Microsoft’s Recent Price Increases: What You Need to Know and How to Overcome Them

If you’ve been paying attention to Microsoft’s pricing trends, this won’t come as a surprise: Microsoft has once again increased the prices tied to their key products. Effective April 1, the list price tied to Power BI and Teams Phone is going up significantly.

Many organizations rely on these products, so now is the time to plan accordingly to mitigate the impact these price increases will have on your go forward Microsoft cost profile, especially when it comes time to renew.

There is an opportunity to turn these price changes from ones being used by Microsoft to create leverage to ones that can actually be turned back on Microsoft in any in-term or renewal negotiations. But you have to negotiate strategically.

Breaking Down Microsoft’s Power BI and Teams Phone Price Increases

Microsoft announced these price hikes late last year, and hopefully Microsoft customers, especially those with June renewals, have already been planning for the changes.

Before getting into the motivation behind such changes and what customers’ planning should look like, here’s a breakdown of what’s happening:

Why Is Microsoft Raising Prices for Power BI and Teams Phone?

Microsoft justifies these increases by citing added value and continuous improvements to these product offerings. They highlight that Power BI Pro has not seen a price increase since its launch in 2015 and that Microsoft has introduced over 1,500 updates in just the last six years. Similarly, Microsoft touts enhancements to Teams Phone as a reason for the significant price jump happening there.

But what’s the real reason behind these price increases? A closer look suggests two key motivations:

Driving Adoption of Microsoft 365 E5 (M365 E5)

Microsoft has been pushing customers to upgrade from a M365 E3 to a M365 E5 subscription. By increasing standalone pricing for Power BI Pro and Teams Phone, they’re making the cost gap between M365 E3 and M365 E5 smaller, effectively nudging customers to upgrade.

For the many M365 E3 customers that also have Power BI Pro subscriptions or Teams Phone subscriptions, the uplift to the Power BI and Teams Phone pricing (and likely uplift to the M365 E3 price) will undoubtedly make your go forward combined cost profile much closer to what it would cost to move to M365 E5. Expect many, if not all, proposals to include the specifics of your cost breakdown clearly presented for consideration.

This tactic isn’t new – remember when Microsoft employed a similar tactic by raising the price of M365 E3 by 12.5% back in March of 2022.

Promoting Fabric Adoption

Microsoft has been aggressively marketing and pushing for customers to adopt Fabric, its data analytics platform, which requires an underlying Power BI Pro subscription. By significantly increasing the Power BI Pro price, Microsoft creates an opportunity to offer compelling discounts on Fabric as an incentive to adopt.

For customers that are venturing down the Fabric road, it is important that you have a complete handle on the licensing metric/model and the right discounting, flexibility and protections in place before signing on the dotted line.

What Microsoft Customer Can Do

If your organization is affected by these price increases, here are key strategies to minimize costs and leverage these changes to your advantage:

Conduct a Granular Usage Assessment

Microsoft justifies the price increases by citing additional value, but are you actually using these new features and receiving this additional value? Pull together a granular view of your Power BI and Teams Phone usage. If you’re not utilizing these enhancements or receiving the additional value, use this data to push back against price increases.

Evaluate Alternative Solutions

If you’re a Salesforce customer, the exploration of Tableau as a potential alternative to Power BI might be worth pursuing. Salesforce would gladly take that call and will be very interested in displacing Microsoft Power BI and gaining the added revenue. Microsoft is very aware of this competitive risk, and a holistic evaluation of Tableau can provide leverage in price negotiations with both Salesforce and Microsoft.

For Teams Phone, assess whether your organization could transition to other VoIP or UCaaS solutions. Many organizations, because of COVID, likely have multiple tools and products already in use or available to be used.

Leverage Microsoft’s Interests in Copilot and M365 E5

As you likely know, Microsoft wants and needs to be an “AI Leader” in the market. Because of this, they are aggressively pushing for Microsoft 365 Copilot adoption and use of Copilot and its related solutions, like Copilot Studio. If done correctly, you can dangle any interest there may be in Microsoft’s AI offerings, whether it be immediate or downstream, when pushing back on the Power BI and Teams Phone price increases. The same tactics can be used with M365 E5.

The conversation with Microsoft should go something like this: “If you want us to consider M365 Copilot, Copilot Studio or any of your AI offerings, you have to first get rid of the ridiculous Power BI price increase you are hitting us with.”

Engage Executives and Elevate the Conversation

Any time a vendor deploys universal price uplifts like Microsoft is doing here, it is always good practice to request an escalated discussion beyond your Microsoft account executive. Do it as soon as possible and ideally have a meeting set up between the established elevated points of contact, usually your executive sponsor. As part of this elevated touch point, your executive can get way ahead of things and set expectations.

The Bottom Line

These price increases are already here and more will certainly follow whether organizations like it or not. However, with the right strategy and planning, Microsoft customers can not only minimize their financial impact, but they may be able to even turn these changes into a competitive advantage.

If you haven’t started planning yet because your renewal is far out, it would be advantageous to start planning now – you can’t start too early.  For those customers that have renewals coming up in June, the time is now.

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