Significant Changes happening to Microsoft 365 Agreements and how Moebius is Responding
As of March 1st, 2022 Microsoft has begun to implement a new purchasing and licensing procedure for Microsoft 365 products that will affect all users of M365 products. This is a global change and will impact all users and resellers, even those users who purchase licensing directly from Microsoft. The new Microsoft program is known as the New Commerce Experience (NCE), and while Microsoft is touting many theoretical advantages to this new system, this is basically a money grab. I’ve highlighted some of the critical changes that our clients need to be aware of below.
- Microsoft will be implementing a 15% price increase on several of its most common business products. This is the first real price increase that Microsoft has made in a decade on these products and they have added a lot of features (Like Microsoft Teams) in that time span (but it still hurts)
- Office 365 E1, E3, E5; Microsoft 365 E3, Business Basic, and Business Standard will receive the initial 15% price increase.
- Microsoft will also be adding an additional 20% charge on ALL products to any clients who wish to continue with Month-to-Month licensing as opposed to Annual (or longer) contracts.
- Month-to-Month licensing can be adjusted up or down and between products at any time as needed.
- Microsoft Annual or Tri-Annual Licensing (36-month) will also be available at no penalty or even with a discount, but contracts will now be enforced and carry the following conditions.
- There will be NO ability to reduce licensing during the year.
- Users will NOT be able to reduce licensed product levels during the year.
- Users will NOT be able to change their licensing to a different MSP if they leave their current MSP.
- Annual contracts will renew automatically within a 24-hour time window, at 48-hours cancellation can be done for a 50% pro-rate. After 72-hours there is NO cancellation option at all.
- Users cannot reduce licensing because of business changes.
- The reselling MSP will be responsible for ALL costs of the service for the entire length of the contract, even if a client goes out of business.
- Annual and Monthly Licensing can be added to the same account. It means more to track, but you can theoretically have annual licensing for your ‘core’ staff, and monthly licensing for users that may come-and-go during the year.
- NEW services and license types established after March 1st 2022 must be sold within the NCE program. Existing products can still be modified for user counts without a change.
- EXISTING monthly services and licensing will be converted to the NCE program by July 1st 2022.
- There is no change (currently) scheduled for M365 Non-Profit, Government, or Educational Licensing.
As these changes roll-out, Moebius Technology will be making the changes to our 365 Client Service Agreements according to the following plan.
- Despite the 20% markup, Moebius Technology will ONLY resell true Month-to-Month licensing (as opposed to annual licensing that is billed monthly) to our clients. We believe that the liability associated with reselling annual licensing is simply too large to account for the minimal margin that Microsoft provides to resellers.
- Moebius Technology will begin to remove the per-seat ‘Managed Email’ markup that we currently add to our clients 365 licensing.
- Microsoft Licensing will be sold at the official Microsoft MSRP based on the license type and contract.
- Clients who are covered by a full AMS Service Plan will not have any additional 365 Tenant Management charges added to their monthly service invoices.
- Clients who utilize a Core Services Plan will automatically have the previous Managed Email expenses replaced with a 365 Tenant Management line item based on the number of users in their organization.
- Core Services clients who do not want to take advantage of the 365 Tenant Management Service will be billed on a Time and Materials for all 365 and email related service calls and questions. We will not proactively provide oversight for unmanaged services.
- Clients who wish to purchase 365 licensing with an Annual or Tri-Annual commitment (to take advantage of the discounted pricing) will need to make those purchases directly from Microsoft and we will assist you with the process. We will still offer a 365 Tenant Management service to our clients who opt for direct licensing.
If you do not know if you are on a Core Services Plan or a more comprehensive AMS Plan please reach out to your Account Manager so that we can discuss the differences.
An added personal note: It doesn’t seem like much of a coincidence to me that Microsoft is making this move while Google is also eliminating their free Google Business ‘Legacy’ Accounts in favor of paid Google Workspace accounts. These changes will cost small businesses more, while reducing margins and flexibility for MSPs like Moebius. The MSP industry and the 365 Channel companies have been fighting these changes vigorously, but Microsoft will not budge. This is happening.
Despite these changes, I truly believe that Microsoft and their Suite of 365 products is the best option out there for small businesses (by far). I cannot think of a single alternative product that can provide the range or reliability of services that Microsoft can offer through these suites.
President, Moebius Technology Solutions, Inc.