alongside any annual subscription and there are pros and cons for each offer. They will also be launching a 36 month subscription in March 2022 (currently only available for Dynamics 365), allowing you to save on any future cost increase by committing to the coming years. Here is a summary of the three subscriptions available through NCE:
Customers can have the flexibility of renewing licences every month. This is the best use case if they’re unsure of business requirements for a whole year. They can increase or decrease licence numbers each month to suit their unique business needs without the fear of being locked in for 12 months at a time – but the cost of a monthly licence will be 20% more expensive compared to an annual term fee.
Probably the most popular term for SMBs, a full 1-year licence gives an economical edge and flexible billing options of either monthly or full-term upfront payments. Even better – more licences can be added in after the term start date, with their end dates aligned to the original subscription term end date so you’re not trying to remember a staggered line of licence renewal dates.
Currently only available for Dynamics SKUs. This offers big savings for businesses, locking in the subscription purchase price for 36 months – something CFOs are bound to love! You’ll still enjoy the flexible billing options of monthly, annual or full-term upfront payment as well.
Probably the biggest change for customers is the introduction of cancellation fees. For annual commitment subscriptions (and multi-year subs in the future), cancelling any seats during the 12 or 36 month commitment period will incur a cancellation fee. The cancellation fee will be the full cost of the remaining annual/multi-year period, billed in the next monthly billing cycle. Reducing the quantity of a seat count is also considered cancelling and will also attract a cancellation fee. Cancelling a license cannot be reversed.
Legacy CSP subscriptions have always had an annual commitment, however this has only really meant a consistent price over the commitment term. With NCE and the introduction of cancellation fees, the commitment period becomes more important to consider. There is a 72-hour stand-down period during which you may “return” the subscription and receive no penalty. There will, however, be a pro-rated fee for the time the subscription was in place.
From March 1st 2022, Microsoft also announced pricing changes for a number of the Microsoft 365 licence suites. This pricing increase reflects the value of the solutions and the added areas of innovation around communication and collaboration, security and automation.
Microsoft have announced uplift on the RRP price for the following. Note that all prices are in NZD. Final retail pricing is still to be confirmed by Microsoft.
As a Silver Microsoft Partner, we’re here to help you navigate the New Commerce Experience. We want to ensure you’re getting the most from your licences and leverage the licencing discounts available. Sound good? Simply get in touch to speak with one of our experts.