Microsoft recently announced multiple changes (#1 , #2) to pricing and terms that will apply to several common Microsoft 365 products between December 1, 2024 and April 1, 2025.
Depending on your usage of MS365 products, these changes could have significant impact on your business’ financial cash flow. To best prepare your organization for minimal impact, we are providing the following “what’s in it for me?” overview.
This list is provided in order of “most impactful” based on product utilization of our current SysDrive partners. To see the listing of changes in chronological order, skip to the end.
Change #1: 5% price increase for products using an annual commitment, but paying monthly
In January 2018, Microsoft began a new pricing structure for many Microsoft 365 products that provided a discount (approx. 16%) for committing to the licenses purchased for a 1 year term. The option for month-to-month license quantities was still available, but the benefit to business was a discount in trade for committing to a year. Even with an annual commitment, Microsoft allowed the option to pay monthly, a major cash-flow benefit for many businesses vs. paying the entire annual cost all at once up front. The pricing for paying all up front vs. monthly was even – the monthly invoice was your annual cost divided by 12 equal payments.
Effective 1, 2025, there will be a 5% surcharge added to most products that are on an annual commitment, but utilize monthly billing. The pricing change take effect at your next renewal date after April 1, 2025 – see below for examples on the timing of changes to your account.
What products are included in the new surcharge for monthly payment?
Products in scope include all annual subscriptions with monthly billing plans. Examples of product categories within the scope include
- Microsoft 365
- Office 365
- Enterprise Mobility + Security
- Windows 365
- Microsoft Dynamics 365 Services
- Microsoft Power Platform
- Other Online Services
What if my current annual renewal date is before April 1, 2025?
If your current annual commitment renewal date is prior to April 1, 2025, then your current pricing terms will remain the same until your next annual commitment renewal date. For example, if you currently have an annual commitment subscription to Microsoft 365 Business Premium with yearly renewal date of March 25, 2025, then your current terms will apply until your next renewal on March 25, 2026.
What if my current annual renewal date is on or after April 1, 2025?
If your current annual commitment renewal date is on or after April 1, 2025, then your pricing terms will update on your upcoming annual commitment renewal date. For example, if you currently have an annual commitment subscription to Microsoft 365 Business Premium with yearly renewal date of May 25, 2025, then your terms will update on May 25, 2025.
How do I avoid the 5% surcharge?
To avoid the 5% surcharge being applied to all of your eligible subscriptions, you must change from monthly billing to up-front billing for the annual commitment at or prior to your renewal date where the change would take effect.
Change #2: Teams Phone & Power BI pricing changes
Power BI and Teams Phone products will see individual price increases beginning April 1, 2025
- Power BI Pro and Power BI Premium: 40% increase
- Teams Phone: up to 25% increase
The product-specific increases are additionally subject to the new 5% surcharge on monthly billing as described above in Change #1.
What is the price change for each product?
The following price changes are based on retail pricing when purchased directly via your Office 365 Admin Center. You may currently have discount applied depending on how you purchase Office 365 products (prices listed in USD $ per month, per user)
- Power BI Pro: $14
- Power BI Premium: $24
- Teams Phone Standard: $10
- Teams Phone Standard for Frontline Workers: $5
- Teams Phone with pay-as-you-go calling (for users in UK/CAN): $12
- Teams Phone with pay-as-you-go calling (for users in US & all other service markets): $13
- Teams Phone with Calling Plan (for customers in US/UK/CAN): $17
- Teams Phone with Calling Plan (for customers outside US/UK/CAN): $22
- Teams Phone with domestic and international calling: $34
Does this impact Power BI & Teams Phone when bundled in another product?
No, this price change only impacts these products when purchased independantly.
For example, if you currently utilize Microsoft 365 E5 licensing that already includes Power BI Pro and Teams Phone Standard, then your E5 license does not increase due to these changes.
However, your E5 licenses are subject to the new 5% surcharge on monthly billing as described above in Change #1.
When do the Teams Phone & Power BI changes take effect?
These product-specific price changes begin on your first renewal date after April 1, 2025. The timing for you will be the same as described in the example renewal scenarios above in Chage #1.
Change #3: Monthly Billing Available for Microsoft 365 Copilot
When Microsoft 365 Copilot released to general availability, one of the criticisms to gaining widespread adoption was that Copilot was only available to purchase up-front for 1 year at a time – no monthly billing option was provided.
Beginning December 1, 2024, Microsoft Copilot 365 is now available with a monthly billing option, to standardize with other Microsoft 365 products.
However, choosing the monthly billing option will incur the same 5% surcharge as described in in Change #1.
Change #4: Limited-time Promotions for Copilot & Microsoft 365 E5
Microsoft Copilot
Beginning November 1, 2024 and ending December 31, 2024, eligible new Copilot customers can receive a 15% discount. There is no minimum purchase requirement, and no limit on the number of licenses you can buy.
Building on the timeline of Change 3# above, if a new Copilot license is purchased prior to December 1, 2024, up-front payment for the annual term is still the only option available. If purchased after December 1 the new monthly billing option is available, but also includes the 5% surcharge as described in Change #1.
Microsoft 365 E5
From January 1 to June 30, 2025, new Microsoft E5 customers can receive 15% off the net price on annual subscriptions. This offer applies up to 2,400 licenses.
Choosing the monthly billing option will incur the same 5% surcharge as described in in Change #1.
Chronological Summary of Changes
| Date | Change |
|---|---|
| November 1 – December 31, 2024 | Microsoft Copilot: promotion for new Copilot customers |
| December 1, 2024 | Microsoft Copilot: begin availability of monthly billing |
| January 1 – June 30, 2025 | Microsoft 365 E5: promotion for new Copilot customers |
| April 1, 2025 | Microsoft 365: addition of 5% surcharge to monthly billing |
| April 1, 2025 | Microsoft Power BI: price increase to stand-alone licenses |
| April 1, 2025 | Microsoft Teams Phone: price increase to stand-alone licenses |
Now is the Time to Asses Your Microsoft Licensing
The announced Microsoft 365 pricing changes will a significant impact on most organizations. Proper financial planning is key to ensure your company is not hit with a surprise hit to your 2025 budget.
Contact us today to schedule an evaluation and discussion of your current Microsoft 365 licensing and see how purchasing your Microsoft licensing through a Cloud Solutions Provider (CSP) such as SysDrive can help offset the upcoming price increases.