Microsoft Office will cost more for monthly payers in 2022
- Microsoft Office monthly subscription will be pricier than annual subscription for some customers next year.
- Prices for monthly and annual subscriptions will remain the same in the first half of 2022.
- Shares of the American multinational technology giant are up roughly 50% year-to-date.
Microsoft Corp (NASDAQ: MSFT) is set to use its pricing power in productivity software next year.
Starting from 2022, a subset of business clients will have to pay 20% more for Microsoft Office if they pick monthly subscription over annual.
What clients in particular will be affected?Copy link to section
Microsoft generates a bigger chunk of its revenue from business customers, roughly 95% of which is driven through partners.
The announcement particularly affects clients that buy Office suite via the Cloud Solution Provider programme. The technology giant does not reveal the number of customers that opt for the CSP route to make the purchase.
In late October, Microsoft reported record results for its fiscal first quarter. The stock has had an incredible 2021 with shares up nearly 50%, adding several hundred billion to the market cap that now stands at about $2.45 trillion.
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Price hike will kick in after June of 2022Copy link to section
The price hike for monthly subscriptions will go live in the back half of 2022. The news comes a few months after the American multinational revealed plans of lifting prices for Microsoft 365 by up to 25% in the coming March.
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The upcoming changes to subscription packages that Microsoft is calling the “New Commerce Experience for Office” is particularly disappointing for small to medium-size enterprises that are already under financial stress due to the global pandemic.
Microsoft, however, is not doing anything new. Subscription businesses at large prefer longer commitments to minimise churn and enjoy greater visibility into revenue, which is why annual subscriptions usually come at a discounted price.