Microsoft 365 business software subscriptions will soon increase prices, Announced this weekAn analyst predicts that the company promises to grow its business by as much as $5 billion annually.
Microsoft plans to increase the price of its business software subscriptions, including its core Office 365 suite, starting March 1, 2022. The company called it “the “first substantial pricing update” since the launch of Office 365 in 2011, shifting from traditional licenses to subscription pricing.
The price increase “is a wise strategic poker move that may bring Redmond another $5 billion or more of incremental tailwinds in 2022, making people more confident that the numbers may continue to rise in the future,” wrote Daniel IvesAnalysts at Wedbush, in a report to clients on Friday morning.
For context, Microsoft’s revenue is $168.1 billion In its most recently completed fiscal year 2021, As of June 30, an increase of 18% year-on-year.
Ives wrote that the latest survey of Wedbush and Microsoft customers shows that “Azure cloud growth story is entering the next phase of growth,” which is contrary to Wall Street’s assumption that returning to the office after the pandemic will hinder cloud revenue growth.
Based on these two developments, Wade Bush raised Microsoft’s 12-month stock price target from the previous $325 per share to $350 per share.
Microsoft’s price increase “reflects the increased value we have provided to customers over the past 10 years,” wrote Jared Spataro, Corporate Vice President of Microsoft 365, In an article this week.
The following are the reasons for the price increase.
- Microsoft 365 Business Basic Edition (US$5 to US$6 per user)
- Microsoft 365 Business Premium (from $20 to $22)
- Office 365 E1 (from $8 to $10)
- Office 365 E3 (from $20 to $23)
- Office 365 E5 (from US$35 to US$38)
- Microsoft 365 E3 (from US$32 to US$36)
Microsoft shares closed at 304.35 on Friday, up 3.7% in the week.