How to Navigate the Microsoft Dynamics 365 Pricing Update – October 2024

How to Navigate the Microsoft Dynamics 365 Pricing Update – October 2024
Microsoft Dynamics 365 is undergoing a significant pricing update in October 2024. This change has caught the attention of businesses using or considering the platform for their operations. Understanding the new pricing structure and its implications is crucial for organisations to make informed decisions about their software investments.
This article will guide you through the key aspects of the Microsoft Dynamics 365 Pricing Update. We’ll explore how it affects existing customers, discuss potential alternatives and add-ons, and provide tips to prepare your organisation for the change. By the end, you’ll have a clear understanding of the update and how to navigate it effectively.
Understanding the Pricing Update
Overview of affected products
Microsoft has announced a significant pricing update for its Dynamics 365 suite, set to take effect on October 1, 2024. This marks the first major pricing change for the platform in over five years. The update will affect a wide range of Dynamics 365 products, including Sales, Customer Service, Field Service, Finance, Supply Chain Management, Commerce, Human Resources, and Project Operations.
It’s important to note that not all Dynamics 365 solutions will see price changes. For instance, Microsoft Dynamics 365 Business Central pricing will remain unchanged. The update primarily focuses on adjusting the licencing costs for various Dynamics 365 applications.
Percentage increases for different services
The price increases vary across different Dynamics 365 services, ranging from approximately 9% to 17%. Here’s a breakdown of some key products and their price changes:
- Dynamics 365 Sales Enterprise: From £74.63 to £82.49 per user/month (11% increase)
- Dynamics 365 Customer Service Enterprise: From £74.63 to £82.49 per user/month (11% increase)
- Dynamics 365 Field Service: From £74.63 to £82.49 per user/month (11% increase)
- Dynamics 365 Finance: From £141.41 to £164.98 per user/month (17% increase)
- Dynamics 365 Supply Chain Management: From £141.41 to £164.98 per user/month (17% increase)
- Dynamics 365 Human Resources: From £94.28 to £106.06 per user/month (13% increase)
- Dynamics 365 Project Operations: From £94.28 to £106.06 per user/month (13% increase)
These price adjustments reflect Microsoft’s ongoing investment in enhancing the Dynamics 365 platform, including the addition of new features, AI capabilities, and improved integrations.
Comparison with previous pricing structure
The upcoming pricing structure represents a significant shift from the previous model, which had remained largely unchanged since 2018. The new prices reflect an average increase of about 17% across the Dynamics 365 product line.
This update aims to align the pricing with the increased value delivered to customers through continuous improvements and new features. Microsoft justifies the price increase by highlighting the hundreds of new features and enhancements released each year, designed to help businesses work smarter, save time, and collaborate more effectively.
The pricing update will affect both new and existing customers. For existing customers, the new prices will apply upon renewal of their licences after October 1, 2024. New customers signing up after this date will be subject to the updated pricing structure immediately.
It’s worth noting that while the price increase may seem substantial, Microsoft emphasises that this is the first major pricing adjustment for Dynamics 365 in more than five years. The company aims to maintain competitive positioning in the market while reflecting the increased value provided through ongoing updates and new functionalities.
Impact on Existing Customers
The Microsoft Dynamics 365 pricing update will have a significant effect on existing customers, particularly those with renewals after October 1, 2024. It’s crucial for organisations to understand the implications and prepare accordingly.
Renewal considerations
For existing customers, the new pricing structure will apply upon renewal of their licences after October 1, 2024. This means that if your Dynamics 365 licence agreement expires after this date, you’ll be subject to the increased rates. For instance, if your Dynamics 365 Sales Enterprise licence renewal is due in November 2024, you’ll see the price rise from £74.63 to £82.49 per user/month.
It’s worth noting that customers who purchase their Dynamics 365 licences through an Enterprise Agreement (EA), Enrolment for Software Assurance (ESA), or Server and Cloud Enrolment (SCE) will have price protection for licences locked in until the end of their contract. However, those who buy outside these programmes, such as through the Cloud Solution Provider (CSP) programme, or EA customers due for renewal, will feel the impact of the price increase.
Budgeting implications
The pricing update will have substantial budgeting implications for organisations using Microsoft Dynamics 365. With increases ranging from 9% to 17% across various products, businesses need to reassess their software expenditure and plan accordingly.
For some customers, this price hike may coincide with the Microsoft 365 and Office 365 price increases that took effect in March 2022. This double impact could put additional strain on IT budgets, making it essential to review and adjust financial plans.
To manage these budgeting challenges, organisations might want to consider financing their software licences ahead of the price increases. This approach can lock in prices for the duration of the finance agreement, providing protection against future price hikes and offering more stable cash flow management.
Strategies for cost management
To navigate the Microsoft Dynamics 365 pricing update effectively, organisations can employ several strategies to manage costs:
- Assess current utilisation: Take time to carefully evaluate your current use of Dynamics 365 products and the value received to date. This assessment can provide leverage in negotiations with Microsoft and help identify areas where you might be overpaying.
- Review licencing usage: Identify any unused licences or opportunities to switch to alternative user licences that could reduce costs. This review can help optimise your licencing structure and potentially offset some of the price increases.
- Push for renewal term price protections: For those with renewals coming up before October 1, 2024, it’s crucial to negotiate hard for renewal term price protections. This can help shield your organisation from future price hikes.
- Explore financing options: Consider financing your Dynamics 365 licences to lock in current prices for the next 3 to 5 years, potentially mitigating the impact of the price increase.
- Leverage the Base and Attach model: Utilise Microsoft’s base and attach licencing model to potentially reduce costs for users who need access to multiple Dynamics 365 applications.
