Microsoft 365 Price Increase Reflects ‘So Much Value’ Added Over 10 Years, Partners Say

‘Just the Teams expansion alone, and the usability of it, is worth the extra money,’ said Zac Paulson, CEO of Microsoft partner TrueIT. ‘We‘re not far away to where phone systems get replaced with Teams in many environments.’

Microsoft partners tell CRN that the price increase on various subscription plans for Office 365 and Microsoft 365 by the tech giant was inevitable after 10 years of virtually flat price plans, and some partners even see an opportunity in the price increase.

But at least one partner dreads the coming conversation with customers over the changes and sees it as “bad optics.”

The price increases range from 9 percent for the Office 365 (O365) E5 plan — from $35 per user per month to $38 — to 25 percent for the O365 E1 plan from $8 to $10. The Microsoft 365 (M365) E5 plan will not change from $57. All price changes will start March 1. No partners who spoke with CRN expect windfall profits from their share of the price increase.

Zac Paulson, CEO of TrueIT, a Microsoft partner based in Fargo, N.D., told CRN in an interview that the price increase better reflects the value customers get from Office 365 -- which can include the traditional Office application suite including Word, Excel and PowerPoint plus newer applications and services including Teams, SharePoint and Exchange.

[Related: Office 365 Price Hike Amounts To A $5B Tailwind For Microsoft: Wedbush]

“Just the Teams expansion alone, and the usability of it, is worth the extra money,” said Paulson. “We’re not far away to where phone systems get replaced with Teams in many environments.”

The price increase, however, could put a financial strain on some businesses, Paulson said. Depending on a company’s plan, a business with 100 O365 users could see an increase of $300 a month.

“It‘s fair for Microsoft to ask for a little more because there have been some massive developments,” Paulson said. “But on the flip side, I’m sure it’s going to be hit with trepidation.”

Randy Jorgensen, managing member of South Jordan, Utah-based Microsoft partner RJNetworks, called the price hike “bad optics” for a tech giant seeing massive sales before the price increase and signals from the tech giant that it wants to make its digital transformation products and services available for small businesses.

He told CRN in an interview that he’s not happy about being the messenger for the increase in price to his customers. While O365 has increased the number of applications and capabilities, many small businesses such as Jorgensen’s clients still get by on the basic features, he said.

“I understand they say that they‘ve added all these features and stuff,” he said. “But guess what? Most of my clients, all they want is a mailbox. They don’t care about a lot of the other features. And so now I get to go back to them and say, ‘OK, I know we talked about how this was cheaper than your own Exchange server, but here’s what’s going on.’”

Jorgensen said he also needs clarification from Microsoft on how much money his company will see from the price increase.

Matt Kinsey, CEO of MK Tech Group, a Microsoft partner based in Coral Springs, Fla., told CRN in an interview that he’s not surprised by the price increase. “They’ve added so much value over the last 10 years,” he said of Microsoft.

The March 1 change date gives “plenty of time” to prepare customers for the increase, Kinsey said. And he hopes that his customers understand that the price change is out of his hands as a solution provider.

“I’ll make, like, 12 cents extra per dollar,” he said. “From my perspective it’s just, hey, this is what the price is and I have no control over this.”

David Cox, operations director at G6 Communications, a Microsoft partner based in New Haven, Ind., told CRN in an interview that he sees an opportunity in the price change.

Cox plans to use the price increase to talk to customers about implementing other parts of O365 to get a greater return on their investment.

“The amount of benefit that you can get from an Office 365 subscription has continually gotten better and better and better,” Cox said. “What I’m going to be able to do is I’m going to be able to use this price increase as a springboard to get people on board with other parts of that solution that they’ve put off.”

The adoption of Teams as a phone system and as “the new front end” for meetings, chats, calls and automating business processes -- as Microsoft CEO Satya Nadella said in July -- continues to create new opportunities for G6 and its customers, Cox said.

“It‘s certainly not a negative,” he said of the price increase. “I’m going to be able to spin this into additional business, I think.”

CRN has reached out to Microsoft for comment. At the time of the price hike announcement last week, Microsoft declined further comment.