Office 365 Price Increased, Subscriptions Now More Expensive
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If you think software is getting more expensive, you're right. Not only that, it's getting harder to even find the price hikes, so you can avoid them or know it's time to switch to another vendor's software. It's only natural vendors will pull out all the stops to maximize their revenue. IT organizations need to do the same to maximize the value they get from their tight IT budgets.
More vendors are building hidden price increases into complex new variations to on-site licensing models, as well as to their newer cloud and subscription offerings. "Licensing is getting to be more sophisticated," and the complexity is driving price increases, says Daryl Ulman, chief consulting officer of the Emerset Consulting Group, which offers negotiating services to IT for Microsoft and Oracle licenses.
Rather than having "clear-cut, outright, aggressive price increases," vendors are becoming "more subtle and devious," says Jeff Muscarella, executive vice president of the IT and Telecom Division at sourcing consultancy NPI. They're hiding price hikes within "changes to their licensing programs that are complex and multifaceted."
To get the best price on the software you need, do a better job of understanding exactly what you need now and in the future -- and what you could replace with a competitive offering. Such self-knowledge also tells you when it makes sense to buy more or different products or services if that will get you a better deal. The more you learn beforehand about the tweaks in each vendor's approach, the better you'll know when a seemingly good deal might come back to bite you.
With an on-premises implementation, you can stop paying maintenance and still run your current version. But if you want to leave a SaaS platform over a price hike, you own neither the software nor the infrastructure on which to run it. That makes moving off the SaaS vendor more complex, expensive, and risky.
Most consultants recommend starting three to six months in advance to understand exactly what functionality you need now and in the future, and how hard and expensive it would be to shift vendors in each case. The preparation might include deciding if your users can skip a generation or two of software upgrades to avoid a price hike, or whether a desktop virtualization license justifies the cost of continuing Microsoft's Software Assurance program.
Tips for better deals from IBM, Oracle, and SAPConsultants say that when it comes to price hikes, the most aggressive vendors are those with a large suite of interconnected products on which customers have come to rely. For customers of companies like IBM, Oracle, and SAP, this can make shifting to a competitor too expensive, difficult, or risky.
Microsoft has spent the last 10 years adding new tools to its software subscription bundles for businesses, and now it's time to raise the rent. The company announced its first major price increase for the Office 365 and Microsoft 365 subscriptions on August 19, which will go into effect on March 1, 2022.
Analysts from RBC Capital Markets reacted positively to the news in a Friday note to investors, indicating that the increased price is fair given the new tools Microsoft has added to the subscriptions over the years and is thus unlikely to impede the ongoing growth of the product. Microsoft stock also hit record highs after the news.
But opinions amongst investors are split on how the new pricing structure will shape future sales. RBC's analysts note that Microsoft's pricing announcement also included an update to Teams which allows users unlimited phone dial-ins into meetings, a feature previously reserved for the highest-priced tier of Microsoft 365. Now that the feature is more widely available, the analysts surmise it could stunt up-sells to those higher-priced tiers.
The bottom line on Adobe: Adobe can get more people into their ecosystem with their lower priced subscription model. These users then provide a wider base for using more and more storage, other apps, and other Adobe products, which therein improves the lifetime value (LTV) consistently.
Sure, customers will purchase a GoPro for a significant price, but they'll quickly lose interest and the expensive camera will end up in a drawer somewhere. They may buy some extra accessories, but the lifetime value starts to cap out and GoPro can't grow rapidly enough to make The Street happy.
Companies started to shift over to Google in the cloud rather than deal with the issues of installing and managing office offline. In the current workplace, a cloud solution allows companies far more variability in their work processes.
Known for their rugged cameras and gear, Go-Pro would be an unlikely company to offer subscription services. However, when their marketing hype wore off, and profit began to tank, they were forced to take drastic measures.The Go-Pro Plus subscription service launched in 2018 as a way for customers to get the most out of their Go-Pro footage. Since then, Go-Pro has grown its subscriber base to more than 1.6 million, and their gross margin has increased by 11%. In the end, subscriptions can be used to make a beautiful ensemble of lifetime subscription revenue.
