As the economy picks up, demand for many inputs is outstripping supply, driving up prices for things as diverse as construction materials, energy, food ingredients, and semiconductors. Soon, that list will include Office 365 subscriptions.\n\nYou might not have heard about it from your sales rep yet, but Microsoft quietly announced that starting March 1, 2022, it will hike the price of many of its enterprise Office 365 and Microsoft 365 subscriptions. (Consumer and education subscription prices aren\u2019t changing \u2014 for now.)\n\nEven if you spotted the company\u2019s Aug. 19 blog post, \u201cNew pricing for Microsoft 365,\u201d you would still have had to wade through over 800 words about all the features the company has added to the package since its launch 10 years ago before getting to the bottom line: a 25% increase in the per-seat price of Office 365 at the E1 support level and a 20% increase in Microsoft 365 Business Basic, with smaller increases in other subscription levels.\n\nPricing for the many similarly named subscriptions is confusing. There\u2019s Office 365, with just the basic apps, or Microsoft 365, which adds a Windows license and enterprise mobility and security tools, each with two categories of support, E (for enterprise) and F (for frontline workers), and each of those can come in different levels (E1, E3, and E5, or F1 and F3). But some combinations of those attributes don\u2019t exist: There\u2019s no Office 365 F1, or Microsoft 365 E1, for example.\n\nOne thing is clear: Microsoft is trying to entice enterprises to spend more to save more, as the percentage price increases will be smaller on fuller-featured (and more expensive) bundles, closing the price gap between Office 365 and Microsoft 365, and making the higher support levels more attractive.\n\n\u201cThey didn\u2019t touch the price of Microsoft 365 E5, the holy grail for them,\u201d says Adam Mansfield, a practice leader at UpperEdge, a consultancy that advises enterprises on IT sourcing.\n\nStart preparing now\n\nEnterprise CIOs need to pay attention to these increases right now: \u201cIf you have a renewal in June or December next year, you better be on top of this right now,\u201d Mansfield says.\n\nJune is a popular month to renew Microsoft contracts, because buyers can often get good deals out of sales staff just before the close of Microsoft\u2019s financial year. But if CIOs leave it until the price list changes on March 1 to begin negotiations, then they may run out of time.\n\nEven companies that have just renewed on a three-year deal should put the price increase on the agenda for their next meeting with Microsoft, to put the company on notice that they will be looking for a better deal, he says.\n\nRenewal price protection\n\nSome companies have negotiated renewal term price protections into their contracts, limiting how much vendors can increase prices.\n\n\u201cThat\u2019s the gold standard,\u201d Mansfield says, something he and his colleagues aim for in the deals they help their clients negotiate.\n\nUnfortunately, says Mansfield, most companies don\u2019t have that protection so when their current negotiated discount ends, they\u2019re exposing themselves to the double whammy of a return to list price \u2014 and that list price rising too.\n\nPricing won\u2019t be the first thing discussed, though. Microsoft will likely begin \u2014 as it began its blog post about the changes \u2014 by talking about all the extra applications and value it has added to Microsoft 365 over the years. But ask yourself, do you and your colleagues use included applications such as Stream, Planner, Delve, Kaizala, Sway, and Yammer every day \u2026 or ever?\n\nHaving detailed, granular information about the features your organization uses is essential for pushback in negotiations. \u201cPush your organization to really look, employee by employee, at what they are using at a feature level in each subscription,\u201d Mansfield says.\n\nBut it\u2019s a slow process, with many organizations starting on it a year before their contract expires.\n\nGet your house in order\n\nThat\u2019s what Joseph Cevetello, CIO of the City of Santa Monica, Calif., did.\n\n\u201cKnowing that the contract was running out, we assessed all of our licenses in the city, and we tried to really right-size our licensing. Gone are the days when you have the most expensive license with the fullest functionality for everyone,\u201d says Cevetello.\n\n\u201cYou need to get your house in order and not just accept what Microsoft says you need,\u201d he says.\n\n\u201cWe set about defining profiles for the different types of workers in the city, and what type of Microsoft Office license they would need. That was the first step in trying to get a handle on the cost,\u201d he says.\n\nSanta Monica, like many other cities in Southern California, gets its Microsoft products through the County of Riverside Microsoft Enterprise Agreement. With a population of over 2 million, Riverside used its vast buying power to negotiate and pass on some great discounts \u2014 although the discounts are not as great as they used to be, according to a 2020 report by the City of Palo Alto, which also benefits from the deal.\n\nCities and other governments can\u2019t purchase directly from Microsoft, but have to go through a reseller, and \u201cresellers vary widely,\u201d Cevetello says. \u201cWe had one when I first came on board that was not providing great value to us. We found a different one who is.\u201d\n\nWhile that adds another layer of complication, it\u2019s also another opportunity to get a better deal, he says.\n\nThreatening behavior\n\nCIOs need to have a credible threat of defection to bring up in negotiations with Microsoft \u2014 and while there\u2019s a feeling in some circles that Microsoft Office is an unavoidable cost of doing business, there are alternatives. There are plenty of desktop clones out there, including open-source suites such as Libre Office for which businesses can choose their own support provider.\n\nThere are cloud-based alternatives too: Google Workplace (formerly Google Docs, then G-Suite) is perhaps the best known, but there are others. Zoho offers cloud-based productivity apps, email, CRM, service desk, bookkeeping, and other business tools. Salesforce, too, plays in this area: It has embedded the functionality of Quip, an office productivity platform it acquired in 2016, into its CRM offering, meaning sales staff may not need a separate productivity suite at all.\n\nFor now, Mansfield sees Google mostly winning market share on front-line or deskless workers, who need a productivity suite only occasionally. \u201cEnterprises are willing to try Google there,\u201d he says, and it provides a bridgehead within the company from which Google can seek to win contracts for corporate desktops, too.\n\nThe biggest threat CIOs have, though, is not taking their desktop spend away from Microsoft, but taking away their other spending \u2014 switching clouds, for example, or playing off Microsoft\u2019s Power BI against Salesforce\u2019s Tableau.\n\n\u201cTell them, \u2018Do this, and you may never get that.\u2019 That\u2019s where you start creating leverage,\u201d says Mansfield, noting that this is one area in which Microsoft\u2019s broad portfolio works against it.