Thursday 5th January 2023
Microsoft announced that it’s is taking several steps to align the pricing of our Microsoft Cloud products globally, meaning customers will have consistent pricing reflecting the exchange rate of the local currency to the US dollar (USD).
Currencies globally have been impacted differently by the macroeconomic environment, which also affected their exchange rate compared to the US dollar. For a sustained period, Microsoft had deferred pricing adjustments based on such currency fluctuations, but as of 1st April 2023, Microsoft is realigning Cloud pricing globally.
This means Microsoft are updating local currency cloud pricing in EUR, GBP, SEK, NOK and DKK based on foreign currency fluctuations compared to the US dollar (USD) to have greater price harmonisation for their cloud products across the globe. This will ensure that customers worldwide have more closely aligned pricing compared to the USD rate. Note that customers who license Azure through New Commerce CSP have pricing in US dollars worldwide and will not be affected by the local currency-based price changes.
Starting April 1, 2023, the following adjustment will be effective for Microsoft Cloud services:
These adjustments will not affect existing orders under licensing agreements for products that are subject to price protection. However, prices for new product additions under such licensing agreements and purchases under new contracts will be as defined by the pricelist at the time of order.
Moving forward, Microsoft will establish a centralised process in which currency fluctuations and potential pricing adjustments relative to the USD will be assessed and evaluated twice a year. This simplified structure will provide better transparency and predictability for customers no matter where they are based and move to a consistent pricing model that is the most common in our industry.
How this may impact you:
New Commerce CSP Online Services
• Pricing for existing subscriptions for seat-based cloud services offers in New Commerce CSP are protected during the term of the subscription at the original billing price.
• Additional CSP seats added to an existing subscription (subscription active before 1st April 2023) will be at the original billing price before any increase.
• Expiring or new subscriptions purchased on or after 1st April 2023, will be subject to the revised price list, including the price adjustment.
New Commerce CSP Azure
• Azure in CSP is already priced in USD globally and is converted into local currency monthly, and so is not impacted by this local currency adjustment.
As described above, any purchases made prior to 1st April 2023 will receive price protection until the end of the commitment or agreement term. Please work with your Bytes and Microsoft account teams to plan accordingly and lock in pricing prior to the price adjustment. Azure customers should consider moving to CSP to avoid any future price adjustments.
Microsoft historically maintained an as needed process of Cloud and on-premises software pricing updates. After pausing local currency pricing adjustments in many markets due to global and political events such as Covid and the war in the Ukraine, Commercial prices across the world have drifted from global US dollar parity.
To become more agile and maintain global pricing alignment, beginning in 2023, Microsoft will implement a more defined and transparent cadence to provide better Microsoft Cloud pricing alignment across regions. Customers and partners with pricing in local currencies, will be able to plan for pricing alignment to USD and global parity at semi-annual intervals, subject to market conditions.
While competitors including AWS are pricing mainly in USD, Microsoft continues to offer 16 local currencies across all channels to customers. Moving to a semi-annual update cadence allows Microsoft to align global cloud pricing, it will also result in smaller, more frequent changes that are easier to plan for.
Microsoft India to increase prices by up to 11%. Starting 1st February 2023, Indian rupee prices for commercial on-premises software will increase by 4.5%, Online Services will increase by 9%, and Windows Get Genuine (GGWA) will increase by 11% to realign close to prevailing USD pricing levels in the Asian region. Read the announcement here.
Microsoft Korea to increase prices by up to 15%. Due to currency fluctuations, Microsoft Korea is announcing Korean won pricelist changes to harmonize its prices for on-premises software and online services between Korea and the Asian region. Starting 1st April 2023 Korean won prices for on-premises software will increase by 15% and online services will increase by 11%
Microsoft Japan to increase prices by up to 20%. Due to currency fluctuations, Microsoft Japan Co., Ltd. will be revising all prices for corporate licenses and services and raise its prices for on-premises software by 20% and online services by 15%, effective 1st April 2023. The new prices will apply to customers renewing or signing new contracts from April 2023. The announcement is here.
Microsoft is adjusting the price of SQL Server by 10% starting January 2023.
If you have an Enterprise Agreement, then you will have fixed pricing through to the end of your contract but only for those licenses already included. If you plan to purchase licenses of a product not currently included within your agreement, then now is the time to purchase. By purchasing a single licence, you can lock in today’s pricing through to your agreement end.
If you purchase through the Microsoft Customer Agreement (through CSP) then you should consider purchasing licenses ASAP to lock in prices for 12 months (with an annual commitment). Any additional quantities of licenses you add over the next 12 months will then be fixed at today’s price.
