Back

Microsoft 365 Licensing Changes in 2022 New Commerce Experience

OverviewBig changes are coming to Microsoft Licensing in 2022 In August of last yearhttpswwwmicrosoftcomenusmicrosoft365blog2021...

4 min read
Published on Jan 28, 2022
changes-to-microsoft-365-licensing-in-2022-the-new-commerce-experience-nce-is-coming

Overview

Big changes are coming to Microsoft Licensing in 2022 . In August of last year, Microsoft announced price increases across most of their Microsoft 365 license types that go into effect on March 1st, but that is not the only change coming to Microsoft 365 subscribers.  Microsoft is simplifying the license procurement process, aligning all offerings (direct purchase, CSP, Open Value) to the Enterprise Agreement (EA) model. Here are three important things to know:

  • New pricing increase of around 15% goes into effect on March 1st
  • Annual agreements will be enforced, with monthly terms getting a 20% increase over annual agreements
  • The cancelation window for licenses will be reduced to 72 hours, where previously you could suspend licenses to avoid being charged.

Why is Microsoft Increasing Prices?

In Microsoft’s August 2021 announcement they explained that Office 365 has not had a substantive price increase since its launch in June 2011. During that time, they have added 24 applications to the suite, including Teams, PowerApps, Power BI, Planner, Visio and OneDrive and released over 1400 new features across the suite, including security, AI, and collaboration improvements. Additionally, along side the pricing increase Microsoft will now be including unlimited dial-in capabilities (Audio Conferencing) for Team Meetings to meet the needs of remote and mobile workers.

Timeline for Microsoft Licensing Changes in 2022

  • January​ 1st, 2022 - General Availability for New Commerce Experience​
  • March​ 1st, 2022 - Office 365 and Microsoft 365 price increases go into effect​
  • March 10th, 2022 - All new-to-the-customer licensing must be placed through NCE​ (New Commerce Experience)
  • March 31st, 2022 - Discount pricing for annual agreements ends​
  • June​ 30th, 2022 -  End of ability to renew subscriptions on existing platform​
  • June 30th, 2022 - Discount for monthly terms ends​
  • July​ 1st, 2022 -  Can no longer renew legacy subscriptions

Annual Terms For Microsoft 365

Microsoft has long stated that their monthly pricing was based on an annual agreement, but left it unenforced, giving businesses the ability to add and remove licenses at will. Microsoft will begin enforcing annual agreements for all direct purchase, CSP, and Open Value customers with the shift to the New Commerce Experience.  The ability to purchase licenses on a monthly basis will still be available (for some licenses) with a 20% premium price.  License purchases made under the annual agreement will qualify for the standard price model, and customers may reduce license counts during their annual renewal window.  Licenses may be added at any time. Microsoft is referring to annual term pricing as P1Y (Pay 1 Year) and monthly term pricing as P1M (Pay 1 Month).

The monthly P1M term, while more expensive than annual, is going to remain useful for organizations that have seasonal workforces, contractors, or during provisional employee onboarding periods.

Monthly Microsoft 365 Pricing

License TypeMonthly (P1M) CostP1M Cost over 12 monthsIncrease from Annual Term
Microsoft 365 Business Basic$7.20$86.40$26.40
Microsoft 365 Business Premium$26.40$316.80$76.80
Microsoft 365 E3$43.20$518.40$134.40
Office 365 E1$12.00$144.00$48.00
Office 365 E3$27.60$331.20$91.20
Office 365 E5$45.60$547.20$127.20

Worth Noting

  • Microsoft 365 E5 pricing is not increasing
  • Windows 365 is not eligible for discount pricing​
  • Some licensing will have not have the P1M (monthly) option​
  • All offers will be seat based​ (as opposed to seller based)
  • Customers can have both annual AND month-to-month agreements

What Are The Price Increases Coming to Microsoft 365?

