In April 2024, Microsoft announced it was looking to standardize its licensing model for Teams to align with the changes made in October 2023 for the European Economic Area (EEA) and Switzerland. Effectively the European commission was accusing Microsoft of monopoly like practices by not allowing users to have a price break if they wanted to use a 3rd party communication tool outside of Teams like Slack or Zoom.
To accommodate for this, Microsoft broke off Teams into an add-on for Enterprise customers and produced skus with or without Teams in the Business line. Now they are standardizing that model worldwide, specifically for the commercial sector at this point in time. Yes, that means gov, non-profit, and education are unaffected. In this article, I wanted to break down those changes so that it is easy to understand.
While Microsoft states they are making this change to “reduce confusion”, introducing another 13 skus and subtlety raising pricing for Enterprise skus if you want Teams is a classic Microsoft move that make people hate their licensing model. I am going to cover all of that here.
Understanding the Change
I am a visual guy so I made this diagram to showcase the changes. TLDR:
- If you have existing licensing today, there is really no changes that will impact you. (FOR NOW. I don’t see a world in which Microsoft won’t deprecate these skus in the future.). You can continue to renew your subscriptions under the current model where Teams is included.
- If you are on the Business plans and purchasing net new, you will now have an option to purchase plans with or without Teams. Plans without Teams have around a 10-20% pricing discount depending on the sku. (Ex. BP is a 10% discount)
- If you on the Enterprise plans, you will now be forced to purchase two separate skus if you want Teams. There will be a Teams add-on license.
- If you are in the EEA or Switzerland, you have specific skus you need to purchase for both Business plans and the Teams add-on.
Pricing Considerations
The good news for Business users is that pricing is not changing for the “bundle” (i.e. what we already had) that includes Teams AND we actually get a price discount if a customer does not want/need Teams. Does that make up the cost to the customer if they wanted to bolt on something like Zoom or Slack? The answer is definitely not but it helps.
The interesting thing with Enterprise is that Microsoft subtlety but not so subtlety increased our pricing by 5% or more on some of the O365 + M365 skus if we want Teams included.
Taking M365 E5 as an example, previously the sku was $57/u/m (Annual commit). Now that we have to bolt on Teams at $5.25, our pricing with these two skus is now $60/u/m, representing a 5% increase.
To see the full article on these pricing considerations, including the F1 skus, click here.
More Helpful Resources: Modern Work for Partners – Sell through CSP (microsoft.com)
EEA and Switzerland Customers have their own skus specific to that market. Teams EEA Cloud Add-On is the standalone offering you now have to bolt onto enterprise plans while “Microsoft Teams Enterprise” is the name of the sku for all other markets.
