Microsoft price increase

Many partners of Microsoft are not surprised by the vendor’s choice to raise their prices, some have claimed that they been warning customers about possible price increases, since the vote to leave the EU had taken place.

Microsoft announced the prices raising on their blog, by saying that the UK cloud enterprises prices will be increased by 22% from the 1st January, also on-premise prices will increase by 13%. All of this is due to decreasing value of the sterling, which has decreased by 18% since June 2016.

microsoft office

According to Mike Bacon a Managing Director of a partner company of Microsoft, the rise will have a limited amount of impact on the VAR, this is because the increases were expected.

He explained “Microsoft have held back for longer than some of the other US vendors.”

Mr Bacon also added “It makes no difference to us because we have been telling customers for six to eight weeks to expect prices to increase everywhere. We have been telling them that where they have committed to buy, they should bring it forward if they can.”

Michael Cornford from Data Driven Systems, has echoed the opinion although he argued that the price increase is far higher than it needs to be.

“It doesn’t surprise me because it happens quite regularly, I think that the price rises are way over inflation and the Brexit issues. Sterling has fallen 18% for now, but I doubt that when it comes back Microsoft are going to lower their prices” He said.

This is the latest in a string of prices rises following Brexit, which includes HP who have increased prices by 10% and Dell who have been rising prices by 8% to 9%.

Microsoft’s announcement has seen their cloud prices rising by 9% more than their on-premise solutions. Mr Cornford has said this could be due to the cloud being more low-cost model.

“Cloud is quite a low-cost model so to make a difference you need to increase it quite a bit. It doesn’t surprise me that one outstrips the other” he explained.

To conclude, for business customers the changes will not affect any existing orders under annuity volume licensing agreements for the products that are subject to price protection. Although the prices for the new product additions under such volume licensing agreements and the purchases under new contracts will be as defined by the pricelist at the time of the order. The pricing change will not apply to consumer’s software or consumer cloud services.

Microsoft, just one of the casualties of Brexit and the dropping of the sterling.