What are the Office 365 licensing changes?

The latest round of changes to Microsoft’s Office 365 sparked many questions by small- and medium-sized businesses.

Analysts are reporting that the changes are all positive; for customers with Office 365 small business versions, the subscriptions will be upgraded and the cost of those subscriptions will remain unchanged. For midsized businesses, with Office 365 Midsized Business subscriptions they will notice a price reduction.

So, what are the planned changes?

As of October 1st, the Office 365 Small Business, Small Business Premium and Mid-sized Business subscriptions are being replaced with three new subscriptions called Office 365 Business Essentials, Business, and Business Premium. The replacements are not one-to-one replacements, and there are few differences.

Office 365 Business Essentials does not include any rights to the Office software for PCs/Macs or tablets but is applicable now for businesses with up to 300 users (up from 25).

Office 365 Business does not directly replace any existing Office 365 SMB version, but it provides subscription-based access to the Office 2013 software only, and not to the Office 365 hosted services. You get 1 TB of OneDrive for Business storage with Outlook, Word, Excel, PowerPoint, OneNote and Publisher. It costs $8.25 per user per month ($99/year) and like Office 365 Business Essentials, it can be licensed by companies with up to 300 users.

Office 365 Business Premium replaces both Office 365 Small Business Premium and Office 365 Midsized Business. It provides everything that is available in both Office 365 Business Express and Business, 1 TB of OneDrive Business storage, Active Directory support, and Yammer Enterprise. It is priced at $12.50 per user per month ($150/year) and can be licensed by companies with up to 300 users.

So, when should you switch to the new version? Timing should depend on a few factors, including when your subscription(s) are up for renewal. However, you will be eligible for credit if the new subscription is less expensive than the old and you will not be penalized if your upgrades are awkwardly timed. In addition, Microsoft is allowing its subscribers one year before they commit to any major change.