Microsoft New Commerce Experience
Microsoft recently announced a change in how customers purchase and manage their licenses through their Cloud Solution Provider (CSP) Program. This CSP plan will be replaced with “New Commerce Experience."
Why the Change? CSP to NCE:
Many products have evolved since the launch in 2015 of the Microsoft CSP plan to now, with a goal to reduce licensing costs and complexity.
Microsoft's goal is to help provide more flexibility to support a wider range of client purchasing scenarios. Their plan is to launch the New Commerce Experience (NCE) for Microsoft Azure in 2019 – and in fall of 2021 expanded NCE to include Microsoft 365, Dynamics 365, Windows 365, and Power Platform for commercial seat-based use.
By introducing NCE, customers have more choices and can optimize their spending. NCE licensing creates a standardization of offers and terms by reducing CSP’s pre-existing array of options. It includes termed subscriptions that reward loyalty to Microsoft.
Who does this affect?
The NCE plan affects commercial businesses only and Government or non-profit organizations will not be affected by it.
What's included in the NCE subscription?
Microsoft will be adding several guidelines as to how users can add and remove licenses to a subscription. This new process went into effect from March 1, 2022, and this is what you need to know:
There will be 3 main subscriptions: Monthly, Annual, and Tri Annual.
- Monthly Subscription - Allows the most flexibility.
- The change in NCE is a 20% increase to current subscriptions under the CSP plan.
- Upgrades are available for mid-level products, while and there are no downgrades permitted.
- Billing is upfront on the first of each month.
- Annual – This subscription is the same costs as CSP pricing.
- Upgrades are available and downgrades not permitted.
- Billing options: monthly or annual.
- Tri Annual – (3-year plan) Same pricing as CSP.
- Upgrades available, downgrades are not available.
- Billing options: monthly, annually, or 3-year upfront.
Those who opt for a monthly subscription will incur a 20% increase in price on their annual subscription - this also applies to all Microsoft CSP licensing. Users will still be able to add licenses during the term of a subscription, but will not be able to reduce the number of licenses during the term.
Which Microsoft Applications are Included with NCE?
These are the seat-based subscriptions impacted:
- Microsoft 365
- Dynamics 365
- Power Platform
- Windows 365
Price Increases for Applications (Unrelated to NCE)
There are some price increases unrelated to the NCE. Microsoft has increased pricing for all bundles by approximately 15%. The amount depends on your SKU and began on March 1st 2022. This reflects the value of their innovations added over the last 10 years.
Ultimately, regardless of the plan your company uses, or plans to use (monthly, annually, tri annually), will cost more.
This chart indicates the increase of each SKU.
Important Dates about the NCE Launch:
March 1st 2022 – From March 1st all new and renewing subscriptions must be purchased through NCE (Legacy CSP customers will be able to finish their existing terms).
July 1st 2022 - Legacy CSP customers must renew to the NCE plan to continue subscriptions.
October 1st 2022 – All customers will have to purchase through NCE, partner incentives and rebates are removed.
A Note About Legacy CSP Customers
All new subscriptions must be made on NCE after March 1st 2022.
You will still have the ability to renew existing subscriptions on the legacy CSP platforms through June 30th 2022 - July 1st 2022. Legacy subscriptions will stay in effect until the subscription term’s end. Microsoft's partner incentives on legacy subscriptions will be removed from October 2022. After June, legacy customers will need to renew their subscriptions in the NCE to continue their MS service.
Can I Convert an Annual Term Commitment to a Monthly Commitment?
This option is only available within 72 hours after placing an order for an annual subscription.
This requires you to cancel the annual commitment offer within 72 hours of placing the order to get a refund, then you can place the order for the Monthly commitment offer.
Who needs to know this?
