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

If customers do the math, the subscriptions appear even more attractive: The $100 Office 365 Home Premium breaks down to $8.33 per month -- again, for five licenses -- while Small Business Premium translates to $12.50 each month.

"If you think about it, if you're willing to pay $100 for Office now, per year, it's always patched, it's always up to date, and you can put it on five machines," said Miller. "That's not a bad deal."

According to Computerworld's calculations, however, Office 365 may, in fact, be a bad deal.

The most important variables in comparing the new subscription plans with traditional "sold" software are first, the number of licenses a customer actually uses -- or needs, which may not be the same -- while the second is the time between upgrading a traditional, perpetual license-based edition of Office.

The Office upgrade, on average, say analysts, is five years: Customers have historically skipped an edition to, say, purchase Office 2007 but not Office 2010, and instead waited for the next upgrade, in this example, Office 2013.

Consumers do it, corporations do it, the former because of expense, the latter because even though they may have paid for the right to upgrade with Software Assurance, they're leery of change and the requisite retraining of workers.

At $100 annually, a consumer subscribing to Office 365 Home Premium would pay $500 over a five-year period, or $100 for each of the five allowed copies. That comes out to $20 per license per year.

In comparison, Office Home & Student 2013, which provides one perpetual license, lists for $140. That's $140 over the same five-year stretch. Bottom line: $28 per license per year.

Office 365 is a deal in that scenario, and on a per-license basis is 29% cheaper. But that presupposes that the customer needs and uses all five licenses offered in Office 365.

"Will the average household equip all five seats?" asked Michael Osterman, president of Osterman Research. "Five devices that need Office, even in an average tech household, that's iffy, very iffy."

If a household buys into Office 365 Home Premium, for instance, but actually only uses two of the five licenses, the per-license, per-year cost shoots up to $50, or nearly double that of two copies of Office Home & Student 2013, which revolves to $28 per license per year.

Even at three licenses of the five allowed, the $33.33 per-license, per-year cost of Office 365 is still higher than buying three copies of Office Home & Student, where the per-license, per-year number remains at $28.

The tipping point for Office 365 Home Premium is four licenses. If a household activates four or more of the five permitted licenses, the subscription is less expensive than the same number of copies of a traditional, buy-it-own-it edition.


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