Microsoft will raise prices of commercial Office bundles in July

Microsoft said Thursday that it will increase the prices of Office productivity software subscriptions for commercial and government clients on July 1.

The company’s Office applications, which include Word, Excel, PowerPoint and Outlook, have been facing increased competition in recent years from Google.

“We are continuously investing and innovating our platform for the future,” Nicole Herskowitz, corporate vice president for Microsoft 365 and Copilot, wrote in a blog post. “In the last year, we released more than 1,100 features across Microsoft 365, Security, Copilot, and SharePoint.” The new features have added value to the suites, she wrote.

Price hikes for commercial Office subscriptions have been infrequent. In 2022, Microsoft raised prices of its productivity bundles for the first time since launching the original Office 365 subscriptions in 2011. Microsoft changed the name of Office 365 to Microsoft 365 in 2020. In January, Microsoft announced a price hike for consumer Office bundles.

Microsoft offers Office 365 subscriptions for commercial use that include access to its productivity applications, along with higher-priced Microsoft 365 subscriptions that also include Windows operating system updates.

Here’s a breakdown of the commercial price changes:

• For small and medium-sized businesses, Microsoft 365 Business Basic will cost $7 per person per month, up from $6.
• Microsoft 365 Business Standard will be available for $14, up from $12.50.
• Microsoft 365 Business Premium will continue to cost $22.
• The entry-level Office 365 E1 offering for enterprises will still be sold for $10.
• Office 365 E3 will jump 13% to $26 from $23.
• The Microsoft 365 E3 package including Windows for enterprises will rise 8% to $39 from $36.
• The full-featured Microsoft 365 E5 will increase to $60 from $57.
• For front-line workers such as cashiers, Microsoft 365 F1 subscriptions will cost $3, up from $2.25.
• Microsoft 365 F3 will be available for $10, up from $8.

The U.S. Defense Department and other government clients will face similar percentage price increases.

The various subscriptions all exclude access to the $30 Microsoft 365 Copilot add-on that draws on generative artificial intelligence models. Some companies have started widely rolling out Copilot, while others have held off on expanding their deployments, CNBC reported last week.

In many cases, organizations receive discounts off of list prices, but Microsoft has cut back on direct volume deals for some types of customers.

Almost 43% of Microsoft’s $77.7 billion in fiscal first-quarter revenue came from its Productivity and Businesses Processes segment, which includes Office. In October, the company said revenue from Microsoft 365 commercial cloud services jumped 17%, while seats increased 6%, mainly from products targeting small and medium-sized businesses and front-line workers.

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