Microsoft to push up UK volume pricing by up to a third

Microsoft is to increase its volume licensing prices for its UK licensing schemes from the beginning of July, the company has announced, with most increasing by a quarter or more and some by over a third.

Price hikes of up to 33.5 percent will hit businesses entering licensing agreements from 1 July, Microsoft said in a statement on Monday.

"Because of sustained currency differences between European countries, Microsoft is taking action to establish and maintain price consistency in the region for our volume licensing programmes," Scott Dodds, Microsoft's UK general manager of marketing and operations, said in the statement. "From July 1 in the UK, these adjustments will result in £ sterling price list rises for new volume licensing contracts of between 7.5 percent and 33.5 percent, to ensure greater consistency with the equivalent Euro price list."

Customers entering into new Enterprise Agreements will see price rises of 25.7 percent on average, with a 21-percent price increase for Office 365. Open Value, Service Provider, and Independent Software Vendor agreements will all increase by 33.5 percent, and Open Licence Agreements will see an increase of 7.5 percent. Select and Select Plus agreements will go up by 24.6 percent on average.

Academic and consumer licensing will not be affected by the price increases, said the company.

Microsoft is in the process of negotiating with the Cabinet Office on public-sector licensing. The negotiations will probably offset price increases for the public sector, technology publication The Register said in a report on Tuesday.

In the long term, Microsoft's inflexible price elasticity is adding to incentives to move to open source.

– Mark Taylor, Sirius Corporation

A Cabinet Office spokeswoman declined to say how much the negotiations would offset the Microsoft price hikes on Tuesday, saying only that the government department will make an announcement in the next few weeks.

"The Cabinet Office and Microsoft will provide a further update shortly regarding pricing and licensing for the UK Government, to replace the PSA09 framework," the Cabinet Office and Microsoft said in a joint statement. "In the meantime we can confirm that the terms of the PSA09 framework will remain in place until June 30."

The Microsoft Public Sector Agreement (PSA09), updated in November 2010, said that Microsoft enterprise products can be "heavily discounted".

Open-source shift?

Customers may have to swallow Microsoft price increases in the short term, and then seek alternative software in the future, according to UK open-source company Sirius Corporation.

"A lot of people will find that they are locked-in [to Microsoft contracts], so in the short term will have very few options," Sirius Corporation chief executive Mark Taylor told ZDNet UK on Tuesday. "In the long term, Microsoft's inflexible price elasticity is adding to incentives to move to open source."

Taylor likened Microsoft's price increases to the situation with petrol pricing in the UK, which has seen massive rises in a relatively short space of time.

Nevertheless, Microsoft customers in both the public and private sectors should expect to be able to negotiate with Microsoft on pricing, Microsoft channel reseller SoftwareONE told ZDNet UK on Tuesday.

SoftwareONE UK managing director Zak Virdi, who is also a director of copyright enforcement organisation the Federation Against Software Theft (FAST), said that public-sector organisations should not rush to buy new licences before July.

"People should wait for more instructions from the Cabinet Office," said Virdi. "Until that time they should not listen to scare tactics around price increases."

Private-sector organisations should take a measured look at systems requirements, and see whether it is necessary to buy new volume licences, said Virdi.