Business owners and other C-suite executives have another hurdle to overcome in 2025. Last quarter; Microsoft announced upcoming changes to their licensing costs under the Cloud Solution Provider (CSP) and New Commerce Experience (NCE) models; with price increases taking effect in April 2025.1 These changes create budgetary implications for U.S. businesses; and executives must now review licensing strategies to optimise costs and avoid unnecessary expenses.
Key changes to Microsoft licensing in 2025 for U.S. businesses
If your company’s Microsoft subscription renews before April 1st; and you are on an annual commitment; you are unaffected by the licensing change until 2026. 2 Everyone else; however; will see a change in Microsoft annual subscriptions. Some notable changes are:
- Power BI Pro: From $9.99 to $14 per monthly user.
- Power BI Premium Per User: From $20 to $24 per monthly user.
- Teams Phone Standard: From $8 to $10 per monthly user.
These changes will affect businesses with large Microsoft 365; Office 365; Dynamics 365; or Power Platform deployments regardless of company size. 3
If the above was not a large enough blow to most organizations; from April 2025; Microsoft will also introduce a 5% surcharge for licenses that are on an annual commitment but where organizations elect to pay on a monthly basis. This will impact businesses; especially those that have been paying monthly and where cash flow prohibits a one-off annual payment.
Why U.S. businesses should act now:
- Optimise costs before price increases
Regardless of when your license ends; you can still renew before your scheduled date. U.S. organizations renewing their licenses before April 1; 2025; can reinstate them at the current lower rates and delay the impact of upcoming increases. - Strategic licensing adjustments
By reviewing your licensing structure now; you can determine the most cost-effective approach for your business; whether it’s through licensing consolidation; downgrades; or shifting to annual billing.You can also migrate workloads to alternative Microsoft licensing models to optimise your spending. - Avoid unnecessary spending on unused licenses
No one likes to overpay; but many U.S. businesses do just that due to inactive or redundant licenses. By conducting a review; you can ensure licenses are aligned with actual usage and eliminate waste. - Take advantage of flexible contracting options
Microsoft’s shift to NCE pricing requires U.S. companies to evaluate their commitment terms. Businesses currently on monthly subscriptions would benefit from switching to annual commitments before the April price rise to avoid the 5% increase. - Ensure compliance and future-proof IT budgets
Like all software; Microsoft’s licensing models are complex; and non-compliance can lead to unexpected and unwelcome costs. Reaching out to a cost consultancy for a review ensures compliance while planning for future needs.
Why partner with ERA Group for a Microsoft licensing review?
- Expertise in Cost Optimization: As a leading cost consultancy; we specialise in reviewing technology costs; ensuring U.S. businesses maximise value while minimising waste.
- Tailored Licensing Strategies: An ERA Group consultant approach aligns licensing with your business objectives to ensure the right balance of subscriptions and commitment terms for your company.
- Proactive Cost Management: As cost consultants; we help your company secure cost-effective licensing structures before price hikes occur.
- Vendor Negotiation Support: Negotiating is our specialty; and we use it to secure the best terms by discussing them with Microsoft or CSP providers.
Nothing moves quite as quickly as Quarter 1 in the new year. With Microsoft’s licensing changes approaching; now is the best time for your business to optimise its IT spending. Don’t wait; Contact one of our consultants to ensure your organization takes full advantage of renewing your licensing before Quarter 2 to delay the risks of price increases today.
