Microsoft is set to roll out significant pricing changes for Microsoft 365 starting April 1, 2025. These updates will impact businesses and individuals using Microsoft’s cloud services, particularly those on monthly billing plans. Here’s a breakdown of the upcoming price hikes and how you can optimize your subscription to minimize costs.
1. 5% Increase on Monthly Billing for Annual Subscriptions
One of the biggest changes is a 5% price increase for customers who choose monthly billing on annual subscriptions. Previously, businesses could commit to an annual plan and still pay in monthly instalments without extra charges. Starting in April, this option will come at a premium. This is what it means:
- If you pay for Microsoft 365 annually but in monthly instalments, your costs will increase by 5%.
- This applies to all Microsoft cloud subscriptions.
- Businesses have until March to lock in the current pricing for 1-3 years through the CSP program or consider switching to annual billing to avoid the extra fee.
2. Microsoft Teams Phone License Price Increase
Microsoft is raising the cost of Teams Phone licenses by 25%. This means:
- Teams Phone Standard license will increase from $8 to $10 per user per month.
- Teams Phone Standard for Frontline Workers will rise from $4 to $5 per user per month.
- For a company with 1,000 employees, this translates to an extra $24,000 per year.
If your business relies on Teams for calling, now is the time to assess whether all users need Phone System licenses. Alternatively, purchasing one annual license through the CSP program before April can help extend the current pricing for a few months.
3. Power BI Price Increase
Power BI is also seeing a significant price jump, with a 40% increase on the Power BI Pro license:
- Power BI Pro will increase from $10 to $14 per user per month.
- Power BI Premium will rise from $20 to $24 per user per month.
- If you’re on a monthly billing plan, you’ll also face an additional 5% increase.
To reduce cost, consider these action items to investigate your current Power BI status:
- Evaluate your Power BI user count—are all users actively using the service?
- Consider Microsoft Fabric, which offers capacity-based pricing instead of licensing individual users.
- Look into third-party analytics tools that may offer cost-effective alternatives.
- Secure your pricing by purchasing a single license through the CSP program in March.
4. Enhancements to Copilot Features
Microsoft is rolling out new AI-powered features for Copilot, which may justify the price increases for some businesses. Key updates include:
- A free version of Copilot Chat to enhance accessibility.
- New productivity tools, such as SharePoint Advanced Management, bundled with Copilot licenses.
While these updates can improve workflow and collaboration, they also contribute to Microsoft’s broader pricing strategy. Is the added functionality worth the higher cost for
your business? Now is the time to assess.
How to Navigate the Microsoft 365 Price Changes
With these pricing changes around the corner, here are some steps your organization can take to stay ahead:
- Review your Microsoft subscriptions – Are you paying for licenses you no longer need?
- Optimize your payment strategy – Consider switching to annual billing to avoid the new 5% premium.
- Explore alternatives – With Teams Phone price increases, third-party VoIP options may provide a more cost-effective solution.
