Microsoft Licensing Changes to Education and Non-profit Sectors

What's changing?

• Microsoft is replacing the existing, legacy, subscription license model with a new one that has different terms. This change has already been rolled out in the commercial sector, and Microsoft is now deploying this model to the Education and Non-profit customer segments.

• Microsoft has called this the New Commerce Experience (NCE) and it brings distinct changes to how the subscriptions operate.

• The main change is the commitment term.  The outgoing legacy model had no restrictions or penalties for cancellations or mid-term seat reductions. The NCE model enforces these commitment terms, where after a 7-day grace period the subscription must run its full term. Reductions or cancellations mid-term are not allowed.

• Therefore, Microsoft offers different commitment term options for annual, monthly and in some cases triennial terms. They all operate the same way, with prices fixed at time of initial purchase for the duration of the commitment term. Seat quantity increases are allowed, and a 7-day grace period is provided for that increase. Increases to a license subscription retain the same price.  It is only at renewal of the subscription that a price change may apply.

• You can have a mix of subscriptions with different commitment terms for the same product license to offer better flexibility if needed. For example, for Microsoft 365 E3 you could have 20 licenses on an annual commitment and use a monthly for temporary/seasonal workforce increases.

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Are prices increasing?

• There is no change to pricing due to the new license model itself, but from 1st September 2023, any new subscriptions or renewals will increase.

• Microsoft increased license prices in New Zealand on 1st September 2023 by 7%. Where beneficial, we proactively locked in prices for customers before this increase to delay its impact.

• Annual and triennial commitments, the price remains the same. Note this may be different to your current prices. With monthly commitments to provide flexibility for temporary workforce increases, Microsoft levy a 20% price premium.

• Note that Microsoft has given itself the option to change prices based on exchange rate fluctuations on 1st February and 1st September each year. There was no change on 1st February 2024. Microsoft advises us of any changes in advance, and we will be proactive in managing any changes where it provides you with a cost benefit.

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Does this impact any Azure subscription usage?

No. This change only impacts subscription licenses. Azure is billed in arrears based on usage and is not bound by any commitment terms.

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When is this happening?

• On 1st July 2024, any new license subscriptions created must be on the new model.

• From 1st September 2024 all renewing license subscriptions must transition to the new model.

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How am I impacted?

• Should you require a license for a Microsoft product you don’t currently have, then from 1st May, this new license subscription will be in the new model.

• For any existing license subscriptions, when they renew from 1st July, they will need to transition to the new model.

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What do I need to do?

As your CSP partner, Theta will be in contact to discuss how these changes impact the Microsoft license subscriptions provided by us.

Please reach out to your Relationship Manager should you require any additional details.