Microsoft Office 365 licensing changes: What does it mean for you?

Microsoft have announced major changes to their licensing models for EA and the Microsoft 365 portfolio. Find out what this means for you.
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Microsoft have announced major changes to their licensing models for EA (Enterprise Agreements) and the Microsoft Office 365 portfolio.

The entry level to Microsoft Enterprise Program will be increased from 500 to 2500 seats. Organisations under 2500 seats will have to purchase their licenses from a CSP (Cloud Services Partner).

In summary before the 1st of March, all Microsoft customers will need to choose to move to either a monthly rolling contract or commit to a 12-month contract for Microsoft Office 365 subscriptions to avoid the upcoming 20% Microsoft price increases.

Option 1: Purchase your licenses on a 12-month agreement. Doing so will mean that you can no longer decrease your license count below what you’ve purchased during the 12-month agreement. However, you will be able to fix your current pricing costs for 12 months, allowing you to bypass the price increases that will be introduced on the 1st March 2022. Under a 12-month contract you can still pay for your licensing on a monthly basis

NB – if you choose Option 1 please be aware that you will not be able to move your current Microsoft licensing to a new IT support provider during the duration of the 12-month contract. Your current Microsoft Support Provider will need to confirm with you that you agree to the new 12-month contract and advise you of the contractual changes.

Option 2: Sign up for a new monthly rolling contract and retain the option of flex up or down licensing as you need to. Due to there being no commitment to a specific number of licenses, these flex licenses will cost around 20% more than the current rate.

Monthly Subscription

Microsoft will provide customers with the opportunity to consume Online Services on a true monthly basis without the need for an annual commitment. This will provide additional flexibility for customers who need to make regular changes* on a month-by-month basis to their seat count and plans.

The monthly subscription via NCE comes at a premium of an uplift of 20% across all online services plans.

*Licenses can be decreased or cancelled within 72 hours of being purchased or alternatively at the end of the monthly term.

12-month subscription

The 12-month subscription will provide customers with the opportunity to consume online services on an annual commitment basis billed on a monthly or annual basis.

Pricing will be locked in for the duration of the term which provides customers with additional cost savings and security against any price increases due in that time. You can increase seats during the 12-month subscription term but are not able to reduce seat count. Your IT support provider will be responsible for your Microsoft licensing during your 12-month subscription and this is not transferable to another IT support provider during this period.

Monthly subscription 12-month subscription
Payment Options Monthly Annual license paid upfront

Annual license paid monthly

Cancellation/ adjustment window 72 Hours 72 Hours
Seat Changes Increase allowed. Decrease with 1 month notice Increase & uplift licensing type allowed
Pricing 20% price increase No price increase
Benefits Flexibility Cost savings and price lock


Mix & Match subscription types are allowed.

Future capabilities for new commerce in CSP

In 2022, additional features and new offers will launch exclusive to new commerce. For example, current plans for M365 (subject to change) include three-year term offers, hybrid use rights, home use program (HUP), and multi-geo add-ons. We’ll be able to align term end dates of new and existing subscriptions.

New Cancellation Policy

With the launch of New Commerce Experience Microsoft will be enforcing a cancellation policy for annual term offers and will be introducing a new monthly term offer. The cancellation policy means that it will only be possible to cancel licensing you order through us within 24 hours of placing an order. In order to provide customers with the flexibility that they have enjoyed previously Microsoft are introducing a new monthly term offer, which will be priced at 20% more than making an annual commitment (annual term offer).

When will the changes take place?

Microsoft’s launches their new licensing model on the 10th January 2022. From March 2022, all new and renewing subscriptions will need to be purchased through the new licensing plan.

In addition to the NCE, Microsoft have announced a price rise from 1st March 2022 for Microsoft 365 Business Basic, Microsoft 365 Business Premium, Office 365 E1, E3 and E5, and Microsoft 365 E3.

Enterprise Agreements

From the 1st March 2022, entry to Microsoft EA level will be increased from 500 to 2500 seats.

What does this mean for you?

If you currently have a Microsoft EA from the 1st March, you will be no longer able to transact under this program if you have less than 2500 seats. Your agreement will need to be transferred to a Microsoft CSP (Cloud Services Partner). You will no longer be able to transact with Microsoft directly.

As a Microsoft Gold Partner enrolled under the CSP Partner program, we are able to support you with this migration. We are able to ensure all services are transferred smoothly and migrate you to the CSP program before this deadline.

For further information regarding the upcoming price rises or help migrating your EA agreement to a cloud service provider, please get in touch with us on [email protected] and 0117 2020 200 .

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