Microsoft has drawn attention for increasing the number of paid add-ons to its Microsoft 365 suite. According to Directions on Microsoft, a group of analysts keeping track of the tech giant's licensing, the total paid add-ons that come on top of the base Microsoft 365 E3 or E5 subscription plans have surged to over four times what they were four years ago. In 2019, Microsoft offered 14 add-ons; by the end of 2023, that number jumped dramatically to 61.
Customer Impact and Cost Analysis
Microsoft 365's base subscriptions do not come inexpensively. Enterprises can expect to spend about $36 per user per month for an E3 subscription, which includes a commitment for one year, or $57 per user per month for the more feature-rich E5 subscription. Despite the broad functionality included with these plans, customers looking to implement newer tools like Copilot for Microsoft 365 face an additional charge of $30 per user per month. Teams Premium and Defender Vulnerability Management are among other tools that incur further charges.
Directions on Microsoft observes that the company is pushing a growing array of new features and applications into the paid add-on category, leading to frustration likened to buying a pricey toy without batteries. The report further criticizes cloud vendors' broken promises on cost savings, indicating that the cloud might, in reality, be driving significant new costs for businesses.
The Future of Subscription Models
As Microsoft continues to roll out new services, speculation about a new, inclusive subscription tier has arisen. Directed by Michael Cherry and his colleagues, this potential future offering would be an E7 model that consolidates services at an even higher price point. As enterprises consider their budgeting options, they are faced with a decision: continue stacking individual add-ons or possibly embrace a new, more comprehensive and expensive bundle when it becomes available.
The trend towards constant upselling in the tech industry has raised concerns among customers about the value proposition of subscription-based models. Once able to secure perpetual licenses for software, businesses are now navigating a landscape where the subscription model, promoted as financially flexible, appears to lock in long-term costs under the guise of regular updates and improvements.
