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Ed Matias

By: Ed Matias on May 19, 2022

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How Will Microsoft New Commerce Experience Affect IT Cost & License?

Cloud | IT Support | Cost

As we know all too well, prices are on the rise for everything from gasoline to technology.

Microsoft recently announced the new commerce experience (NCE). You may be wondering how that will affect your IT costs and exactly what NCE means for you. What are your options? How do they compare? 

As a service delivery manager at Kelser Corporation, I’ve been explaining these changes to our customers for months. You must understand the changes to your licensing agreement and costs. 

In this article, I’ll explain what those changes will look like and how they will affect your business. After reading this article, you’ll have a better understanding of your options and how your decisions will affect your IT licensing costs. 

What Is Microsoft NCE?

According to the Microsoft website, NCE was launched in its Cloud Solution Provider (CSP) program in November 2019 to “give customers greater choice and flexibility…”

What’s The Difference Between My Current Microsoft Product And NCE?

The biggest difference between Microsoft’s traditional Cloud Solution Provider (CSP) model and the new NCE model is that NCE requires a one-year commitment for subscriptions. There is still a month-to-month payment option on NCE, but it comes with a 20 percent additional cost.

Does Microsoft NCE Offer New Functions Or Benefits?

The only difference between Microsoft NCE and current Microsoft software leasing agreements is the fee structure. There are no new features or functional benefits for customers. 

What Are Your Options With Microsoft NCE?

Microsoft NCE provides two software license pricing structures: annual and monthly. There are pros and cons to each arrangement. 

 

Annual 

Month-To-Month

Cost

  • Current customers can lock in at their current rate by June 30 for a 12-month subscription
  • Price increase of 20 percent over the current price for new customers or those who don’t lock in by June 30
  • 20 percent more than the increased annual commit rate (for a 40 percent total increase over current monthly rates)

Pros

  • Flexible payment options - can pay monthly or one annual lump sum

  • Current customers can save money and lock in current pricing by committing to a 12-month subscription before June 30

  • Predictable cost, easier to budget
  • Flexibility to add or
    reduce the total number of
    licenses (and cost) every month

Cons

  • Can’t reduce the number of licenses until the end of the one-year contract, committed to pay for the agreed-upon number of seats for the duration of the contract (can add to, but not decrease the total number of seats) 
     
  • Current customers who don't commit by June 30 and new customers will see a 20 percent increase in cost over current rates
  • Unpredictable cost, more difficult to budget

  • More expensive

  • Per-seat costs could increase throughout the year

Who It’s Good For

  • Organizations with a fairly stable, predictable staffing load (i.e. bank, accountant, grocery store)
  • Organizations with workforce levels that fluctuate (i.e. seasonal businesses like ski resorts, country clubs, companies that hire interns or part-time employees)

Annual

The annual subscription might be a good fit for organizations with a stable, predictable headcount. These may include large companies such as banks or Fortune 500 companies or government agencies.

Pros

Predictable Cost

With an annual software agreement, you pay one price for the entire year. There is no risk of additional price increases for at least 12 months

Flexible Payment Options

Customers can pay one lump sum or can spread the cost out in monthly payments.

Guaranteed Pricing For 12 Months 

When current customers sign up for an annual NCE agreement before June 30, they lock in their current rate for 12 months. Annual contracts going forward will be locked in at a predetermined guaranteed rate for the following year.

Cons

No Flexibility

This option is less flexible. If your headcount decreases throughout the year, there is no option to decrease the number of users covered under your subscription for 12 months. (You may, however, add users.) You have an agreement for a given number of licenses for 12 months and that fee is a static cost,  no matter how much your employee headcount may decrease.

Price Increase

New customers and current customers who don't commit to an annual subscription by June 30 will see an overall price increase of 20 percent for NCE subscriptions.

This increase applies to both annual and month-to-month subscriptions (although monthly subscribers will incur an additional 20 percent premium for the monthly option, yielding a total price increase of 40 percent for monthly subscribers).

Monthly

Month-to-month NCE agreements are best for organizations that have unpredictable staffing levels such as a seasonal business or an organization that anticipates significant growth (or restructuring) in the next year. 

Pros

Flexibility

The main benefit of a month-to-month agreement is that customers can adjust the number of licenses they pay for each month to reflect the current employee levels. 

Cons 

Unpredictable Costs

With the flexibility of adjusting the number of licenses comes an unpredictable cost. The cost can swing widely from one season to the next, making budgeting more difficult. 

More Expensive

The monthly license model is more expensive. Monthly subscribers pay a premium of 20 percent (on top of the 20 percent base cost increase of NCE) yielding a total increase of 40 percent more than the current CSP pricing model.

What’s Best: Annual Or Monthly Microsoft New Commerce Experience Licenses?

After reading this article, you have a clear understanding of what to expect from an annual or monthly NCE agreement. We've talked about the pros and cons of each agreement. 

For annual agreements, the pros are:

  • predictable costs guaranteed for one year
  • flexible payment options

and, the cons are: 

  • no flexibility to decrease the number of licenses you pay for to reflect your most current employee headcount

For monthly agreements, the pros are: 

  • customers can adjust the number of licenses they pay for every month to mirror current workforce levels. The agreement and associated costs can be adjusted to reflect seasonal surges or other unpredictable workforce levels 

    and the cons are:

  • overall cost (including the 20 percent overall increase for NCE and 20 percent premium cost of monthly service) will be 40 percent more than the current rate, and the rate is only locked in for one month at a time. 

Now you have the information you need to decide what’s right for you. And, if you currently work with a managed IT provider, reach out to them to find out how they will handle your specific Microsoft NCE subscription and how that will impact your costs. 

At Kelser, we know that it can be difficult to sort through all of the details. Whether you work with us or with another provider, we are committed to providing honest information that helps you make sound IT decisions.

We provide comprehensive managed IT solutions for hundreds of customers, but we also know that managed IT isn’t right for everyone. If you've been hearing about managed IT and have questions, check out this article: How Much Does Managed IT Cost? What's Usually Included? 

Or take the short quiz below to see if managed IT would be an effective solution for your IT needs. 

Are IT Managed Services Right For Your Organization?

 

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