Microsoft Plans Price Increase For Nonprofit Cloud Products

‘It‘s a huge value as it is, price increase or no price increase,’ says Nyasha Tunduwani, CEO of Microsoft partner Real Impact Technology Consulting. ‘And for the organizations that really leverage it and use it, there’s massive savings in total cost of maintenance and especially in this hybrid universe.’

Microsoft will increase the prices on multiple Microsoft 365 nonprofit products later this year, following a price increase in March for multiple M365 commercial products after a decade of updates and innovation without a price hike. M365 includes popular Microsoft applications such as Word, Outlook, Teams and Excel.

According to a document of frequently asked questions provided to Microsoft partners, the Redmond, Wash.-based company will increase the price of five products on Sept. 1. The increase applies to new and existing nonprofit customers across all licensing channels.

However, the price increase doesn’t affect offers available as a grant, “including 10 licenses of Microsoft 365 Business Premium, 300 licenses of Microsoft 365 Business Basic and 2,000 licenses of Microsoft Office 365 E1 via Enterprise Agreement,” according to Microsoft.

[RELATED: Microsoft Hikes Office 365 Pricing In First Major Increase In Decade]

CRN has reached out to Microsoft for comment.

While four of the nonprofit products will increase by the same percentage their commercial counterparts experienced in March, one product—Microsoft Office 365 E3—will have a larger percentage increase than its commercial counterpart.

The price changes include the nonprofit Microsoft Office 365 E1 license increasing by 25 percent, going from $2 to $2.50.

By comparison, in March, commercial Office 365 E1 licenses increased from $8 to $10, also 25 percent.

The nonprofit Microsoft Office 365 E3 will increase by 28 percent, going from $4.50 to $5.75.

In March, commercial Office 365 E3 licenses went from $20 to $23, an increase of 15 percent.

The nonprofit Microsoft Office 365 E5 license will increase by 9 percent, going from $14 to $15.20.

In March, commercial Office 365 E5 licenses went from $35 to $38, also an increase of 9 percent.

The nonprofit Microsoft 365 E3 license will increase by 13 percent, going from $8 to $9.

In March, commercial M365 E3 licenses went from $32 to $36, also an increase of 13 percent.

And lastly, nonprofit Microsoft 365 Business Premium licenses will increase by 10 percent, going from $5 to $5.50

In March, commercial Business Premium licenses went from $20 to $22, also an increase of 10 percent.

M365 E5, Microsoft Business Standard and Frontline nonprofits products will not change their prices, according to Microsoft.

Microsoft will continue to provide nonprofits with discounts of up to 75 percent on other M365 products, according to the company. Local markets may see some price adjustments. Sellers can’t use an early commitment to avoid the price increases.

The company is raising prices in recognition of 10 years of enhancements to the products and to keep up with competitors’ prices, according to Microsoft.

“This is the right time to update our pricing,” the company said. “Although there are still questions and uncertainty, we see clear signs of economic recovery around the world. Moreover, over the past few years our competitors have increased prices, in some cases aggressively. We simply have a better story and proven track record of reinvestment in the product and consistently delivering new value to our customers.”

Since M365’s initial release, the company has added 24 new applications and more than 1,400 features, including Teams, data loss prevention for documents and emails, Office messaging encryption, artificial intelligence-supported capabilities, and ways to reduce an organization’s attack surface.

On April 4, Microsoft ceased providing grants for most on-premises software and shifted to a cloud-first grant program to promote nonprofits’ move to the cloud.

Nyasha Tunduwani, CEO of Seattle-based Microsoft partner Real Impact Technology Consulting, which works with nonprofits, told CRN in an interview that despite the price increase—which will hit larger nonprofits more, perhaps, than ones with fewer employees—the licenses still come with enough value to make up for the cost.

“It‘s a huge value as it is, price increase or no price increase,” Tunduwani said. “And for the organizations that really leverage it and use it, there’s massive savings in total cost of maintenance and especially in this hybrid universe.”

He continued: “We‘ve moved from essentially deploying machines on-prem, on servers, in-house to being able to deploy them regardless of where the employees are. So honestly, for a lot of organizations that can now have that flexibility of hybrid work and things like that, which a lot of nonprofits didn’t have before, even the additional cost is not significantly more. For organizations that are greater than 250, 300, they may be less excited about this. But for the ones underneath, they’re still giving massive value at that price point.”

When Microsoft announced the overall price increase to commercial Microsoft licenses, multiple Microsoft partners told CRN that they accepted the overall price increase to Microsoft products due to years of updates and innovation without a price increase.

However, Microsoft later announced a 20 percent premium Microsoft put in place on month-to-month commitments on top of the overall price increase during its “new commerce experience” campaign of modernizing how it transacts with partners and customers.

Partners have told CRN that the month-to-month premium pushes customers to annual commitments, which are more risky for partners because, if a customer no longer needs a Microsoft license before the end of the commitment, the partner could be stuck paying the rest of the year.

Partners who use distributors—also called indirect sellers by Microsoft—are also unable to change them during the duration of the commitment. Customers are also not allowed to change partners during the commitment.

Microsoft has defended the month-to-month premium as a financial protection against customers that are at a greater risk of losing a license—which could be due to going out of business, acquisition or a loss of employees. Microsoft has also pointed out that many subscription businesses charge more for month-to-month commitments than annual ones.