Legacy CSP customers should transition to New Commerce CSP in December to avoid any increases.
Changes to Microsoft Cloud & On-Premises Pricing - From September 2023
As previously announced, Microsoft will establish a centralised process in which currency fluctuations and potential pricing adjustments relative to the USD will be assessed and evaluated twice a year. This simplified structure will provide better transparency and predictability for customers no matter where they are based and move to a consistent pricing model that is the most common in our industry. Recently Microsoft confirmed that price adjustments for local currency fluctuations will be effective every September and February beginning September 2023, if sustained, material currency deviations occur.
Frequently Asked Questions
Why are Microsoft making these changes?
In some regions, Microsoft customers and partners have been able to purchase Microsoft products at up to 40% lower prices versus global US dollar levels for several months. These changes are to realign regional prices closer to USD pricing which may result in increases or decreases depending on local currency fluctuations.
What is the change being made?
Beginning in 2023, Microsoft will implement a more defined and transparent cadence to provide better Commercial Cloud pricing alignment across regions. Partners and customers with pricing in local currencies will be able to plan for pricing alignment to USD and global parity at semi-annual intervals, subject to market conditions.
Why is Microsoft changing local currency pricing at a semi-annual cadence?
Microsoft regularly assesses the impact of its local pricing for software products and online services to ensure there is alignment across regions. Moving to a semi-annual cadence will enable greater transparency for our customers on the timing for pricing adjustments and ensure a clear and consistent approach to pricing.
Why does Microsoft adjust prices due to foreign exchange?
Cloud services can be purchased globally and many of Microsoft’s competitors’ price in USD globally. Microsoft’s pricing updates are based on local currency fluctuations and other factors to ensure global consistency in our pricing.
Does this mean my pricing will be changing all the time?
Pricing updates are based on local currency fluctuations and other factors to ensure global consistency; this is the same process, but rather than occurring at any time of year, there will be a set semi-annual cadence. Partners and customers with pricing in local currencies will be able to plan for pricing alignment to USD and global parity at semi-annual intervals, subject to market conditions.
Does Microsoft decrease prices?
Yes, Microsoft has decreased prices most recently in New Zealand and Taiwan. As part of the new semi-annual cadence prices will be aligned up or down to maintain global pricing alignment.
Does this announcement mean that all pricing will soon increase globally?
Only pricing out of alignment will be updated and Cloud prices may be adjusted upward or downward based on prevailing market FX rates. Details will be shared in the upcoming weeks and months on specifically what will be changing in the first half of 2023. Note: USD pricing and MCA Azure plan on New Commerce which is USD pricing will not be impacted.
I noticed you only mentioned Cloud pricing alignment. What about on-premises software licenses?
Microsoft continue to prioritise local pricing stability for on-premises software. Although any FX pricing adjustments for on-premises software will follow the same semi-annual cadence, the evaluation will continue to consider many factors such as local and regional market dynamics including competition, business models, local currency rates and local inflation
How will I be notified about price changes?
Beginning in 2023, local currency prices will be adjusted semi-annually at a routine and predictable cadence. Bytes will share details as soon as it becomes available in the coming weeks and months.
Will I receive a price preview from Microsoft?
When business conditions allow, Microsoft will provide Bytes with a 30-day price preview. By transitioning to a semi-annual pricing cadence for local currency adjustments, partners will have additional transparency and predictability to prepare for upcoming price changes.
How will Microsoft’s local currency pricing adjustments affect indirect pricing?
For business sold through partners, end customer pricing will continue to be determined by resellers.
How will local currency prices align with Azure US dollar prices in the MCA?
Adjusted prices will align more closely with Azure MCA US dollar pricing.
Why is Microsoft taking a more proactive approach to adjust for currency fluctuations?
With global alignment to US dollar levels, customers and partners will have more consistent pricing regardless of their geographical location.
Are Microsoft prices driven by energy costs?
Microsoft considers many factors such as local and regional market dynamics including competition, business models, local currency rates and local inflation. Energy prices are included in inflation metrics when making this overall assessment.
Am I able to transition my transaction currency with Microsoft?
Currencies are determined based on enrolment location. By moving to semi-annual currency adjustments, pricing will be better aligned regardless of the transaction currency.
If Microsoft is going to make frequent adjustments to local currency pricing, why doesn’t it price in US dollars?
Microsoft believes that there is an advantage to partners and customers to be able to purchase Microsoft products in their local currency. Therefore, Microsoft will continue to offer local currency pricing in sixteen markets while striving to have better global pricing alignment. Microsoft is committed to providing competitive pricing to customers and partners in all regions of the globe. Unlike many of their competitors, Microsoft continues to provide price protection for committed customers.
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