Major changes to Microsoft licensing with the New Commerce Experience

This article was originally published on 28th October 2021 but has been updated in line with any changes announced by Microsoft.

Originally planned to launch in October 2021, the New Commerce Experience (NCE) for Microsoft Licensing was delayed until January 2022 following partner feedback.

This new model brings major changes to the way Dynamics 365, Microsoft 365, and the Power Platform, are licensed. Ultimately, the NCE is designed to offer customers a consistent and simplified purchasing experience.

What is the New Commerce Experience?

Currently, the majority of businesses using seat-based subscriptions (including Dynamics 365, Microsoft 365, and the Power Platform) purchase them directly from a Microsoft Partner (like ourselves) via a programme called the Cloud Solution Provider programme (CSP). Since 2015, this has been the preferred way of purchasing licenses for businesses around the world.

With the NCE, Microsoft is aiming to simplify their subscription models whilst still giving customers the flexibility to fit their licensing around fluctuating business needs. There will be three subscriptions to choose from, each with different rules, which are detailed below. Additionally, this new model aligns the CSP programme with the rest of the Microsoft eco-system.

The new licensing options within the New Commerce Experience:

Customers will be able to purchase licenses in one of three ways: Monthly Subscription, 12-Month Subscription and 36-Month Subscription.

Monthly Subscription:

• For this subscription, the number of seats can be increased or decreased each month or terminated at the end of each month (with month-to-month commitments), allowing users to tailor their licenses to their changing business needs
• This will incur a 20% price premium; due to the flexibility it provides
• Price increases are not protected and will increase with price changes by Microsoft

12-Month Subscription:

• The customer is committed to a 12-month subscription
• Cancellation is limited to the first 72 hours of the subscription, with pro-rated billing. After this, the customer cannot cancel and is committed to the full 12-months
• The number of seats cannot be decreased within the 12-month term, but can be increased with pro-rated billing
• Price protection from cost increases for the full 12-month term
• The subscription can only be terminated after each 12-month term

36-Month Subscription:

• The customer is committed to a 36-month subscription
• Cancellation is limited to the first 72 hours of the subscription, with pro-rated billing. After this, the customer cannot cancel and s committed to the full 36-months
• The number of seats cannot be decreased within the 36-month term, but can be increased with pro-rated billing
• Price protection from cost increases for the full 36-month term
• The subscription can only be terminated after each 36-month term

When will the New Commerce Experience be enforced?

Although the New Commerce Experience launched in January 2022, it will not be enforced until 30th June 2022 for existing subscriptions. This means that customers can switch to the NCE at any tie prior to 30th June 2022.

However, from  10th March 2022, NCE will be the only avenue for new business.

Furthermore, all renewals after the 30th June 2022 will only be allowed via the NCE. For businesses with existing licenses that have a renewal date after 30th June 2022, it will continue as normal until renewal, at which point it will transition to the New Commerce Experience.

Can subscriptions be mixed?

Subscriptions can be mixed, meaning customers can have both monthly-term and annual/multiyear-term subscriptions. For example, you can mix and match a core set of licenses for a longer-term and an appropriate number of seats, and have a few monthly licenses when required (however, the monthly ones will include the 20% price premium).

Contact Us

As usual, if Microsoft provides any additional updates or offers around the New Commerce Experience, we will update this blog accordingly. If you have any questions about your existing licenses or the new model, please don’t hesitate to get in touch. You can do so by filling out the contact form, emailing us at info@pragmatiq.co.uk, or calling us on 01908 038110.