New Microsoft Billing Premium, Product Price Hikes: Five Things To Know

Microsoft 365, Office 365 and Enterprise Mobility+Security are among the affected suites.

Microsoft has stirred up solution providers with the next move in its philosophy of more flexible billing terms should get a premium—a 5 percent increase in the price of some of its most popular annual subscription bundles if the customer wants to pay monthly instead of once a year.

Starting April 1, products in popular software suites including Microsoft 365 and Office 365 should see the premium, according to Microsoft.

Various products not subject to the premium include Azure savings plan and GitHub.

[RELATED: Microsoft’s Dezen: Cloud Solution Providers Building ‘High-Value Value-Added Solutions, Services’]

Microsoft Billing Premium

Microsoft had not responded to a request for comment as of press time.

A document for partners released by Microsoft highlighted the importance of “cash flow flexibility.”

“This change aims to continue providing customers with cash flow flexibility while maintaining the value and benefits of our services,” according to the document. “By aligning our pricing strategy across channels and segments, we ensure consistency and transparency across all platforms.”

The price increase will cut across the Buy Online, Cloud Solution Provider (CSP) and Microsoft Customer Agreement for Enterprise (MCA-E) motions.

Plenty of partners have sounded out on the pros and cons of the change. Here’s what you need to know.

Changes Hit Copilot Offers First

The Redmond, Wash.-based tech giant will launch the premium on Dec. 1 for Microsoft 365 Copilot, Copilot for Sales and Copilot for Service annual subscriptions bought through the vendor’s Buy Online, Cloud Solution Provider and Microsoft Customer Agreement for enterprise motions, Microsoft revealed Tuesday.

For solution providers selling Copilot, a 15 percent discount on M365 Copilot is available for the monthly billing, annual commitment plan. Customers must buy at least 10 licenses for the discount.

The discount expires on Dec. 31, but customers who commit to a 12-month subscription secure the discounted price for the duration and can add up to 300 licenses, according to Microsoft.

April 1 is when users of popular Microsoft productivity applications such as Word, Teams and Excel could see the price the increase, with the new billing premium hitting the following:

Microsoft products and offers not seeing a billing plan change include:

Customers who renew plans before April 1 lock in the existing price until the following renewal. A monthly bill, annual commitment renewal on March 30, 2025, for example, won’t see the price increase until March 1, 2026.

Another possible help to customers is a 15 percent discount on Microsoft 365 E5 set to run Jan. 1 to June 30 for CSP partners, according to Microsoft.

Premium Timing Coincides With Teams Change

Presenting a possible headache for partners with the billing premium coming April 1 is the timing of customers buying packages of Microsoft 365 and Office 365 without Teams to quell European Commission anti-competition concerns.

Microsoft stopped selling net-new M365 and O365 suites with Teams on April 1, 2024, and partners will have to work with customers on how they want to handle renewals. The vendor said in an online announcement that it will allow partners to schedule changes to edit billing frequencies for annual subscriptions at renewal only starting April 1.

And traditionally, Microsoft provides price list previews 30 days in advance of major changes, meaning that partners might have to manually calculate how the 5 percent premium affects customers until March 1, leaving customers 30 days to decide on billing preferences.

During a CSP partners community call hosted by Microsoft, an unidentified representative with the tech giant said partners are unlikely to get price previews before March 1 but the billing frequency change function could come sooner. The capability is still getting built, the representative said.

Product Price Hikes

Also on April 1, Microsoft will raise the price of Teams Phone by 25 percent, from $8 to $10 per user, per month for annual commitment, annual billing.

The price of Power BI Pro will grow 40 percent from $10 to $14 per user, per month for that same billing plan.

The price of Power BI Premium Per Use will grow 20 percent from $20 per user, per month to $24 per user, per month for that plan.

Customers who buy Teams Phone or Power BI through Microsoft 365 E5 or Office 365 E5 annual term subscriptions with annual billing will not see a price change, according to Microsoft.

Annual commitments, monthly billing for Teams Phone, Power BI Pro and Power BI Premium Per Use will still have the 5 percent premium, according to Microsoft. This is the first price increase to stand-alone Teams Phone offers since its launch in 2017 and first price increase to Power BI offers since the product’s launch in 2015.

Microsoft, Partners Differ On Flexibility

The clash between Microsoft and solution providers who don’t like the 5 percent premium might bring to mind the difference of opinion over Microsoft’s 20 percent premium on month-to-month subscriptions introduced during the rollout of its new commerce experience (NCE).

Microsoft has positioned the premiums as helpful to solution providers to mitigate risk with customers that are in danger of going out of business, getting acquired or having a layoff and thus possibly leaving the solution provider paying out the rest of the commitment.

The premiums could incentivize customers to go with the least expensive annual commitment, annual billing option, which gives solution providers more money up front but could present a cash flow issue for some customers.

Along with the billing changes, Microsoft said it will now disallow midterm billing frequency changes for three-year offers starting April 1. Instead, customers can make billing frequency changes at renewal, according to the vendor.

Microsoft did not say in its partner document whether the price level changes will apply in EA for Copilot or whether month-to-month plans are expected for M365 Copilot.