Microsoft raises Office 2013 prices to push new Office 365 sub plans

Tipping point for Office 365 subscription plans: Use four or more of the five allowed installs

By , Computerworld |  On-demand Software, Microsoft Office, office 2013

To equip three PCs with Office Home & Student 2013, consumers must fork over $420 (3 x $140 per copy), or 180% more than the $150 Office 2010 edition. Buying two licenses of Home & Business, meanwhile, means $440 out of pocket, a 57% increase, while two copies of Office Professional 2013 costs $800, or 60% more than the comparable Office 2010 SKU.

It's clear to analysts why Microsoft has raised prices for perpetual-licensed copies of Office 2013, killed off the multi-license discounts, and made it prohibitively expensive to recreate those editions by selling only single-license software.

"Microsoft is trying to make the price of the subscriptions more attractive by increasing the prices of the [perpetual] licenses," said Al Hilwa, an analyst with IDC. "Microsoft is bracing for a shift to a subscription model because it's so much easier for them on a financial revenue perspective because it's more predictable."

And Microsoft knows how effective -- and lucrative -- subscriptions can be. Most of its Office revenue comes from that model in the form of enterprise agreements.

Wes Miller of Directions on Microsoft saw the pricing shifts the same way: They are part of what he called a "meticulous plan" to position the Office 365 subscription packages as better deals.

"Microsoft has just put the perpetual license on the higher shelf," said Miller. "You can still reach for it if you want, but they're guiding customers toward the subscriptions."

Those new subscription plans have been priced at $100 per year for Office 365 Home Premium and $150 annually for Small Business Premium. Customers of each receive a full complement of applications, including Word, Excel, PowerPoint, Outlook, OneNote, Access and Publisher -- with Lync only available in Small Business Premium -- as well as extras, notably cloud-based storage space.

The selling point of the subscriptions, however, is their multi-license nature.

Home Premium can be installed on up to five Windows PCs, Macs and Windows tablets in a household, while Small Business Premium, although limited to one user, also offers five device licenses.

At first blush the new Office 365 plans look like a deal. Five licenses for $100 annually versus $140 for one copy? It seems like more a steal than a deal.

And that's Microsoft's strategy.

"The packaged products have much larger upfront fees," said Miller, talking about the single-license perpetual licenses such as Office Home & Student 2013. "And only one install."


Originally published on Computerworld |  Click here to read the original story.
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