As 2024 draws to a close, Microsoft has announced changes to its annual Microsoft 365 subscription pricing, set to take effect on April 1, 2025. With this update on the horizon, now is the perfect time to prepare for smooth conversations with your customers. Let’s dive into the details and explore what this change means for you and your customers.
What’s changed?
Price Increase for Annual (Monthly) Subscriptions
Microsoft will introduce a 5% price increase for monthly-billed annual plans across Buy Online, CSP, and MCA-E platforms. This adjustment ensures a consistent, transparent billing structure while maintaining flexible cash flow options.
How it affects existing customers
Customers currently on annual subscriptions with monthly billing will have two options:
- Remain on their current plan and incur a 5% price increase. *
- Switch to an annual prepayment plan to avoid the price increase.
How it affects new customers
As an MSP, you will have the flexibility to offer new customers the following options for Microsoft 365:
- Monthly-Billed Monthly Plan
- Annual-Billed Annual Plan – Save 20% compared to the monthly-billed plans.
- Monthly-Billed Annual Plan – 5% premium for flexibility over annual prepayment*
The financial benefits of committing annually and paying yearly encourage longer-term client engagement, as customers look for year-round support.
Opportunities for MSPs
While pricing changes may prompt challenging conversations, with customers, but they also open doors for MSPs to strengthen their business. Here’s how:
Drive Annual Commitments with Clear Financial Incentives
Annual-billed plans offer customers 20% cost savings compared to monthly billed plans. For customers seeking flexibility, the 5% premium for monthly-billed annual plans provides an attractive middle ground. This structure empowers MSPs to guide customers toward annual commitments, balancing savings with payment flexibility.
Improve Partner Cost Recovery and Reduces Likelihood of Mid-Term Moves
From a financial perspective, opting for the 20% discount on upfront annual payments offers customers substantial savings, effectively providing over two months of service at no cost compared to paying monthly. This creates a clear incentive for customers to commit to a longer-term plan.
Meanwhile, the 5% premium on monthly-billed annual plans allows MSPs to recover costs typically lost when customers switch mid-term, while also encouraging customers to think strategically about their commitments. This approach ensures a balance between financial efficiency for customers and sustainable cost management for providers.
Foster Long-Term Thinking and Collaboration
The updated structure aligns client commitments with long-term goals, giving MSPs the opportunity to deepen relationships. By focusing on initiatives like adopting new features, enhancing security, or streamlining workflows, MSPs can help their customers maximize their Microsoft 365 investment, to drive tangible benefits and ROI. Positioning longer term commitments (like annual) as the standard encourages stability and fosters a collaborative environment where both MSPs and their customers can work toward sustained technology adoption and success.
Opportunities for MSPs
The recent Microsoft 365 pricing update offers a great opportunity to drive growth by introducing value-added services during renewal discussions. As data protection becomes crucial for compliance and AI-readiness, these conversations allow MSPs to position themselves as proactive partners addressing broader business needs beyond Microsoft 365 productivity.
To support you, SkyKick has developed resources to guide you in engaging customers on AI-readiness and future-proofing their technology investments, ensuring alignment with long-term strategies.
* There may be slight variations in price due to exchange rate fluctuations, local pricing policies, and rounding rules.
