Microsoft readies three new Office 365 plans for small and mid-size businesses

Microsoft readies three new Office 365 plans for small and mid-size businesses

Summary: Microsoft is introducing three new Office 365 plans for small and midsize business users this October. Here's what's coming.


One of the primary markets where Microsoft goes head-to-head with Google in the office-cloud wars is the small and midsize business (SMB) space.

To shore up its offerings there, Microsoft is planning to launch on October 1, 2014, three new Office 365 plans aimed specifically at SMBs.

The three:

  • Office 365 Business, which includes the full set of locally installable Office applications (Outlook, Word, Excel, PowerPoint, OneNote and Publisher) for up to 5 PCs and/or Macs per user; and 1 TB of free OneDrive for Business cloud storage. It doesn't include Exchange, Lync or SharePoint online. It's just the software (and storage) sold as a subscription. It will cost $8.25 per user per month, or $99 per year.

  • Office 365 Business Essentials, which includes email and calendaring (Exchange Online); online meetings, instant messaging and video conferencing (Lync Online); team sites (SharePoint Online); 1 TB of free OneDrive for Business cloud storage, and Yammer enterprise social-networking support. It doesn't include any downloadable Office apps. It will cost $5 per user per month, or $60 per year.

  • Office 365 Business Premium, which includes the full set of locally installable Office applications for up to 5 PCs and/or Macs per user; Exchange Online; Lync Online; SharePoint Online; Yammer enterprise social-networking; and 1 TB of free OneDrive for Business cloud storage. It will cost $12.50 per user per month, or $150 per year.

Here's Microsoft's chart showing how the three plans compare:


Over the next year or so, these three plans will replace Microsoft's current Office 365 plans for SMBs, which are Small Business, Small Business Premium and Midsize Business, which cost $5, $12.50 and $15 per user per month, respectively.

To ease customers into the new plans, Microsoft will begin making some of the features and pricing to existing Office 365 SMB customers this fall.

Starting October 1, Microsoft will raise the seat caps from 25 to 300 for Office 365 Small Business and Small Business Premium users. Office 365 Midsize Business users -- who already have a seat cap of 300 -- will see their prices cut from $15 per user per month to $12.50 per user per month. (Users will get the new price next time they renew, starting as of August 1, 2014.)

Users will have the option to switch more easily between plans by moving either their entire companies or just specific users. In the past, Microsoft has not allowed users to switch to a cheaper plan (only to a more expensive one). I've asked whether users will be able to downsize to a smaller/cheaper plan.

The rollout strategy for these new Office 365 plans is the most complex part of today's announcement.

Microsoft is advising existing customers that they will be able to opt-in and move to the three new plans after they launch. But the official recommendation is users just wait until their first renewal dates after October 1, 2015, given only "a small number of customers with very specific needs would realize value from moving plans" before that date, according to today's blog post.

There's also this caveat called out in today's blog post on the new plans: "Some customers will be unable to opt-in and move to the new plans immediately at launch. We are delivering an update for these customers to enable them to move to the new subscriptions by October 1, 2015." Right now, I'm not which customer set this refers to and what kind of update is needed.

Microsoft will provide more details about the new Office 365 SMB plans during its Worldwide Partner Conference in Washington, D.C., which kicks off on July 14.

At last year's partner show, Microsoft officials (and some partners) were critical of the complexity introduced by too many Office 365 options and choices. It will be interesting to see if partners think these three new plans will help Microsoft better battle Google in the cloud.

Topics: Cloud, Collaboration, Microsoft, Storage, SMBs


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • Good Grief

    How to make purchasing something that should be essentially simple as complex as quantum physics.

    Just when you thought it was safe in the Windows SKU dept, now this.
    Alan Smithie
    • Which part?

      Which part didn't you understand? Seems pretty simple to me.
      Buster Friendly
      • Just Wait...

        It looks simple, but just try to administrate it or use it fully. MS will figure out some way to make it more complicated than it needs to be.
    • NOOB

      we need to prequalify folks who comment. The comment above is either a straight hater or he's never ordered anything remotely near enterprise software in his life.

      Alan Smithie, the [business] world isn't run on gmail and pinterest.
  • Where is Visio?