License typeOld PriceNew PriceIncrease
Microsoft 365 Business Basic$5$6$1
Microsoft 365 Business Premium$20$22$2
Microsoft 365 E3$35$38$3
Office 365 E1$8$10$2
Office 365 E3$20$23$3
Office 365 E5$32$36$4

Microsoft 365 Annual Term Discount

Organizations that move to P1Y terms prior to March 31st, 2022 get a 5% discount for the first year. Substantial savings are possible for early movers that lock in pricing ahead of the March 1st, 2022 price increases as this discount will also apply to the old pricing.

License TypeMonthly Cost (P1Y)Annual CostPrice With DiscountSavings
Microsoft 365 Business Basic$6$72$68.40$3.60
Microsoft 365 Business Premium$22$264$250.80$13.20
Microsoft 365 E3$36$432$410.40$21.60
Microsoft 365 E5$38$456$433.20$22.80
Office 365 E1$10$120$114.00$6.00
Office 365 E3$23$276$262.20$13.80

Author: Kristy Guy, Agile IT Program Manager and Resident Licensing Expert

Are You Overspending on Licensing?

Agile IT is more than just a license provider. We partner with our clients to help them unwind the complexity of their Microsoft licensing and help avoid redundancy and over-spending. To find out how we can help your organization reduce licensing costs, request a quote today.

This post has matured and its content may no longer be relevant beyond historical reference. To see the most current information on a given topic, click on the associated category or tag.

Related Posts

CMMC and the False Claims Act: Understanding Compliance Risk

CMMC and the False Claims Act: Why Not Getting Compliant Hurts

Learn how failure to meet CMMC 2.0 requirements can lead to False Claims Act liability for DoD contractors. Discover compliance risks and how to protect your business.

Jun 10, 2025
5 min read
Understanding the 17 Practices for CMMC Level 1

Understanding the 17 Practices for CMMC Level 1

Learn about the 17 cybersecurity practices required for CMMC Level 1 compliance. Understand basic safeguarding measures and how they help protect federal contract information (FCI).

Jun 10, 2025
6 min read
Comparing Azure Database Migration Service vs Manual Migration

Azure Migration Cost Guide: Estimating, Optimizing & Avoiding Hidden Expenses

Learn how to estimate, optimize, and avoid hidden expenses in Azure migration. Compare on-prem vs. cloud costs, use Azure Cost Management tools, and implement cost-saving strategies.

Jun 9, 2025
7 min read
Comparing Azure Database Migration Service vs Manual Migration

Choosing Between Azure Database Migration Service and Manual Migration

Should you use Azure Database Migration Service or migrate databases manually? Compare the pros and cons of both methods and choose the right approach for your migration.

Jun 6, 2025
7 min read
How to Use Microsoft 365 to Achieve CMMC 2.0 Compliance

How to Use Microsoft 365 to Achieve CMMC 2.0 Compliance

Learn how to use Microsoft 365—Business Premium, GCC, and GCC High—to meet CMMC 2.0 compliance requirements across Levels 1, 2, and 3.

Jun 5, 2025
6 min read
Getting GCC Validation

Getting GCC Validation

Need Microsoft GCC High for CMMC, ITAR, or DFARS? This step-by-step guide explains the validation process, eligibility requirements, and how Agile IT can help you get approved.

Jun 5, 2025
6 min read

Ready to Secure and Defend Your Data
So Your Business Can Thrive?

Fill out the form to see how we can protect your data and help your business grow.

Loading...
Secure. Defend. Thrive.

Let's start a conversation

Discover more about Agile IT's range of services by reaching out.

Don't want to wait for us to get back to you?

Schedule a Free Consultation

Location

Agile IT Headquarters
4660 La Jolla Village Drive #100
San Diego, CA 92122

Secure. Defend. Thrive.

Don't want to wait for us to get back to you?

Discover more about Agile IT's range of services by reaching out

Schedule a Free Consultation