- Optimise storage costs: Dynamics 365 includes a certain amount of storage. Manage your data efficiently to avoid additional storage fees.
By implementing these strategies, organisations can work to minimise the impact of the Microsoft Dynamics 365 pricing update and ensure they’re getting the most value from their investment in the platform.
Exploring Alternatives and Add-ons
Evaluating current usage and needs
As organisations navigate the Microsoft Dynamics 365 pricing update, it’s crucial to assess current usage and needs. This evaluation helps determine if the platform still aligns with your business requirements and budget constraints. To begin this process, examine your level of user adoption. Are users utilising the system as they were trained? Who might need additional support? Identifying power users who could become internal advocates or trainers can be beneficial.
Out of the box, Dynamics 365 doesn’t offer a simple way to view usage statistics. However, Microsoft provides solutions through the Power Platform admin centre, which includes User Auditing features. As Dynamics 365 is now part of Microsoft’s Dataverse, all its data is accessible through Power Platform. The admin centre offers eight reports on Dynamics user activities, breaking down usage by type, operation, and device.
Considering Business Central and other unchanged products
While many Dynamics 365 products are seeing price increases, it’s worth noting that Microsoft Dynamics 365 Business Central pricing will remain unchanged. This makes Business Central an attractive option for organisations looking to manage their financial and operational needs without incurring additional costs.
Business Central is a cloud ERP solution designed for small to medium-sized businesses. It offers flexibility and customisation options, allowing you to streamline your business processes and manage operations from a single platform. The stability in pricing for Business Central presents an opportunity for organisations to reassess their needs and potentially switch to a more cost-effective solution.
Exploring complementary services for added value
To maximise the value of your Dynamics 365 investment, consider exploring complementary services and add-ons. These can enhance functionality and provide additional benefits without significantly increasing costs. For instance, the Power Platform, which includes tools for business intelligence, automation, and artificial intelligence, comes bundled with Essential and Premium Business Central licence subscriptions.
Microsoft also works with software and implementation partners to develop custom integrations, known as connectors, which can add unique functionality to Business Central. These integrations can significantly expand the capabilities of your system, potentially offsetting the impact of price increases by improving efficiency and productivity.
Additionally, consider exploring third-party solutions that integrate with Dynamics 365. For example, Continia offers document management and expense management solutions, while Insight Works provides tools to optimise inventory and distribution operations. These add-ons can help you tailor your Dynamics 365 environment to your specific business needs, potentially increasing its overall value proposition despite the pricing update.
Preparing Your Organisation for the Change
As the Microsoft Dynamics 365 pricing update approaches, it’s crucial to take proactive steps to prepare your organisation for the changes ahead. By implementing strategic measures, you can minimise the impact on your budget and ensure a smooth transition.
Communicating with stakeholders
Effective communication with stakeholders is paramount when navigating the Microsoft Dynamics 365 pricing update. Start by identifying key stakeholders across your organisation, including product pricing analysts, sales managers, finance teams, and customer success managers. Each of these roles has valuable insights to contribute to the decision-making process.
Organise meetings or workshops to discuss the upcoming changes and their potential impact on various departments. Encourage open dialogue and gather feedback from different perspectives. This collaborative approach will help you develop a comprehensive strategy that addresses the needs and concerns of all stakeholders.
Consider creating a communication plan to keep everyone informed throughout the transition process. Regular updates on licencing changes, cost implications, and any planned adjustments to workflows will help maintain transparency and reduce uncertainty.
Reviewing and optimising licences
A thorough review of your current Microsoft Dynamics 365 licences is essential to optimise costs and ensure compliance. Start by conducting a comprehensive licence audit to identify any unused, unallocated, or overprovisioned licences. This process will help you eliminate unnecessary expenses and align your licencing with actual usage.
Utilise tools like the Microsoft 365 admin centre to generate usage reports and gain insights into activity levels across different services. Pay close attention to licences assigned to inactive users or those that include features not being utilised by your organisation.
Consider working with a trusted Microsoft partner to perform a detailed licence optimisation audit. Their expertise can help you identify cost-saving opportunities and implement a tailored optimisation strategy. This may include exploring alternative licencing options, such as per-user or per-feature licencing, which might better suit your specific needs.
Planning for potential workflow adjustments
The pricing update may necessitate changes to your existing workflows and processes. Take time to assess how the new pricing structure might impact your current use of Microsoft Dynamics 365 and plan for any necessary adjustments.
Review your business processes and identify areas where you can streamline operations or leverage underutilised features to maximise the value of your Dynamics 365 investment. This might involve reassessing user roles and access levels to ensure optimal licence allocation.
Consider exploring complementary services and add-ons that can enhance functionality without significantly increasing costs. For example, the Power Platform, which includes tools for business intelligence and automation, can add value to your Dynamics 365 environment.
Lastly, develop a training plan to ensure your team is well-equipped to adapt to any changes in workflows or new features introduced as part of the pricing update. This proactive approach will help maintain productivity and user satisfaction during the transition period.
Conclusion
The Microsoft Dynamics 365 pricing update in October 2024 brings significant changes for businesses using the platform. This update has an impact on various products and services, with price increases ranging from 9% to 17%. To navigate these changes, companies need to carefully review their current usage, explore cost management strategies, and consider alternatives like Business Central. It’s also crucial to communicate openly with stakeholders and plan for potential workflow adjustments.
In the end, while the pricing update may present challenges, it also offers a chance to reassess and optimise Dynamics 365 usage. By taking a proactive approach, organisations can minimise the impact on their budgets and potentially uncover new ways to get more value from their investment. Remember, thorough preparation and strategic planning are key to successfully adapting to these changes and ensuring continued business growth.