Microsoft Office Prices Will Be Going Up 20% Unless Some Business Clients Do This

If you’re a business client who uses Microsoft Office, you will be interested to learn that the tech giant’s prices for the service are going up 20%.

That is unless you move from the monthly to annual subscription option.

Microsoft is telling partners that customers will soon be charged 20% more for Office subscriptions if they prefer to keep paying by the month. The move would help the company have better visibility into its revenue as well as reduce concerns about customer churn.

Next year Microsoft is rolling out what it’s calling the New Commerce Experience for Office, revamping the way customers buy its software through business partners.

The company has not made a public announcement but has informed partners that organizations paying by the month will face a 20% hike unless they move to annual subscriptions.

Needless to say, some business partners are against the move and have signed a petittion at Change.org.

Microsoft will expect payment for subscriptions even if customers decide they no longer want the Office services halfway through the term, according to an internal document obtained by CNBC.
A big chunk of Microsoft’s revenue comes from business customers, rather than consumers, and 95% of the its commercial revenue is derived through partners.

Speaking to CNBC, Rob Schenk, co-founder of Intivix, a Microsoft partner with offices in the Bay Area, said he’s started telling clients about the 20% increase for month-to-month arrangements.

He has said that customers have told him they “don’t like it at all.”

Microsoft’s lack of clear information on the monthly price bump has complicated conversations with customers, according to Schenk.

Backlash has led to meetings between Microsoft and its partners, said a person familiar with the launch.

“Microsoft provides flexible purchasing options to meet our customers’ diverse needs, and we don’t publicly disclose information around our premium and pricing approach for partners,” a spokesperson told CNBC.

The new program “introduces a monthly term option that will enable partners to provide customers with flexibility at a premium price,” the email said.

Between January and June, Microsoft will charge the same price for monthly and annual offers, the company said. After that, the monthly increase kicks in.

Shares of Microsoft are up 46% this year, pushing its market cap past $2.4 trillion.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.