Microsoft changes pricing and discounting policies for today’s cloud-first world

 In Microsoft, Software, Volume Licensing

Microsoft kicked off its Fiscal Year 2019 with a focus on helping customers drive digital transformation while at the same time shifting to a new “modern commerce” strategy designed to provide more consistency and better reflect the actual value and costs of products and services.

To achieve this vision, Microsoft recently announced a set of programmatic and product-centric pricing updates that will go into effect on October 1, 2018. Here’s a summary of the changes and how they may impact your organization.

Programmatic pricing updates

October’s pricing change will establish a single, consistent starting price across all programs aligned to web direct for online services. Microsoft will remove the programmatic volume discounts (Level A) in Enterprise Agreement, Enterprise Agreement Subscription, MPSA, Select/Select Plus, and Open Programs. In addition, it’ll align government pricing for on-premises and online services to the lowest commercial price in EA/EAS, MPSA, Select Plus, and Open Programs.

Product pricing updates

Microsoft will also roll out a number of product-specific pricing increases. These include:

  • Office 2019 commercial prices will increase 10 percent over current on-premises pricing. These increases will be applicable to on-premises Office, Visio, Project, Enterprise/Core CAL (Standalone Component CALs), and Productivity Server (i.e., SharePoint Server) licenses.
  • Windows Server Standard edition prices will increase 10 percent over current pricing.
  • Windows Remote Desktop Services Device CAL and External Connector pricing will increase 30 percent over current pricing.
  • Windows 10 Enterprise will experience a name change as well as a pricing adjustment:
    • Windows 10 E3 will refer only to Windows 10 Enterprise E3 per User – No pricing adjustment.
    • Windows 10 Enterprise E3 per Device will become Windows 10 Enterprise – Pricing will increase to match the current pricing for Windows 10 E3 (per user).
    • Windows 10 Enterprise E5 per Device will be discontinued.

Determining who will be affected

Generally speaking, the updates will have the largest and most immediate impact on small and midsize commercial and government customers. Specifically, renewing level A commercial customers can expect a 2-4 percent increase, and government EA customers can expect a 6 percent increase, respectively. Both will also be subject to any applicable product-specific increases. In addition, government MPSA and Open Program customers can expect a 3-18 percent increase for online services, plus any applicable product specific increases.

The extent to which individual organizations will be impacted by these updates will depend on a wide range of factors – seat count, expiration date, deployment strategy, etc. And again, the new pricing doesn’t take effect until Oct. 1, 2018. But make no mistake, every organization should be evaluating how these changes may impact the price you’ll pay for your Microsoft investment.

We expect Microsoft will introduce additional changes to adapt to a cloud-first world and help customers adopt cloud technologies at a faster pace. Reach out to your SHI Account Executive to schedule a meeting to discuss how the changes will impact your organization moving forward.

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Showing 4 comments
  • Britt Adams
    Reply

    Where did you get the 30% increase for RDS from?

    • Kyle Timm
      Reply

      We do not have insight into how Microsoft decided on the specific increase percentages for specific products. But, the information contained in this blog was gathered through the details provided by Microsoft in the Licensing FAQ posted on the Modern Commerce Licensing site. The logic stated in this document is that this increase will align the RDS Per Device CAL pricing to the current pricing structure for the RDS Per User CAL.

  • Wesley Day
    Reply

    10% is a huge jump in fees. Most software companies increase pricing by 3 or 5%. Microsoft certainly has enough revenue and market share in the world to provide their customers better pricing. How often will they increase pricing? When will you know what the Government increase is going to be as it just states 3% to 18%?

    • Kyle Timm
      Reply

      Thank you for your comment and question, Wesley. Unfortunately, Microsoft does not provide a definitive roadmap when it comes to potential price increases, and it communicates those changes to the partner community only a few weeks/months prior to their release – similar to the communication rhythm we experienced with this announcement. We currently have access to the October Price List Preview from Microsoft with definitive pricing being released on October 1, 2018. For more information regarding how these price increase will affect specific technologies through Government offerings, please reach out to your SHI Account Executive.

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