Plain-English Briefing
The Real Cost of the Microsoft 365 Packaging Update
On 1 July, Microsoft changed its pricing structure for Business, Enterprise, Frontline and Government suites. It’s being called a “packaging and pricing update,” and to be fair, there is real substance behind it — a year’s worth of AI and security features have been folded into the suites. But the effect on your renewal is a bigger bill.
What Often Gets Missed
For some organisations, once you strip away volume discounts, the increase is considerably larger than the headline figure.
What often gets missed in the noise is the arithmetic underneath. This isn’t just about a price hike; it’s about how the cost is structured.
The Seat vs. Usage Trap
Copilot is not a standalone product. It sits on top of a licence you already need to pay for.
When you look at the cost, you shouldn’t just look at the add-on price ($30/user/month). You have to look at the whole seat. If you are on E3, the true all-in cost is $69/seat. On E5, it’s $90/seat.
This creates a specific trap: the cost scales with headcount, not with usage. Twenty staff is twenty seats, whether five people use the AI feature or all twenty do. It recurs, it’s set by someone else, and it renews annually with no ceiling you control.
The Arithmetic Beat: Renting vs. Owning
The most important comparison isn’t between Microsoft plans — it’s between renting software and owning an appliance.
Under “New Commerce Experience,” your price holds for the term you commit to. If you renewed before 1 July, you keep your old rate until next renewal (and get the new features anyway). This means the way to protect yourself is to commit for longer — locking in a three-year term now effectively locks out future hikes.
But consider the arithmetic over time.
- Renting: You pay per seat, forever. If you hire more people, your bill goes up immediately. If you fire people, it takes a year to go down.
- Owning: You buy a capable appliance once. The price is fixed. It works regardless of how many users you have (up to capacity).
The argument here isn’t that nobody should buy Copilot. If your work genuinely lives in Word, Excel, and Outlook, in-app assistance is worth having. The argument is that you should know what shape the cost is before you sign for another three years.
An Honest Note on Our Own Fees
It would be disingenuous to attack recurring fees without acknowledging our own model. We sell Care at £195/mo and hosting from £45/mo.
A post attacking subscriptions would read poorly against our own price list. So, let’s be clear about the difference:
- Ownership: When you buy an owned appliance, the thing keeps working if you stop paying us. With Microsoft 365, when you stop paying, the lights go out.
- Predictability: When you buy an appliance, the price doesn’t move when you hire more staff. With M365, every new hire is a new line item on your invoice.
What to Do This Week
Before you sign anything, run this check:
- Find your renewal date. Are you pre- or post-1 July pricing?
- Count the seats you’re actually paying for versus the people who’d use an AI feature.
- Ask what happens to your cost if you add five people next month.
Microsoft shipped real capability, and this isn’t a scandal. But the packaging has changed. Make sure the arithmetic works for you before you commit.
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