Office 365 Price Tiers Provide Less Value Than Other Microsoft Product

Price tiers for Office 365 represent only a 3% difference from the preceding level rather than the more traditional 7+% for other products.

Both of these are reflective of cost and budgeting.

For Windows Server / System Center, the cost of licensing larger servers (that is, with more cores per processor) will increase. Organizations may have opted – or are contemplating – these denser servers as a way to increase capacity and workload while constraining additional software license investment.

For Office 365, the notion of determining cost by ascribing a routine 7% discount from one price level to the next does not work. So if an organization is considering going for that extra 100 seats in order to attain Level “C” pricing, for example, Microsoft’s proposal may come as a surprise. So consider Office 365 Plan E3. At Level “B”, the monthly fee is $18.80. Thus, 5,900 licenses would cost $110,920. If the organization opted to license 6,000 users, the unit cost is $18.20 – the 3% variance – and the monthly cost is $109,200 – just $1,720 less.

What the customer might have been expected is the traditional 7% price variance, which would result in a $17.84 monthly unit cost, which, in turn, translates into a monthly total of $104,904 – over $6,000 less!

So the price variance by month is nearly $4,300. The annual variance is over $51,000. That could be a hard nut to crack if not budgeted.