Microsoft has announced a 5% price increase for Microsoft 365 licenses in the UK, effective from April 1, 2025. This adjustment specifically affects annual subscriptions with monthly billing plans, while other billing models remain unchanged.
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In the meantime, those that have monthly billing, may benefit from “locking in” prices. But! We are here to help you make sense of the increase and what it means for your organisation.
Understanding the Changes
The upcoming price increase is part of Microsoft’s strategy to standardize its billing structure across all platforms, encouraging customers to opt for either monthly subscriptions or annual subscriptions with upfront payments.
Subscription Options and Pricing
To help you navigate these changes, here’s a comparison of the available subscription models:
| Subscription Model | Commitment Term | Payment Frequency | Flexibility | Pricing Impact |
|---|---|---|---|---|
| Annual Subscription / Annual Billing | 12 months | Annual | – Fixed number of licenses for the entire term. – No option to reduce quantity until renewal. | – Current pricing remains unchanged. – Requires upfront payment. |
| Annual Subscription / Monthly Billing | 12 months | Monthly | – Fixed number of licenses for the entire term. – No option to reduce quantity until renewal. | – Subject to a 5% price increase effective April 1, 2025. – Spreads payments over 12 months. |
| Monthly Subscription / Monthly Billing | Month-to-month | Monthly | – Allows adjustments to the number of licenses each month. – Greater flexibility to scale up or down. | – Higher cost compared to annual commitments. – No long-term commitment required. |
Expert Insight
Mark Williams, Senior Client Relations Manager from b2b IT Services (Personic is part of the b2b IT Services Group) our, emphasises: “It’s crucial for businesses to assess their operational needs and financial planning in light of these changes. Opting for annual billing before April 1, 2025, can lock in current pricing and provide cost predictability for the year ahead.”
Next Steps
We recommend reviewing your current Microsoft 365 subscriptions to determine the best course of action:
- Switch to Annual Billing: Transitioning to annual billing before April 1, 2025, allows you to maintain existing pricing and avoid the 5% increase. Keep in mind that this option requires upfront payment and commits you to a fixed number of licenses for the entire term.
- Maintain Monthly Billing: If flexibility is a priority, you can continue with monthly billing, understanding that it comes at a higher cost compared to annual commitments.
Still confused?
If you have any questions or need guidance on how these changes may impact your organisation, please don’t hesitate to get in touch with our team. We’re here to help you make informed decisions that best suit your business needs. We will also be ensuring that this particular topic is discussed within our regular client engagement meetings.