In October 2016, when Microsoft announced the price changes for UK customers by January 2017 the Pound was at its weakest vs. the EURO for more than 5 years. The price adjustments were made to align pricing across the European Regions.
Now that the new pricing has landed we are looking at today’s rates and what the increases mean for UK Customers compared to pricing in EURO and USD.
The above % aren’t applied to all the products – there are variations for some products.
Customers looking to move to the cloud using add-on prices for example, (add-ons to on-premise licenses) will find that add-on prices have increased by more than the average online services (up to 30%). This is to close the gap between the on-premise products who have increased less than the online Services.
When the price increases were announced, prices between UK and EUR would have been brought to parity – Factoring in the FX rate change to 1.17 today however, the UK is more expensive than in the Eurozone and international customers may wish to look at options for future contracts. Cloud Optics are experienced in advising on contractual options taking pricing and exchange rate factors into consideration.
We would also like to have a look at how the increases and the current low exchange rate between GBP and USD impacts pricing differentials between UK and US.
With average exchange rates of GBP to USD well above 1.35 prior to the end of 2016, pricing in GBP was considerably more expensive than US based pricing. European customers generally knew this and it has been the case for many years. In recent months prior to the price increases, the gap between UK and US pricing has become very small and for online services, UK pricing was even cheaper than in the US.
After the adjustments, GBP is now back to being more expensive for most products (with some exceptions), however, the difference for online Services is considerably smaller than for on-premise products. This is positive for customers who are looking to move to the Cloud in Europe /UK and provides some comfort of not paying a premium as high as 20% or more for Services in Europe vs. the US.
Please do not hesitate to reach out to us at Cloud-Optics if you wish to discuss your licensing requirements and pricing/currency aspects in more detail.