Microsoft UK Increases Enterprise Pricing Due to Sterling Devaluation

The UK public’s dramatic decision to leave the European Union has caused financial uncertainty in the markets and resulted in Sterling dropping from around 1.35 to the USD to the current rate of 1.22. Putting the political arguments aside, this weaker conversion rate can reduce a company’s profit margins. This is particularly true for UK hardware retailers who order stock in USD, then sell it to the public in GBP. As I’m sure you can imagine, the higher cost per item is passed onto consumers. Microsoft is the latest company to change their pricing strategy in the UK based on the current financial trends. In particular, the enterprise cloud services will go up by 22% and come into effect on January 1, 2017. Not only that enterprise software pricing will also rise by 13% “to realign close to euro levels”.

Despite these changes, Microsoft assured customers that their pricing remains competitive:

“Even after this adjustment, customers across the region buying in British pound will still find our cloud offerings highly competitive.”

Microsoft then clarified that the new pricing won’t be enforced on existing agreements:

“For business customers, these changes will not affect existing orders under annuity volume licensing agreements for products that are subject to price protection. For example, customers with Enterprise Agreements have price protection on previously ordered enterprise software and cloud services, and will not experience a price change during the term of their agreement. Similarly, business customers with cloud commitment subscriptions such as Office 365 also receive price protection during their subscription term, which is normally twelve months from the start of paid subscription.”

This isn’t a surprising revelation and I can see more companies following a similar strategy. It’s a shame though for business clients wanting the best possible deal, but this just wasn’t possible based on Microsoft’s analysis.