11% Microsoft price increase Cloud products

Microsoft stated today that it will take multiple measures to globalize the pricing of its Microsoft Cloud products, ensuring that customers will pay a fixed price that reflects the local currency’s exchange rate with the US dollar (USD). Pricing for Microsoft Cloud products will change as of April 1, 2023.

Read more via the Microsoft short News update of January 5, 2023: consistent Global pricing for the Microsoft Cloud.

Price update for Cloud Services as of April 1, 2023

Update per region. Pricing for Microsoft Cloud products will be adjusted in the following currencies:

  • GBP: +9%
  • DKK, EUR, and NOK: +11%
  • SEK: +15%

Organizations with ongoing agreements that have price protection, such as: Enterprise Agreement & Open Value (Subscription), benefit from price protection. This applies to the products they previously ordered and of course as long as the agreement lasts.

The price change applies to all new subscriptions and renewals of existing subscriptions occurring after April 1, 2023.

Subscriptions (per year) purchased or renewed before April 1, 2023 are subject to price protection for the duration of the subscription, or one year.

Are there opportunities for organizations to take advantage of this? YES.

 

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Microsoft Azure price increase effective April 1, 2023

Prices for all cloud services are going up April 1. For some products, you can have price protection depending on your contract. For an EA, SCE or EAS, that’s 3 years from the start date. For most CSP products, it’s 1 month (if you chose monthly subscriptions) or one year (if you chose annual subscriptions).

That price protection applies only to “plans,” such as M365 F1 or E3 or EMS E3. For services that charge based on usage, the protection does not apply. Nor is there a price noted for those in your contract. Think of storage, network and compute costs. There are a lot of services in Azure that are charged based on usage.

A commitment is often issued for that usage. This involves the customer agreeing with Microsoft to spend a certain amount on these types of usage costs. Usually over a period of 3 years. In return, the customer gets a discount on the usage fee. But that discount is always calculated on the current price for a service. The price itself is not fixed.

Normally not such a problem, because price changes in Azure services are usually quite limited. Now suddenly the prices for those services all become 11% higher. That has never happened before!

Say a particular service costs €1 per unit. And you got a 10% discount. So then you pay €0.90. With the price increase, that service suddenly costs € 1.11 per unit. Then you get a 10% discount on that and you pay € 1 per unit. So with that, your negotiated discount has suddenly disappeared because of a price increase by Microsoft.

So customers are going to pay more for these types of services because of the price increase, even if they have agreed to a commitment. You can’t actually avoid the price increase for these services. Just like that, usage becomes 11% more expensive.

How Blackbelt XP can help

If you want advice on how you might be able to mitigate some of these changes, contact Blackbelt XP!

Feel free to get in touch and consult Blackbelt XP to strengthen your negotiating position.

 

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