    If they would just add Visio into the mix it would really be a complete Office. It just seems it is missing an essential tool to draw charts and other business type drawings.
    • Visio

      Is included with the E3 plan
  • Good for me

    Mary Jo:

    I have been planning to set up a "Small Business" account "real soon now" for over a month. I have a feeling that adding Yammer and Active Directory will be helpful to the future of the business.

    Is there any way that you can make the Microsoft comparison chart easier to read, like clicking on it gives an enlarged image that can be copied, pasted and studied?

    Thank you.
    • Use the source

      The blog has a higher res picture:
  • So it boils down to:

    1) Office subscription software
    2) Office online services
    3) Both

    Some businesses lease their hardware and get Office bundled with it, but then turn the systems back in after 3-5 years and do it all over again. It might be cheaper for them to just get the online services added on and keep buying their software outright, knowing that they would get the latest software anyway when they refresh their hardware.

    Some businesses might not care about SharePoint or Lync, and might use their own in-house Email solution (although Microsoft is making that harder and harder on SMB's) or maybe just Hosted Exchange accounts elsewhere (or ick, POP or IMAP). But they might want up-to-date software without the hassle of a traditional VL agreement with SA. So you have the subscription software offering for those customers.

    Now, with "P" plans finally getting the full SKU treatment, what are the major differences between these and Enterprise plans now? Previously, you could say "well if you wanted more choice, you have to pick an E plan". Not anymore. So are we basically just looking at retention and security policies being different between P and E plans? I wonder if the domain restrictions are still going to be in effect. Currently, Microsoft allows small business customers to host their DNS records with Microsoft. Now with the partnership with GoDaddy, I wonder if that will change. Enterprise customers CAN'T host their DNS with Microsoft though. Hosting the DNS with Microsoft is somewhat limiting, but also very simple.
    • Tied to hardware

      Would you really want to have to replace your hardware just to get a software update? It's also nice to be allow people to do an install on their own systems. I have my Office 365 Business seat on my office desktop, home desktop, and two laptops.

      I'm actually not real sure what they mean by doesn't include sharepoint online. Is that different from Onedrive for Business?
      Buster Friendly
      • Some companies want to tie their software to their hardware

        When an enterprise company wants control of their platforms, they'll want to lock them in to their lease agreement so that they can control when software upgrades happen. And not every company cares about paying more just so their employees can have a home-use copy.

        Also, SharePoint Online is a collaboration intranet development platform that lets you build out web apps (especially BI). It is way more than just online file storage. OneDrive (for business or not) just lets you store and share files.
  • Simple it should be, SIMPLE IT IS NOT!

    I've got clients on O365 since day1. Try adding exchange encryption service and have to migrate users from SMB to Enterprise, but before you are told that, you are told to buy VL licenses (Exchange Encryption) for your client only to find out it is included in "Certain Plans" Ask which plans and be told 3 different pricing structures. At a certain level of subscription service this should be included especially for HIPAA and financial institutions. Terribly frustrating and lack of correct information.
  • What about MS Access?

    Do I understand correctly that the 'full set of Office Applications' no longer includes MS Access?

    (Access was previously part of the 'full set' in Office Small Business Premium).
  • And you wonder why businesses DONT want tyo go there.....

    We will MOT use Office 365 or Office 2013 ever.

    The UI is very BAD we will stivck to Office 2010 PRO and when we cant get it the its open/libra Office MS have screwed us once too often
    • Blurry Text As Well

      Couldn't agree more re Office 2013.

      In addition, the font rendering API in Office 2013 is seriously defective.
      Text in Word documents and Outlook was so shockingly blurry, we had to abandon our small trial because the selected users stated categorically that "we cannot look at blurry text all day"

      Unbelievably, Microsoft still have no fix for this problem.
  • Finally!!

    I use Google App for my email and really didn't want to do the switch to another service. Office 365 Business is exactly what I wanted.

    Only one question: right now, "File storage and sharing with 1 TB of storage/user." The new service states: "1 TB of free OneDrive for Business cloud storage." So the question is, is it still 1TB PER user or 1TB for the whole company? Also, if an employee leaves - can I retrieve his / her files in their 1TB?

    If someone knows the answers, please let me know. Thank you.
    • Per user

      It states 1TB personal online storage - meaning per user, yes.