What is Microsoft doing with its pricing?
Price increases are a familiar story today, and there are few sectors where this isn’t going to be passed on to consumers – including cloud computing. A prime example of this is the price increase that has been announced by Microsoft, which is going to have an impact on a global level.
The narrative from Microsoft is that it is taking steps to align its global pricing so that customers worldwide will have a consistent experience with the megabrand. The pricing will reflect the exchange rate of local currency to the US dollar. That will look like a 9% increase in cloud computing costs for customers in the UK and up to 15% in other areas. This is not a one-time thing for Microsoft either, as the company has also announced that it will be assessing pricing twice a year to consider any currency fluctuations that have occurred in that time. The motivation for this, says Microsoft, is to deliver more transparency and predictability for customers on a global level and to be able to continue to support its commitment to being competitive. It’s worth noting how Microsoft highlights the fact that it is simply moving to a “pricing model that is most common in our industry.”
What does this mean for cloud computing globally?
Probably the biggest impact will be when other cloud computing providers follow in the footsteps of Microsoft and make their own changes to pricing. Most likely to increase their own charges. Microsoft Azure is not the biggest provider in the cloud computing space (that’s Amazon, which has a third market share) but currently accounts for around 20%. Plus, it’s a huge global brand and many other businesses go where Microsoft leads. However, it’s worth noting that there remains substantial competition across the cloud services market and pricing is always going to have a big part to play in that. We’ve already seen Amazon do everything it can to remain ahead of the competition with continuous innovation and developing its cloud offering so there is certainly scope for different approaches regarding pricing models.
How are Microsoft price increases justified?
In the same way that they are being justified across many other sectors today – as a result of overall rising costs. Centres that run cloud environments tend to be very energy intensive and in an era of eye-watering price rises where energy is concerned, that could be proving very problematic, even for a global giant like Microsoft. On a global level, data centres have been hit with a big increase in costs for simply continuing to do what they have always done, which has necessarily had to be passed on to the consumer. By way of an example, some of the smaller providers in the UK have been significantly impacted by the increase in energy prices and seen their basic costs rise by around 500%. That’s an enormous cost increase to absorb for any business.
But Microsoft isn’t a small provider
No, that’s true, and the company has held off from implementing price rises before now, probably for that reason. However, when looking at a triple-digit increase in costs, that’s something that even the biggest companies in the world need to sit up and pay attention to. Especially as there are no signs of this dropping off any time soon, the increases at Microsoft are going to come into effect on 1st April this year, and it would be surprising if Microsoft turns out to be the only big provider that goes down this route. It’s likely that Google – and perhaps even Amazon – are going to have to take the step to balance this level of expense in the same way that Microsoft has.
How can your business cope with these price rises?
- Shop around and make sure you’re getting the best price for the service that you need – There is plenty of choices today in the cloud computing market, and no need to stick with a provider that increases costs by an unfair amount or to a figure that isn’t affordable for your enterprise.
- If Microsoft is your chosen provider, buy your annual license before 1st April 2023 – That way, you’ll be protected against this, and any other, price rises for the rest of this year at least.
- Review your data and see if you could reduce the volume of storage that you need – Have a ‘spring clean’ and remove anything that no longer needs to be there so that you’re not paying to store data when it’s not really necessary. You might also be able to look into how you’re configuring applications to reduce storage levels.
- Make sure you’re actually using what you’re paying for – Sometimes, we simply commit to a service and then forget about it. One simple way to reduce your costs is to review the service you’re paying for, and if you’re not using it completely and no longer need that level of support, look for opportunities to reduce what you’re paying.
- Get some advice on the best options for cloud computing for your business so that you know you’re directing your resources in the right way and making investments that count.
When Microsoft increases its prices in April 2023, it will probably trigger a wave of similar cost increases – something that business owners today are very familiar with. However, there are steps you can take to manage this, including making the right choices in terms of the IT support and services that you use.
SADS IT is a leading IT support company servicing London, Kent and the South East. We’ve over 35 years of experience working with local businesses, providing professional, and trusted IT support. Microsoft has been making a lot of changes recently, with their partner program and now the impending price increase. Keep ahead of the curve with SADS IT – Contact us.
