Microsoft is pushing some Office customers towards annual subscriptions to avoid price increases

Microsoft may once again be overstepping the goodwill it's been recently awarded through tireless iteration of its Office 365 productivity service by raising subscription prices by 20 percent.

To clarify, Microsoft has gone to its partners recently and informed them that the company plans to charge customers 20 percent more for Office subscriptions for plans that run month-to-month versus yearly contracts.

Starting sometime in 2022 Microsoft will roll out its New Commerce Experience for Office (NCE) which targets the commercial sales of Office. With the new "Experience" customers who continue to opt for a month-to-month relationship with Microsoft's Office suite will face a 20 percent hike, while alternatively, yearly subscriptions will remain capped for the moment.

The bully tactic Microsoft is employing isn't a new technique but often used to usher customers to longer subscription models from everything like food delivery to cosmetics.

The business model obviously favors the product and service provider by locking customers into longer contracts that enable the bean counters at companies to more reliably deliver investor outlooks and revenue reports.

Microsoft Investors Meeting

On the topic of investors, pushing its commercial customers into longer contracts through price point strong-arming will also allow help Microsoft disincentivize platform jumping as well as reliably predict churn trends if and when they do occur.

Microsoft has put its distribution partners in a tough bind as delivers of a poor message amid an ongoing fluctuating business industry.

Reddit is rife with comments and complaints about the new pricing model from Microsoft partners, Office 365 users and SMBs who find a $2.4T valued company employing these seemingly cost-cutting measure distasteful at best, and tone deaf to current circumstances at worst.

CNBC is also reporting that internal documents (obtained by CNBC) state Microsoft intends to collect the full yearly payment despite customers who may attempt to opt out part way through the year.

Microsoft has often attempted to take Draconian stances on several business-related fronts to eventually walk many of them back after customer feedback reaches an apex.

Right now, there is Change.org petition with 1,400 signatures floating around, and perhaps, several thousands more customers who will voice their opinions as the exact amount on the price hike is revealed.

Aside from the public relations blowback sticking with the price increase model could have for the company, journalist Jordan Novet over at CNBC points out that Microsoft is ostensibly playing a game of chicken with its Azure cloud customers.

Assuming those who re-up for the year will continue to integrate Office 365 and Microsoft's prized platform Azure, there is an unknown contingent of users who not only leave Office 365 but also pull their Azure contracts to find cheaper pastures elsewhere.

Yes, Office 365 is a preferred wholistic solution for many, others have managed to cobble together Google's G Suite of apps with AWS or Linux based alternatives for both productivity and cloud, and Microsoft is gambling a lot of goodwill and future earnings on this 20 percent hike.

 

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