Pricing for a few specific Enterprise Agreements is changing

With Microsoft running in nearly all enterprises, headlines of a 10% price increase and removal of volume discounts can cause significant worry. This blog will help sift through the noise and aims to clarify who is affected, what impacts there could be and considers possible ways to mitigate the impact. There are essentially three headlines in this announcement:

1. Office 2019 commercial pricing is going up by 10%
2. Pricing for a few specific Enterprise Agreements is changing
3. Windows 10 Operating System offerings are changing.

CHANGES TO ENTERPRISE AGREEMENTS

WHAT IS CHANGING?

Microsoft is simplifying its pricing, which is a good thing. With dozens of different levels, bands and programs, simplification is a welcome change. There are a few key changes:

• Establishing a single, consistent starting price across all programs aligned to web direct for online services (OLS).
• Removing the programmatic volume discounts (Level A and Open Level C) in Enterprise Agreement (EA)/ EA Subscription (EAS), MPSA, Select/ Select Plus, and Open programs (Open, Open Value, Open Value Subscription). This will affect only a few programs and affect them differently.
• Aligning government pricing for on-premises and online services to the lowest commercial price in EA/ EAS, MPSA, Select Plus, and Open Programs. This simplifies licensing.
• Delivering a newly designed Customer Price Sheet that better outlines how a customer’s price was derived (direct EA/ EAS only)

WHAT TO WATCH OUT FOR?

According to the Microsoft FAQ: “The biggest impact will be on small and mid-size commercial customers purchasing through Open Programs (including Open License, Open Value and Open Value Subscription), MPSA, Select Plus, Select, Enterprise Agreement and Enterprise Subscription Agreement, and on government customers. The customer-earned pricing display changes are only applicable to customers with a direct Enterprise Agreement, including Enterprise Subscription Agreement.”

• Level A pricing bands will remain the same – but remove volume discounts.
• Open Level C – will remove the pricing band and volume discounts.
• Government customers will see an increase in up to 6% for their Enterprise Agreements and between 3-18% for online services in MPSA and Open programs, and an unspecified increase on perpetual products.

RECOMMENDATIONS:

• The increase in government licensing costs should be noted, especially when considering the greater impact for online services. All government entities should evaluate their current licensing strategy or contact their Microsoft service provider.
• If you don’t have an Enterprise Agreement and purchased through Select, Select Plus, Open, Open Value or MPSA, you don’t have price protection and will be impacted as of October 2018. Review your Microsoft License Statement to get a complete view of your Microsoft inventory.
• Additionally, MPSA online services will be price protected through the subscription term. For most under an EA, these changes could impact you in a few months, or up to three years away – this could be the time to true up and purchase for planned growth to take advantage of the existing price lock provided by your current agreement.