Microsoft last week announced a price increase for Microsoft 365 services that will primarily impact commercial users. This is a rare move for the corporate software giant. As corporate vice president for Microsoft 365 Jared Spatoro details in a blog post, it's the "first substantive pricing update" since Microsoft 365 launched in 2011.
But why now, just as many businesses are recovering from the economic fallout of the pandemic? Spatoro writes that it's due to the "increased value" that Microsoft 365 has delivered to its customers. Microsoft has added a number of new apps to its business offerings that many companies rely on regularly, including Microsoft Teams, Outlook, OneDrive, and Whiteboard.
It's no surprise that the hike will greatly benefit the software giant's bottom line. Microsoft will net an estimated $5 billion in annual revenue due to the price hike for Office 365, estimates security firm Wedbush.
The price hike goes into effect in March 2022, and adds up to an increase of at least 10 percent and as much as 25 percent per user. Here's a breakdown of the new monthly pricing below, which is per user:
Microsoft 365 Business Basic (from $5 to $6)
Microsoft 365 Business Premium (from $20 to $22)
Office 365 E1 (from $8 to $10)
Office 365 E3 (from $20 to $23)
Office 365 E5 (from $35 to $38)
Microsoft 365 E3 (from $32 to $36)
A more expensive Office 365 will especially impact small businesses, which don't benefit from the bulk pricing plans that bigger corporations can purchase. The new pricing tiers will apply to businesses of up to 300 employees.
If you don't want to pay more for Microsoft Office next year, you have a few options to cut costs:
Purchase a standalone version of the programs you use the most.
Does your business only need Microsoft for Outlook? Or do only a few of your team members need access to Excel and PowerPoint? In some cases, your business could save money over time by purchasing a standalone version of a Microsoft app. For example, a standalone version of Microsoft Outlook is $139.99 for a lifetime, and will only cover one PC or one Mac. But you'll have to pay an additional fee for any upgrades, and you'll only be able to access the program on the original device on which it's installed.
Meanwhile, a subscription to Microsoft 365 Business Basic will only set you back $72 per year per employee, and includes Outlook, Word, Microsoft Teams, Excel, OneDrive, and more. It also includes free updates and access for up to six people per account.
But purchasing standalone versions will really only benefit you if you only use one or two of the core apps. You'll also have to pay for upgrades and deal with compatibility issues as time progresses. Given that each Microsoft 365 Business Basic account allows you to share access with up to six people, it may be cheaper to get subscriptions for a few employees and have them share access to others in their team who need it.
Use the free version of Microsoft Teams.
If your business only uses Microsoft for video calls and chats, it may be wise to consider using the free version of Microsoft Teams. The free version allows for video calls of up to 60 minutes, and can host up to 100 participants. You can make an unlimited number of audio and video calls. Even better is that usage of Team's workplace chat tool is unlimited as well. However, the free version of Teams only includes 10 GB of shared cloud storage, which may pose a problem for some businesses.
Try G Suite or free cloud-based office software tools.
If your company uses one of the higher tier Microsoft 365 plans, (like Office 365 E3 or E5), switching to one of the higher-price Google Workspace plans could save you a substantial amount of money. Google's Business Plus plan is $18 per user per month, while Office 365 E3 is $23 per month. But at $6 per user, the lowest tier of Google Workspace is the same price as the lowest tier of Office 365.
Your business could also try any number of free office applications that may suit your needs. There's Apache OpenOffice, which includes six free applications: Writer (word processor), Calc (spreadsheets), Impress (presentations), Draw (diagrams and illustrations), Base (databases), and Math (math equations). Libre Office, another free suite of office tools, includes similar applications.
Zoho, which offers everything from email to spreadsheets to word processing, is free for up to three users, but the premium plan is only $3 per user, making it significantly cheaper than offerings from Microsoft and Google.