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Microsoft: Monthly VS Annual subscription Licensing

Introduction

Microsoft licensing is changing on the 1st April 2023, with 9% price rises across NCE subscriptions. Its time to review your organisations current licensing structure. When it comes to Microsoft licensing, organisations have two main options: annual licensing agreements or monthly licensing agreements. Each option provides a choice for an organisation, dependant on its specific needs and budget. In this blog we will explore each option and provide insight towards the best fit for your organisation.

Annual licensing is an agreement between the organisation and a software vendor, in which the organisation agree to pays for the use of the software for a one-year period. This option provides fixed pricing for the full 12 month period.

Alternatively, Monthly licensing agreements, as the name suggests, are an agreement where the organisation agreed to use the software on a monthly rolling agreement. This option provides the ability to decrease seat count dependant on business needs.

Annual Licensing

One of the main benefits of an annual licensing agreement is that it provides a predictable and stable costs. This makes it easier for organisations to budget for the cost of the software and to plan for future expenses. Additionally, annual licensing can provide organisations with peace of mind that they will have access for a full year. Removing the need to worry about renewing their license on a monthly basis.

Another advantage of an annual licensing agreement is that it can be a cost-effective option for organisations that use a lot of software. In many cases, organisations that purchase annual licenses for multiple software products may be eligible for volume discounts. This option can provide overall cost savings, more affordable.

Next2IT Microsoft Licensing
Next2IT Microsoft Licensing

Monthly Licensing

Monthly Licensing is often preferred by organisations that want more flexibility and less commitment. They can be beneficial for organisations that need to scale up / down their software usage on a regular basis. Additionally, organisations that may be able to avoid paying for software that they are not currently using.

One of the main benefits of a monthly licensing agreement is that it provides organisations with more flexibility and scalability. This can be especially beneficial for organisations that experience fluctuations in their software usage. Organisations can easily adjust the number of licenses they are paying for on a monthly basis. Additionally, organisations that choose a monthly licensing agreement have the option to cancel or change their license at the end of any month, rather than being locked into a long-term contract.

Another advantage of a monthly licensing agreement is that it can be a cost-effective option for organisations that use a small amount of software. In many cases, organisations that purchase monthly licenses for a single software product may be able to avoid paying for additional features or capabilities that they do not need.

Monthly VS Annual Microsoft Licensing – Benefits

Dependent on what licensing type you select there are a number of benefits for each solution. Check out the table below comparing the benefits for both Annual and Monthly Microsoft Licensing.

BenefitsAnnual LicensingMonthly Licensing
Predictable CostsProvides a fixed cost for the entire year, making it easier to plan and budget for IT expenses.Monthly payments can vary based on usage or plan changes, which can make it harder to predict costs over time.
Easier BudgetingAnnual licensing provides a single payment for the year, which can make it easier to manage finances and allocate resources.Monthly licensing spreads the cost out over time, which can be helpful for businesses with limited upfront capital.
FlexibilityAnnual licensing allows for the option to renew or upgrade at the end of the year, providing greater flexibility and the ability to adjust to changing business needs.Monthly licensing allows for more frequent plan changes or cancellations, which can be useful for businesses that have a more fluid or uncertain future.
ScalabilityAnnual licensing may be easier to add licenses to as the business grows, and may offer volume discounts for larger purchases.Monthly licensing allows businesses to quickly add or remove licenses as needed, which can be helpful for businesses that experience rapid changes in staffing or seasonal fluctuations in demand.
Support and UpgradesAnnual licensing typically includes access to support and upgrades for the entire year, which can provide businesses with peace of mind and ensure they always have the latest features and security updates.Monthly licensing also includes support and upgrades, but may not provide as much long-term stability or predictability as annual licensing.

Monthly VS Annual Microsoft Licensing – Cons

Dependent on what licensing type you select there are a handful of drawbacks for each solution. Check out the table below comparing the drawbacks for both Annual and Monthly Microsoft Licensing.

ConsAnnual LicensingMonthly Licensing
Initial InvestmentAnnual licensing may require a larger upfront payment, which can be challenging for businesses with limited cash flow.Monthly licensing typically has no upfront payment, but can be more expensive overall compared to annual licensing.
Limited FlexibilityWith annual licensing, businesses cannot change plans mid-year, which can be a disadvantage if they need to scale up or down quickly.Monthly licensing allows for more frequent plan changes or cancellations, but may be more difficult to manage or negotiate over time.
Cost PredictabilityWhile annual licensing provides a fixed cost for the entire year, unexpected usage changes or plan upgrades can result in additional costs that were not accounted for in the original budget.Monthly licensing can be unpredictable, with costs that can vary month to month based on usage or plan changes.
Renewal ComplexityAnnual licensing requires a renewal negotiation at the end of the year, which can be time-consuming and may require additional resources to manage.Monthly licensing requires more frequent renewals, which can be challenging to manage or negotiate over time.
Usage ChangesUnused licenses under annual licensing cannot be refunded at the end of the year, resulting in potential wasted resources and added costs.Unused licenses under monthly licensing may still incur cost, even if they are not being used, which can result in added expenses for businesses.

Why purchase Microsoft Licensing with Next2IT?

As a Microsoft Gold Certified business, Next2IT have proven commitment to earning the highest level of customer care & collaboration relationship with Microsoft. Learn more about our Microsoft Gold Certification and benefits for your organisation here.

Working closely with our clients we ensure the Licenses selected accurately meet the needs of the business whilst controlling costs. With regular review and insights into the latest Microsoft news, Next2IT can make sure you’re always ahead of the latest changes to licensing.

Overview

In this article we have review the benefits of both Monthly and Annual licensing options.

In conclusion, organisations have the option to choose between annual licensing agreements or monthly licensing agreements. Each option has its own set of pros and cons, and the best choice for a given organisation will depend on its specific needs and budget. Book a call with an expert today to conduct a review of your current licensing & see where you can save. Call 0330 1332 202, email sales@next2it.co.uk or contact us on LinkedIn.