The Whoop company entered the wearables market in 2011 by following a traditional business-to-consumer model. Sell your product to the consumer, and hope they purchase the next version when it's available. While this model worked for others, it found itself struggling to get market share against more established brands like Fitbit and Apple.Seeing the changing market landscape, in 2018 Whoop decided to waive the initial purchase price in exchange for a free strap with the purchase of a 6-month subscription to their health service. Whoops, pivot has since paid dividends, the company has grown to over 18 million subscribers, and is now worth an estimated 1.3 billion.
Nvidia has long been a titan in the world of computer hardware known for its GPUs. Manufacturers and gamers alike rely on their products. NVIDIA launched GEFORCE now as GPUs became more expensive and as more people worked through cloud-based apps.A cloud gaming monthly service which would allow customers to stream games on any hardware from anywhere with an internet connection. Since is launched, Geforce now has grown explosively to 15 million paid subscribers, with 2 million of those coming in the last quarter of 2021.
In order to do so, companies often lower their prices to unsustainably low levels in the short- to medium-term, but aim to compensate in the longer-term, when they'll be able to upsell and cross-sell their large customer base onto a more profitable package.
One classic example is the printer: most modern printers are sold for extremely low prices, but as soon as your ink runs out, you're forced into shelling-out for expensive, own-brand ink cartridges (the captive product), which are usually far more expensive than the printer itself.
In SaaS, this strategy works because of the Technology Adoption Lifecycle: early adopters gain utility from the bragging rights of first access to new technology, and they'll often pay more for access to new products. As the product matures and prices are reduced, it begins to appeal to the later market.
Their lowest priced package is a hefty $499, but by positioning their most expensive package on the left of the page (and therefore the first package would-be customers come across), both their Pro and Lite packages seem like relatively good value in comparison.
Crucially, the print option isn't designed to sell subscriptions: it's designed to make the combined subscription more appealing in comparison. Without the print-only option, online subscriptions are valued at $59, and the value of a print subscription is implied to be $66:
Though the E3 plan is slightly more expensive than the E1 tier, the added features justify the investment. Within the O365 E3 plan, each user gets the full license and is allowed to install the applications on up to 5 desktops, 5 tablets, AND 5 smartphones.
At the moment, from our experience with the two, Power Automate is a lot more expensive solution than Automation Anywhere, but it is also a far more reliable solution. With the price increases and with the current pandemic situation going on worldwide, a lot of the prices have fluctuated, but the packages and the all-encompassing features you get with the Microsoft package far outweigh the benefits from the Automation Anywhere side. Each package on the Automation Anywhere side is cheaper, but we need to continuously purchase subsequent packages to continue with our automation to the extent that we require. So, the Power Automate solution is a bit more pricey, but it does offer us a far better range of capabilities. There are different development plans that you can use. Additional licenses might be required for additional features, such as your Azure Logic or your Dataverse capacity. There is a limited capacity package that you can purchase, and then you have to have an additional license for added capacity.
The price is why I even considered it, because HelpSystems Automate was winning all of these awards and was supposedly the easier tool to use. That's what it says. But Power Automate's pricing model had a more gentle incline. That's why I went to the Microsoft Power Automate Desktop in the first place, because the pricing seemed to be more favorable. It the end, once you're using it for the whole organization, you end up paying the same thing for both products anyways. But to get started, Power Automate Desktop seemed better priced. But then it stopped working and I don't know how to get it back working yet. I'm using the HelpSystems Automate now, and I'm stuck on another step. I mean, it's hard and that's good. If it's hard, it means you'll get paid. So the bit being hard is not the issue. I just have no idea how to get Power Automate to work again. So when I do, I guess I'll let you know. The licensing was on a monthly basis. I liked it because it gave me a more reasonable per user cost. So I can set up one user like me, and then quickly set up all the workflows that I need, and it allows me to evaluate better and longer. I can onboard two or three other logins at a very reasonable price. Ultimately everybody wants to just dominate the entire organization anyway, and so the price is going to get ridiculous at some point. But by the time it gets there, the organization would be benefiting so much from it they don't mind. Whereas with the other solution, you have to bite the bullet a little sooner. I think you have to have an office license. I'm not sure actually. Maybe you can just use it by itself, but I'm not sure. 2b1af7f3a8