Office 365 price reductions - but what about Plan P?

Microsoft’s March 14 announcement that “the cost to run Office 365 becomes more efficient” and that ”we're able pass on savings to make it even more affordable for customers of all sizes to move to Office 365” is good news for many customers. The list prices (in the U.S.) per month are now:

·         Plan E1: $8 (20% reduction)

·         Plan E2: $14 (13% reduction)

·         Plan E3: $20 (17% reduction)

·         Plan E4: $22 (19% reduction)

If, like me, you can’t remember the finer details of what each of the plans represent in terms of functionality, you can head over to Microsoft’s web site to look at what they say. Interestingly, to simplify matters, Microsoft chooses to compare plans E1 and E3. I think this is wise because these are the plans that are most likely to be selected by customers.

Browsing a more detailed comparison, it appears that for an extra $6/month, Plan E2 adds edit capability for online Office documents while for the extra $2/month over Plan E3, E4 gives you the opportunity to install an on-premises Lync Server.  Hmmm…  I think there’s a fair chance that Plan E2 will disappear in the future as I can’t quite imagine how many people opt to pay an extra $6 to have online edit access to Office documents, especially if they’ve paid for Office licenses for PCs.  But it’s good to have choice.

What interested me in the announcement was that Microsoft did not drop the price of Plan P1, which remains at $6/month. I suspect that the reason lies somewhere between “Plan P is priced pretty keenly already” and “Plan P has been used  to move many small companies to Office 365 and we shouldn’t reduce the flow from our cash cow now”.  Perhaps Microsoft will make a liar of me and reduce Plan P prices next week. We’ll see.

Plan P1 is designed for small companies or independent professionals who don’t need the ability to synchronize with Active Directory, run hybrid configurations, or Live 24x7 phone support. It’s a very attractive plan if you want to do a one-time move from an on-premises IT configuration completely into the cloud and leave everything to Microsoft. It's also a cash cow for Microsoft because once someone has subscribed it takes a lot less effort on Microsoft's part to keep things ticking over in comparison to the complexities of hybrid deployments, extra support requirements, and everything else that goes along with enterprise-style deployments. See this article for more about the differences between Plan P and Plan E.

The downside is that Plan P is a one-way street that cannot be upgraded to another plan should the need arise in the future. However, I anticipate that Microsoft will accommodate matters should a company such as the next Facebook start off with Plan P and expand to a point where Plan E makes more sense. I’m sure that a way will be found to bridge the gap then.

Microsoft briefings are fond of citing a factoid that many Fortune 500 companies have taken out Office 365 subscriptions. On the surface, this is a solid endorsement of Office 365 but it masks two relevant data points. First, most of the subscriptions are for one or two seats and are used to “find out what this cloud stuff is all about” and to protect the organization’s domain name.  Second, moving the IT infrastructure of any Fortune 500 company into the cloud is a delicate, complicated, and sensitive operation that doesn’t happen overnight. The reduction in Plan E licenses makes the financial side of the argument more compelling but doesn’t do anything to remove any of the complexity.  Don’t get me wrong. I like price drops – but I do want to stay realistic.

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Tony Redmond

Tony Redmond is a senior contributing editor for Windows IT Pro and the author of Microsoft Exchange Server 2010 Inside Out (Microsoft Press) and Microsoft Exchange Server 2013 Inside Out: Mailbox...
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