Microsoft 365 licence - the best option for your business
Deciding to purchase your Microsoft 365 licences on a yearly or monthly basis can be a tricky decision. With software being a big investment for any organisation, your choice can significantly impact your business’s financial planning and operational flexibility. Understanding the price difference is crucial for making an informed decision. Here’s our quick guide to the pros and cons of purchasing annual and monthly licenses, for businesses (in the UK) looking to choose the best option for them.
KEY TAKEAWAYS;
- Monthly 365 licences provide a level of flexibility, offer short-term commitment and can assist with budgeting
- If your workforce fluctuates during the year, a monthly licencing option can provide cost efficiencies
- Annual Microsoft 365 licences can save you around 16-20% compared to a monthly licence term
- Balance cost efficiencies and flexibility with an 80/20 annual/monthly split.
Monthly 365 Licence
Flexibility – Monthly licencing provides a level of flexibility for businesses that experience fluctuating staffing needs. Examples can include businesses that increase their workforce depending on seasonal operations, or those undertaking regular project work. The ability to turn on and turn off software licences can help save unnecessary cost in quieter periods.
Short-term commitment – The ability to scale up and down as required, can be ideal for start-ups or businesses in transition. Your organisation may have a structured growth plan which will require onboarding new staff over a period of 12 months. However, if new starters are onboarding throughout this period, it may be more cost efficient to purchase licences as and when required instead of all up-front.
Budgeting – With monthly licencing businesses will be charged smaller, more manageable amounts spread across the year. Instead of having a large bill at the start of the licence you can manage expenses monthly. Bear in mind you will be subject to any price changes.
Annual 365 licence
Cost saving – For the long-term an annual licence is the most cost effective. For example, a yearly commitment can save you around 16-20% compared to a monthly licence term. You will also avoid any price increases implemented during the 12 months. It’s important to note that annual licences can still be paid monthly.
Stability – Annual licences give continuity and minimal administrative hassle. So if your business is likely to remain at a stable staffing level then the yearly option is beneficial.
Simplicity – One-off payments are simpler to administer, with renewals easy to factor into the annual budgeting process.
How do I choose the best Microsoft 365 licensing option for my business?
- Assess what your business needs
Consider the nature of your business, workforce stability, and budget flexibility. Think about what might happen in the longer-term, as well as current requirements. - Financial planning and budgeting
Weigh up the benefits of making lower monthly payments against the potential savings from an annual commitment. For instance, the yearly option might save you hundreds of pounds over the course of a year. Even if you don’t need to use it for the full year. - Planning for growth
Your choice of licencing option may be impacted depending on the future plans of the business. You may be planning for growth, or be aware of the need to downsize in upcoming months. Business growth plans will influence your licensing needs over time.
To balance flexibility and cost savings, we recommend an 80/20 split between yearly and monthly licences. This approach allows you to take advantage of the discounts offered by yearly licences for your core team, while maintaining the flexibility to scale up or down with monthly licences as your business needs change.
Getting the most of Microsoft 365 for your business
Whether you opt for a monthly, yearly, or a balanced mix of licences, ensuring that your Microsoft 365 setup aligns with your operational needs is key to maximising productivity and cost savings. Make sure you complete a detailed business analysis with your MSP prior to purchasing software. This will ensure you invest in the best solution for your business.
If you want to discuss in more detail our team will be happy to advise.
