Microsoft Commercial Pricing Update
Unlike many of its competitors, such as AWS, Microsoft does not create its prices only in US Dollars (USD). Instead, Microsoft continues to offer 16 local currencies across all channels to customers.
Historically, the company has maintained an as needed process of Cloud and on-premises software pricing updates. After pausing local currency pricing adjustments in many markets due to global and political events – such as Covid and the war in the Ukraine – commercial prices across the world have drifted from global US dollar parity.
Microsoft is making some adjustments to be more agile and maintain global pricing alignment. From 2023, Microsoft will implement a more defined and transparent approach to provide better Microsoft Cloud pricing alignment across regions.
This means that customers and partners with pricing in local currencies, will be able to plan for pricing alignment to USD and global parity at semi-annual intervals, subject to market conditions.
Moving to this semi-annual update model allows Microsoft to align global cloud pricing, and it will also result in smaller, more frequent changes that are easier to plan for.
Microsoft has recently announced that Microsoft Korea and Microsoft Japan are to revise corporate licenses and services prices. More to follow on this as soon as it becomes available.
Frequently Asked Questions
Why are Microsoft making these changes?
In some regions, Microsoft customers and partners have been able to purchase Microsoft products at up to 40% lower prices versus global US dollar levels for several months. These changes are to realign regional prices closer to USD pricing which may result in increases or decreases depending on local currency fluctuations.
What is the change being made?
Beginning in 2023, Microsoft will implement a more defined and transparent cadence to provide better Commercial Cloud pricing alignment across regions. Partners and customers with pricing in local currencies will be able to plan for pricing alignment to USD and global parity at semi-annual intervals, subject to market conditions.
Why is Microsoft changing local currency pricing at a semi-annual cadence?
Microsoft regularly assesses the impact of its local pricing for software products and online services to ensure there is alignment across regions. Moving to a semi-annual cadence will enable greater transparency for our customers on the timing for pricing adjustments and ensure a clear and consistent approach to pricing.
Why does Microsoft adjust prices due to foreign exchange?
Cloud services can be purchased globally and many of Microsoft’s competitors’ price in USD globally. Microsoft’s pricing updates are based on local currency fluctuations and other factors to ensure global consistency in our pricing.
Does this mean my pricing will be changing all the time?
Pricing updates are based on local currency fluctuations and other factors to ensure global consistency; this is the same process, but rather than occurring at any time of year, there will be a set semi-annual cadence. Partners and customers with pricing in local currencies will be able to plan for pricing alignment to USD and global parity at semi-annual intervals, subject to market conditions.
Does Microsoft decrease prices?
Yes, Microsoft has decreased prices most recently in New Zealand and Taiwan. As part of the new semi-annual cadence prices will be aligned up or down to maintain global pricing alignment.
Does this announcement mean that all pricing will soon increase globally?
Only pricing out of alignment will be updated and Cloud prices may be adjusted upward or downward based on prevailing market FX rates. Details will be shared in the upcoming weeks and months on specifically what will be changing in the first half of 2023. Note: USD pricing and MCA Azure plan on New Commerce which is USD pricing will not be impacted.
I noticed you only mentioned Cloud pricing alignment. What about on-premises software licenses?
Microsoft continue to prioritise local pricing stability for on-premises software. Although any FX pricing adjustments for on-premises software will follow the same semi-annual cadence, the evaluation will continue to consider many factors such as local and regional market dynamics including competition, business models, local currency rates and local inflation
How will I be notified about price changes?
Beginning in 2023, local currency prices will be adjusted semi-annually at a routine and predictable cadence. Bytes will share details as soon as it becomes available in the coming weeks and months.
Will I receive a price preview from Microsoft?
When business conditions allow, Microsoft will provide Bytes with a 30-day price preview. By transitioning to a semi-annual pricing cadence for local currency adjustments, partners will have additional transparency and predictability to prepare for upcoming price changes.
How will Microsoft’s local currency pricing adjustments affect indirect pricing?
For business sold through partners, end customer pricing will continue to be determined by resellers.
How will local currency prices align with Azure US dollar prices in the MCA?
Adjusted prices will align more closely with Azure MCA US dollar pricing.
Why is Microsoft taking a more proactive approach to adjust for currency fluctuations?
With global alignment to US dollar levels, customers and partners will have more consistent pricing regardless of their geographical location.
Are Microsoft prices driven by energy costs?
Microsoft considers many factors such as local and regional market dynamics including competition, business models, local currency rates and local inflation. Energy prices are included in inflation metrics when making this overall assessment.
Am I able to transition my transaction currency with Microsoft?
Currencies are determined based on enrolment location. By moving to semi-annual currency adjustments, pricing will be better aligned regardless of the transaction currency.
If Microsoft is going to make frequent adjustments to local currency pricing, why doesn’t it price in US dollars?
Microsoft believes that there is an advantage to partners and customers to be able to purchase Microsoft products in their local currency. Therefore, Microsoft will continue to offer local currency pricing in sixteen markets while striving to have better global pricing alignment. Microsoft is committed to providing competitive pricing to customers and partners in all regions of the globe. Unlike many of their competitors, Microsoft continues to provide price protection for committed customers.