Microsoft hikes enterprise fees, blaming Brexit

Microsoft is to hike prices for some of its new business customers from January, when a rise of up to 22% will hit commercial users of the company’s Cloud service.

So-called ‘on-premises’ enterprise software users will be hit by the price hike too – albeit by a less steep 13%, which will also take effect from the New Year.

Both the price hikes were blamed by the US software giant on the EU referendum; specifically, the downward effect that the Brexit decision has exerted on the pound.

In particular, the value of sterling against the dollar, which Microsoft books its revenues in, has plummeted by about 18% since the UK voted to leave the EU on June 23rd.

Cue the California company’s comments in an “important” update about the need to “harmonise” its prices across Europe, so its fees in sterling can “realign close to euro levels.”

“We periodically assess the impact of local pricing of our products and services to ensure there is reasonable alignment across the region and this change is an outcome of this assessment,” Microsoft said.

“These changes are similar to the recent harmonisation adjustments to pricing in Norwegian krone and Swiss franc we made in April 2016.”

Ongoing contracts are immune to the price hikes, as are resellers, although such third parties are likely to reflect their own costs being inflated when pricing the two affected MS products for January.  

“For business customers, these changes will not affect existing orders under annuity volume licensing agreements for products that are subject to price protection,” Microsoft said.

“For example, customers with Enterprise Agreements have price protection on previously ordered enterprise software and cloud services, and will not experience a price change during the term of their agreement.”

Business customers with cloud commitment subscriptions such as Office 365 also get price protection during their subscription term (normally 12 months from the start of paid subscription) and were said to be unaffected too.

However, the 13% and 22% hike (the latter affecting “most” enterprise cloud prices) covers new orders from January by public sector, academic and commercial customers, and covers any business or institution that renews a volume license arrangement from then.

In a statement that may entice customers to buy before the New Year, Microsoft said: “Prices for new product additions under existing volume licensing agreements and purchases under new contracts will be as defined by the price list at the time of order.”

Microsoft’s announcement comes a week after its Office 365, which is covered by the “unified price adjustment”, was included in a software bundle being discounted by 25 per cent for new members of IPSE, the UK’s contractor trade body.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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