News

Microsoft Offers Monthly Billing for Annual Cloud Subscriptions

• By Gladys Rama
• November 12, 2024

Microsoft on Tuesday described a new monthly billing option for customers that have signed annual contracts for services like Microsoft 365, Windows 365, Power Platform and others.

Starting Dec. 1, Microsoft will give customers who have purchased a one-year term of Microsoft 365 Copilot the option to pay for the service in monthly installments instead of upfront.  

The option will be available for annual subscribers of Microsoft 365 Copilot, Microsoft 365 Copilot for Sales and Microsoft 365 Copilot for Service. Normally, Microsoft 365 Copilot costs $360 per user per year ($30 per month), while the Sales and Service SKUs each cost $600 per user per year ($50 per month).

The monthly billing option will increase these prices by 5 percent. That means Microsoft 365 Copilot will cost $378 per user per year ($31.50 per month) and Sales and Service each $630 per user per year ($52.50 per month).

Microsoft's FAQ describes a few caveats. The monthly billing offer is not yet available to nonprofit organizations, but it is for education and government customers. Also, Microsoft emphasized that choosing the monthly billing option for an annual subscription doesn't mean that an organization can cancel its subscription at any given month; it still must commit to the entire annual term or risk running afoul of Microsoft's cancelation policy.

Standardization Across Annual Subscriptions
Starting April 1, 2025, the following Microsoft products will also get the monthly billing option (with a 5 percent price increase) for annual subscriptions:

• Microsoft 365
• Office 365
• Enterprise Mobility + Security
• Windows 365
• Microsoft Dynamics 365 Services
• Microsoft Power Platform

At least some products that fall under Microsoft's "other online services" category will also have the option, though Microsoft didn't specify which ones.

On-premises products are not affected by these changes, nor are Azure Reserved Instances, Azure Savings Plans, Marketplace, GitHub or AirGap.

Microsoft is extending the same monthly billing option to all of its subscription products in the spirit of standardization and cost efficiency. "This change aims to continue providing customers with cash flow flexibility while maintaining the value and benefits of our services, it said in the FAQ. "By aligning our pricing strategy across channels and segments, we ensure consistency and transparency across all platforms."

Some Notes for Partners
Microsoft's FAQ detailed some partner-specific nuances related to these billing changes that will also apply starting April 1, 2025:

• Changes to the billing frequency for annual term subscriptions for end-of-sale (EOS) and EOS with Conversion offers (i.e. from monthly billing to annual billing for an annual term subscription) such as Microsoft 365/Office 365 Enterprise suites with Teams can be scheduled to occur at renewal.
• Mid-term billing frequency changes for triennial offers will no longer be allowed. Customers will still be able to make billing frequency changes for triennial offers at renewal.
• Subscription term and billing frequency can be specified for the paid subscription that trial purchases renew into. Trials will continue to default to monthly billing for annual subscription at the point of renewal.