Microsoft licensing is shifting fast. If you are responsible for budgets, IT operations, or software strategy, the updates introduced in the past year will affect your costs, planning, and agility. Below you’ll find what is new, why it matters, and how to adapt.
The New Commerce Experience (NCE) replaced the flexibility of the legacy CSP model, requiring longer commitments.
Annual license terms are significantly cheaper than monthly terms, which now carry a 20 percent premium.
A 5 percent surcharge applies if you commit annually but choose to pay monthly.
Microsoft Teams has been unbundled from Microsoft 365 app suites for new customers.
Price increases are rolling out for Power BI and Teams Phone Microsoft 365 plans.
Nonprofits will lose certain free licensing options and must rely more heavily on discounted paid licenses.
Each of these updates changes how you should think about license management. The days of “set it and forget it” licensing are over.
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The most significant change is the move from the old Cloud Solution Provider (CSP) program to the New Commerce Experience. Under CSP, businesses could adjust seat counts at any time and receive prorated refunds. That flexibility is gone.
With NCE, organizations must choose either monthly or annual commitments. Annual terms come with better pricing, but they also come with risk. You have just seven days after a renewal to cancel or reduce seats. After that short window, you are locked in for the full term, even if your headcount changes.
This means IT and finance leaders must forecast carefully and align licensing with business needs. Planning ahead is no longer optional.
The cost gap between annual and monthly licensing is now more pronounced. Monthly subscriptions cost about 20 percent more than annual commitments. This pricing model is designed to encourage organizations to move to annual terms.
In April 2025, Microsoft introduced an additional 5 percent charge for annual commitments billed monthly. For example, instead of paying $120 upfront for a license, spreading payments across twelve months will cost $126. That may not sound significant on a single license, but multiplied across hundreds or thousands of users, it adds up quickly. Whenever possible, paying annually upfront is the most cost-effective option.
Microsoft has also started reviewing pricing more frequently. In 2025, several popular services and productivity apps saw increases:
These increases take effect at renewal. For example, if your Power BI Pro licenses renew in December, you will not see the new price until then. Organizations that rely heavily on these tools should expect higher software budgets going forward.
Regulators in Europe pushed Microsoft to separate Teams from its Microsoft 365 suites in 2023, and the company extended this model worldwide in 2024.
For new enterprise customers, this unbundling results in about a $3 per user increase compared to the older bundled model. Existing customers, however, retain a small pricing advantage.
Nonprofits are also impacted by recent changes.
Nonprofits should revisit their licensing mix now to prepare for these adjustments.
The new licensing model shifts risk to customers, making it essential to manage licenses proactively. Practical steps include:
Microsoft 365 pricing updates have made licensing more complex, less flexible, and more costly. While organizations cannot avoid these changes, they can take control by auditing usage, planning renewals strategically, and working closely with a trusted partner.
At Ntiva, we help organizations navigate Microsoft licensing with strategies that reduce costs, improve efficiency, and keep IT budgets predictable. Contact our team today to make sure your Microsoft 365 licensing strategy is working for you.