The New Commerce Experience (NCE) impacts:
- A commercial business (schools and non-profits excluded)
- Paying monthly to Microsoft (pay as you go plans included)
- Using Microsoft on a seasonal basis or to support temporary work requirements
Monthly subscription pros and cons::
Advantages:
- The NCE monthly plan STILL offers companies the most flexibility (especially if there is plenty turnover). By keeping this plan, you can re-evaluate your organizations need for Microsoft products on a monthly basis.
- You can upgrade or downgrade subscriptions each month.
- You can add or decrease the amount of licenses each month.
Disadvantages:
- The flexibility created a 20% increase to pricing.
Can I have one NCE SKU with multiple terms? (Hybrid)
Yes, you can enact a plan with two terms. In a small-midsize business space, temporary employees are common over the course of the year.
For these customers, mixing annual and monthly agreements for permanent and temporary users may be the most cost effective and flexible solution.
Comparing Strategies
Company A has 500 employees and purchases the Microsoft NCE Annual plan.
They order 500 licenses for the full year. Throughout the year, 80 employees leave the company, leaving Company A overpaying for these 80 unused licenses.
Company B has 500 employees also. However, they decide on using the NCE Annual plan for 400 users while using a NCE Monthly plan for 100 users.
Company B will pay 20% extra on the monthly price for these 100 users, but will save on the annual subscription costs of the departed employees.
NCE’s Cancellation Policy
Beginning March 1st, this cancellation period will change to a 3 day trial period to cancel, and a 24 hour period for a refund.
Q&A on Terms of NCE:
1: What seat-based subscriptions does NCE affect?
Microsoft 365, Dynamics 365, Power Platform, and Windows 365 offers, plus associated add-ons.
2: Will billing dates change?
Yes. The billing cycle will be updated to reflect a beginning-of-month to last day-of-month cycle.
3: Will the available subscription terms change?
Yes. As well as continuing with the 12-month commit term, Microsoft will be introducing 1-month and 3-year commitment terms for subscriptions.
- 1-month commit term (incurs 20% price uplift vs legacy)
- 1-year (12-months) commit term (same as legacy pricing)
- 3-year (36 months) commit term (currently Dynamics 365 subscriptions only - others expected March 2022)
4: Can I purchase the annual term and still pay monthly?
Yes. You can choose to commit to a 1-year or 3-year term and pay for subscriptions monthly. However, you will be unable to decrease seat count or subscription type each month during the commitment period. You can only do this at renewal.
5: Can I increase or decrease my seat count mid-term?
You CAN INCREASE your subscriptions seat count mid-term with immediate effect and the additional seats will be pro-rated to the original commit term end date.
You CANNOT DECREASE your subscriptions seat count mid-term. You will have to wait until subscription commit term renewal to reduce the seat count.
6: Can I upgrade or downgrade a subscription mid-term?
You CAN UPGRADE your subscription(s) mid-term (partial/all) with immediate effect and the upgraded subscription will be pro-rated to the original commit term end date.
You CANNOT DOWNGRADE your subscription(s) mid-term. You will need to wait until subscription commit term renewal to downgrade/change to a lesser subscription.
7: Are subscription seat adds pro-rated when adding mid-term?
Yes, you can increase your subscription(s) seat count mid-term and the additional seats will be pro-rated to the original commit term end date.
Recap of NCE Subscriptions
Short-term commitment for term flexibility: one-month commitment
- Monthly subscriptions at a premium
- No price protection, month-to-month exchange rate
- 72-hour cancellation window
- Pay by day is unavailable, upgrades are permitted mid-term for some products, and downgrades are not permitted on any license
- Quantity increases are possible, but no decreases during the term
Long-term commitment for price predictability: one-year or multi-year commitment
- More stability in price for the term of the contract
- Annual subscriptions can be paid either monthly or upfront
- Price advantages for annual agreements
- 72-hour cancellation window or at-term renewal at the end of the year period
- Upgrades are available mid-term for some products, downgrades are not permitted on any license
- Quantity increases are possible, but no decreases during the term