Prices Set to Drop Soon for Microsoft Cloud Licenses in Switzerland.
The strong Swiss franc is making a difference: Swiss customers can look forward to a nine percent price reduction for Microsoft Cloud Services as of September 1. The reasons behind the adjustment not having an immediate impact everywhere, and what nonprofit organizations will need to consider in the future when using Microsoft 365, are explained in the following article.#Microsoft #Microsoft 365 #Cloud Services
Microsoft already announced at the beginning of the year that Microsoft Cloud services available worldwide were to be offered at uniform prices[i]. As a result, license prices will now be reviewed semi-annually and adjusted in the event of major exchange rate changes.
How global price adjustments work
Cloud services offered by Microsoft, such as Microsoft 365, Dynamics 365 and also Microsoft Azure, are highly standardized worldwide. Consequently, they should also cost the same, since no development costs are incurred locally. It is understandable that this represents a challenge for Microsoft in a global market with constantly changing local currency rates. While Azure Services have been adjusted to the US dollar exchange rate on a monthly basis for some time, it was not until this year that a solution was found for Microsoft 365 and Dynamics 365: every six months, changes in the exchange rate to the US dollar will be checked and the prices of the licenses will be adjusted if there are serious differences. Microsoft has defined March 1 and September 1 as effective dates for the adjustment. According to Microsoft, the announcement of adjustments is to be made two months in advance.
What are the concrete implications?
The nine percent price reduction announced as of September 1, 2023, will only affect Microsoft 365 and Dynamics 365 licenses purchased in Swiss francs. Swiss companies that purchase their licenses in other currencies will not benefit. It should also be noted that Azure services are billed each month according to exchange rates anyway; therefore, the announced price reduction does not apply to Azure.
When exactly a company will benefit from the price reduction is very individual. Price changes for existing licenses will only occur after the end of the contract term or for new orders. Since most customers switched to licenses with a one-year term with the introduction of NCE, they will have to wait until the respective license renews at the new, reduced price.
NCE for non-profit organizations and schools as well
Non-profit organizations and schools have been exempt from the introduction of the New Commerce Experience (NCE) at the beginning of 2022. This means that today their existing licenses are still not tied to contract terms and can be flexibly adapted. That is changing now. As of November 1, NCE-based licenses will also be available for non-profit organizations and schools[ii]. Operators need to think about which durations are ideal for their organization. Again, annual terms will probably be chosen more often, as the 20 percent surcharge for flexible monthly licenses is quite significant.
Affected UMB customers will be contacted in September. They will be given the opportunity to communicate their desired licensing periods until October, so that the migration can be carried out in November.
From January 2024 there will be only NCE based licenses
Commercial customers who have been using NCE-based licenses for some time, as well as non-profit organizations and schools that have yet to make the NCE transition, will no longer have a choice as of January 2024. Legacy licenses that have not been proactively converted before this date will then be converted by Microsoft into annual licenses[iii].
What are NCE licenses?
Microsoft 365 and Dynamics 365 based on NCE (New Commerce Experience) are bound to a fixed term. Before ordering, a customer can choose whether he wants a term of one year (standard) or one month (20 percent surcharge) for his licenses. There is also a term of three years for a small number of licenses. Terms cannot be changed after the order has been placed. During the term, the number of licenses can be increased, but not reduced. During the license period there are also upgrade options. A downgrade possibility is not available.