New Pricing Model for Microsoft 365

by | Sep 15, 2021

There have been changes made to commercial pricing for Microsoft 365—the first substantive pricing update since Office 365 launched a decade ago. This updated pricing reflects the increased value delivered to customers over the past 10 years. Let’s take a look at some of the innovations delivered over the past decade in three key areas—communications and collaboration, security and compliance, and AI and automation—as well as the addition of audio conferencing capabilities.

A decade of continuous innovation

Since its launch a decade ago, Office 365 has grown to over 300 million commercial paid seats. Four years ago, Microsoft 365 was introduced to bring together the best of Office, Windows, and Enterprise Mobility and Security (EMS). That same year Microsoft Teams was added as the only integrated solution where you can meet, chat, call, collaborate, and automate business processes—right in the flow of work.

In fact, since introducing Microsoft 365 24 apps have been added to the suites—Microsoft Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard—and have released over 1,400 new features and capabilities in three key areas.

1. Communication and collaboration. Microsoft Teams is the new front end across work, life, and learning for more than 250 million monthly active users. Teams launched in 2017 as the only integrated solution where you can meet, chat, call, collaborate, and automate business processes—with the power of the Office apps—all within the flow of work. In 2020 alone we released over 300 new capabilities including Together mode, background effects, large gallery view, raise hand, live reactions, breakout rooms, live captions with speaker attribution, and Fluid components, just to name a few.

A new category of collaborative applications was introduced in Teams, empowering people and organizations for hybrid work through deep integrations with Power Platform, Whiteboard, Lists, Planner, Shifts, Forms, and SharePoint. Companies like Adobe, Atlassian, Salesforce, SAP, ServiceNow, and Workday have built apps that deeply integrate with Teams, bringing business processes and functions directly into the flow of work.

Innovation continues on both real-time and asynchronous collaboration. Real-time collaboration in Word, Excel, and PowerPoint desktop apps while a growing set of capabilities like @mentions, assign tasks, modern comments, and auto-save have streamlined the collaboration experience, added and expanded OneDrive cloud storage and the Exchange Online mailboxes.

2. Security and compliance. The cybersecurity landscape is more complex than ever. With the accelerating volume, sophistication, and scale of cyberattacks, security and compliance are a priority for every organization. Since Microsoft 365 was first introduced, new attack surface reduction capabilities have been added to help organizations defend against ransomware and other threats. Also added capabilities like data loss prevention (DLP) for email and documents, sensitivity labels, and message encryption to help keep important data within the organization. And added powerful compliance capabilities that help organizations reduce risk and respond to increasing regulatory requirements such as Content Search, eDiscovery, and core Litigation Hold. Built-in mobile device management (MDM) and other management tools like Microsoft Endpoint Manager help admins support remote and hybrid workforces.

3. AI and automation. Over the past decade, AI capabilities have been infused across the Microsoft 365 productivity and collaboration applications to help everyone achieve more. Across Microsoft 365, we have introduced AI-powered innovations to help users be better writers, designers, and presenters. Cloud-powered AI now automatically creates maps, charts, and tables in Excel, and sorts email and removes clutter in Outlook. And AI-powered real-time translation, captions, and transcription make collaboration and communication more accessible and engaging for everyone.

Extending audio conferencing capabilities

And now, there is unlimited dial-in capabilities for Microsoft Teams meetings across our enterprise, business, frontline, and government suites over the next few months. Even as cloud connectivity increases, we know that people join Teams meetings while they are on the go or struggling with a bad internet connection. Currently included with Microsoft 365 E5 and Office 365 E5, we have come to see dial-in as an important part of the complete Teams experience. Available with subscription in over 70 countries and with interactive support in 44 languages and dialects, unlimited dial-in provides peace of mind that users will be able to join their Microsoft Teams meeting from virtually any device regardless of location.

New pricing

The pricing changes announced today will go into effect in six months. On March 1, 2022, Microsoft will update the list pricing for the following commercial products: Microsoft 365 Business Basic (from $5 to $6 per user), Microsoft 365 Business Premium (from $20 to $22), Office 365 E1 (from $8 to $10), Office 365 E3 (from $20 to $23), Office 365 E5 (from $35 to $38), and Microsoft 365 E3 (from $32 to $36). These increases will apply globally with local market adjustments for certain regions. There are no changes to pricing for education and consumer products at this time.

Frequently Asked Questions

Why are we increasing the price of Microsoft 365?  What should we highlight?

This is the first substantive price update since Office 365 was released in June 2011. This change will go into effect on March 1, 2022 – providing customers with about six months of advance notification.

This change builds on the product innovation we’ve delivered over the past ten years to meet the changing needs of customers. Since release, we’ve added 25 new apps and over 1400 features including:

  • The introduction of Microsoft Teams as the only solution with meetings, chats, calls, collaboration, and the ability to automate business processes.
  • We have added capabilities like data loss prevention (DLP) for documents and emails, Office messaging encryption, and attack surface reduction capabilities.
  • And we have added new AI-supported capabilities that help automate tasks, find the information we need, and help us communicate in ways that are more accessible for everyone.

Which licensing programs does the new pricing apply to?

The new pricing applies to commercial Volume Licensing, CSP, and Web Direct.

How will this price change impact existing customers?

Existing customers are not impacted until their next renewal on or after March 1, 2022.

What Audio Conferencing capabilities will be included in the new $0 add-on SKU?

The new Audio Conferencing SKU will include unlimited dial-in in geographies where the Audio Conferencing subscription is available today. In the US and Canada, the SKU will also include 60 minutes of dial-out per license.

What channels will the new $0 Audio Conferencing add-on SKU be available in? 

This offering is available in all channels: Volume Licensing, CSP and Web Direct.


To download the full PowerPoint deck, click here: M365 Price Update