How to deal with Microsoft’s yearly price increase
The American tech multinational Microsoft is known to increase their prices on an annual basis. In 2023, Microsoft announced an increase in prices of its business software and cloud services in the adjustments below respectively:
EURO 11% Price increase
DKK, 11% price increase
NOK 11% price increase
GBP 9% price increase
SEK 15% price increase
It is no news that in 2024 prices will increase again. The price increase news from Microsoft in 2023 left many organizations wondering how they would manage the increase in costs.
Recent reports also indicated that the world economy is likely to take a downturn, causing the cost of energy, products and services to become more expensive.
Economic and financial experts are forecasting an increase in unemployment due to the recession and many businesses may face financial hardships as their sales decrease.
It’s predicted that inflation will also rise during this time, meaning that the cost of goods and services will become much more expensive. These changes could have far-reaching effects on businesses in the industry as big tech companies are increasing their products and services.
We will answer some questions that can help your organization adopt and use solutions to deal with the Microsoft annual price increases.
In het kort
Can I negotiate a better price after a price increase?
Yes, you can, but the first step in dealing with Microsoft’s price increase is for your organization to assess your current Microsoft usage. This includes identifying how many licenses you have, what products and services you use, how often you use them, and who uses them.
Getting this information could also get you to look at how heavily reliant you are on Microsoft products and services. You can speak to an independent unbiased expert after your findings to help you explore alternatives that can deliver the same results yet help with savings. There may likely be licenses that are gathering dust on the shelf and maybe consolidating them into one product that is delivered at a lesser cost may help. This will be extra money discovered for other operations funding.
Again, assessing your organization’s usage patterns allows you to identify cost allocations to be done more accurately and priority given to licenses that are mission-critical and cannot be ignored. This will allow you at the beginning of the financial year to draw up your budget more focused and periodically put a workable plan in place to assess license performance frequently as the financial year unfolds. Seek the expertise of an independent unbiased expert to support you to stay updated per license changes, and how to optimize and save.
Why will periodic assessment help?
When purchasing licenses, it is quite clear what challenges you may want solutions to. But updates to license terms and usage conditions from vendors may suddenly bring a twist to how your purchase decisions may go at the end of your agreement. Not waiting till the end of your agreement, but periodic assessment will help you identify which licenses are essential and which ones you can do without. Also identify areas where you can optimize usage and keep license lifecycle in check so as not to significantly affect essential services or business units due to inaction.
For example, you can consolidate your licenses or switch to a lower tier of Microsoft 365 if you do not need all the features. A SAM tool can help to assess your current Microsoft usage and to optimize. Our team of license experts are on standby to answer all questions and support you with your license assessment needs.
How do I start negotiations with Microsoft?
Microsoft offers volume licensing programs like the Enterprise Agreement and Enterprise Subscription that provide discounts based on the number of licenses organizations purchase. In addition, you have the opportunity to negotiate your Microsoft Enterprise Agreement.
When your organization goes to negotiate with Microsoft and has a clear understanding of usage and requirements you are better positioned. The well researched information you have gathered from your organization coupled with a well formulated strategy, gives you power to leverage on what you know and what you want to make favorable demands on. Your organization should also be prepared to negotiate price terms and support services. It is helpful to have a backup plan in case negotiations do not go as planned.
A backup plan may include arming yourself with alternative solutions knowing that they will work for your challenges and putting this across to Microsoft if the negotiation hits a dead end. This will awaken their team who will go all out to avoid losing your organization to a competitor they know can also deliver.
Many software and cloud service providers offer similar products at a lower cost. By exploring these alternatives, you may find that you can get the same level of functionality at a fraction of the cost. However, before your organization makes any changes, research and test the alternatives thoroughly to ensure that they meet your business needs.
Bring up the alternative vendor conversation to broaden your chances to beat down prices Microsoft offerings are going for to save money.
I don’t have EA, but Microsoft NCE, can I negotiate my NCE contract?
Yes, you can negotiate a Microsoft NCE. As customers are moving to the cloud and signing for CSP or NCE, you should also take advantage of this opportunity to negotiate with your cloud service provider. Microsoft partners are well paid by Microsoft to sell you Cloud services. Have a plan on how to get a better price from your Microsoft CSP or NCE partner. They will reject your negotiation request. But don’t give up. You can get a better deal from your NCE and CSP if you give it a try.
Use Microsoft promotions
Microsoft often offers promotions and discounts on its products and services. These promotions can result in significant savings for organizations. For example, Microsoft may offer new enterprise discounts, bundled packages, or seasonal discounts. That means, Microsoft may offer free trials or demo licenses for its services. It is important that your organization read the terms and conditions carefully when taking advantage of promotions and to ensure that the promotions meet your business needs. Also be aware of any deadlines or expiry dates for the promotions.
Monitoring Microsoft Updates
Microsoft may continue to increase prices in the future. Therefore, your organization needs to monitor Microsoft’s price changes and adjust your strategy accordingly with the advice of license and cloud experts such as Q-Advise. Do this by subscribing to Q-Advise’s newsletters and blogs.
Can I sell my on-premises Microsoft software after moving to the cloud?
Yes, you can sell your on-premises Microsoft software. Many companies who moved from on-premises to Microsoft cloud like CSP, NCE or EA, still have on-premises software. Companies do not know that they have a surplus of licenses. Research has even shown that organizations have an average surplus of licenses of up to 20 to 30 percent! By selling your unused software you can get some of your money back. In this time of upcoming recession, we believe every coin counts. Have you become curious about selling or buying surplus licenses? Q-Advise can help.
Want to know how to prepare for Microsoft’s price hikes and what the future looks like?
To stay up to date with upcoming Microsoft price increases in 2024 and how to respond to it, kindly contact Q-Advise and subscribe to our newsletter for more updated announcements and happenings.