Microsoft Pricing Update: What You Need to Know Ahead of April 1, 2025
Microsoft has announced a pricing update that will take effect from 1 April 2025, and it impacts Microsoft 365 and other per-user subscriptions across all markets – including New Zealand.
If your business uses Microsoft tools (like Microsoft 365), now’s the time to take stock and understand what’s changing, why it’s happening, and how to best manage the impact.
What’s Changing?
Microsoft is introducing a 5% price increase for annual commit subscriptions that are billed monthly. This change applies across all purchasing channels, including Cloud Solution Providers (CSPs) like TMG Cloudland, Microsoft’s web portal, and enterprise agreements.
Here’s a quick break-down:
| Subscription Type | New Pricing Impact |
|---|---|
|
Annual Commit – Monthly Billing |
+5% Price Increase |
|
Annual Commit – Upfront Payment |
No Change |
|
Monthly Term – Monthly Billing |
No Change |
|
Triennial Term – Monthly Billing |
+5% Price Increase |
Applies to: All customer segments – including Commercial, Academic, and Non-Profit customers.
Why the Price Increase?
This update is part of Microsoft’s broader efforts to:
- Encourage upfront commitments for better forecasting and resource planning.
- Simplify pricing structures and bring consistency across markets.
- Align with Microsoft’s shift towards value-based pricing across its cloud portfolio.
In short, Microsoft wants to incentivise customers to opt for annual upfront payments – offering better value to those who commit longer-term.
What Are My Options?
At renewal, you can choose to:
- Stick with monthly billing on an annual commitment – and pay 5% more.
- Switch to upfront annual billing – and avoid the increase.
- Review your licensing structure – to ensure you’re only paying for what you use.
We recommend reviewing your Microsoft 365 subscriptions now to see which billing option best suits your business needs and cashflow.
What Does This Mean for You?
If you’re currently on:
- Annual Commit, Monthly Billing: Expect a 5% price increase from April 1.
- Annual Commit, Upfront Payment: No change – you’ll continue to get the best value.
- Monthly Term, Monthly Billing: No change (though this remains the most expensive overall option).
Our Advice
If you want to lock in current pricing before April 1, speak to us now.
We can help you:
- Review your current licensing
- Explore upfront billing options
- Avoid unnecessary cost increases
