Careful with the pricing Microsoft!

Now don’t get me wrong… I love what Microsoft are doing with their cloud platforms and security efforts. The investment must be mind-blowing considering the many constantly evolving services we now have at our disposal.

…BUT…! when they hiked their prices in March last year and introduced the yearly commitment so you could ‘stay on the lower rate’, I was not overly impressed. The timing seemed a bit off for a massive corporation that was already doing very nicely – while many small to medium businesses were and still are struggling to get by. Compassion and social responsibility are obviously not ‘top of mind’ when these decisions are made.”

Anyway, what am I writing about again? 🤣🤣🤣 Ah yes, at the time I did a bit of research to get an idea of what a little tweak in subscription pricing can do for a company that has millions of subscribers around the globe. And I found some interesting stats – for example, in New Zealand the average number of employees working for a company is… 4. I was completely underwhelmed to learn that!! It seemed a bit on the shy side, until I realised that a huge proportion of New Zealand businesses are owner operated, so they only have one employee! That’s going to drag the numbers down a bit.

I came across stats for the ‘top 10’ Microsoft 365 countries based on number of companies using the service. That’s when Excel came out and I started punching in some admittedly veeery ballpark numbers to see the effects on a semi global scale. How interesting I hear you say (while holding back a yawn – lol)!

👊🙂👍 👊🙂👍 👊🙂👍 👊🙂👍 👊🙂👍 👊🙂👍 👊🙂👍 👊🙂👍

As a starter for ten and with some different sources of information at hand, I thought I’d use the following inputs.

  1. Take the total number of companies in the top 10 countries. There are obviously many, many more, so I’m going in well beneath reality!
  2. I’ve used an average number of 18 licensed users per company. The reality may be closer to 10, so I’m making up some ground here.
  3. I’m using the effects of a Business Basic license price hike of $1.50 NZD. [$7.60 became $9.10]. This is very conservative – many companies use Business Standard, Premium, E3 or E5 licensing which could significantly impact these numbers.

Based on these inputs, Microsoft bring in an additional half a billion NZD yearly, or 308 million USD. Not small numbers, but not huge either when they talk about $50+ billion in revenue!

Here is the sheet I created – you can download it “here” if you want to have a play with different numbers.

So, I ended up pondering “Did they really need to make those pricing changes at that point in time?”. Or could they have taken a more socially responsible approach and left it for 2-3 years.

Perhaps Nadella was up against a wall and had no other option, who am I to judge?

Until next time! 🙂


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