Key Changes in Microsoft Licensing for 2025
- New pricing structure for Microsoft 365 & Office 2021
- Increased focus on security features for enterprise plans
- End of support for certain legacy products
- Updates to Azure pricing and service tiers
- Changes to the Windows Server licensing model
- New features for hybrid work scenarios
Key Changes in Microsoft Licensing for 2025
As 2024 unfolds, Microsoft significantly changed its licensing structure, reflecting its evolving approach to cloud services, subscription models, and AI-powered solutions.
These changes impact a wide range of Microsoft products, including Microsoft Teams, Dynamics 365, and various enterprise services.
This article provides an in-depth look at the key changes in Microsoft licensing for 2024 and their potential impact on businesses and enterprise users.
Teams Licensing Restructuring
One of the most notable licensing changes for 2024 is the restructuring of Microsoft Teams subscriptions. Starting April 1st, 2024, Microsoft will modify how Teams is integrated into its Office and Microsoft 365 packages.
These changes were initially rolled out in the European Economic Area (EEA) and Switzerland, but they are now set to expand globally.
Under the new licensing structure, new customers will no longer receive Teams as part of the standard Microsoft 365 and Office 365 suites. Instead, Teams will require a separate subscription, which costs approximately $5 per user per month for the standalone Teams Enterprise license.
This restructuring means enterprises and businesses must make more deliberate decisions about whether they want Teams integrated into their productivity suites or to keep them separate.
The change is less drastic for existing subscribers. Customers using Microsoft 365 or Office 365 with integrated Teams functionality can continue with their existing subscriptions. However, they can switch to the new structure when their subscriptions renew.
Impact on Enterprise Users
This change will affect several key Microsoft enterprise packages:
- Office 365 E1, E3, and E5
- Microsoft 365 E3 and E5
Teams will no longer be bundled with these packages in the new licensing format, but the standalone Teams subscription can be added for an additional cost. The pricing for suites that exclude Teams is approximately $1 less per user per month compared to the current version with integrated Teams. Businesses must assess whether the additional cost of a separate Teams subscription aligns with their organizational needs.
Impact on Business and Frontline Users
For smaller businesses, Microsoft 365 Business packages—such as Basic, Standard, and Premium will continue to be available in both versions, with or without Teams integration. Similarly, Frontline packages such as Microsoft 365 F1, Office 365 F3, and Microsoft 365 F3 will also maintain both versions, giving businesses flexibility in their licensing decisions.
Microsoft’s new Teams licensing structure provides more granularity, enabling businesses of all sizes to tailor their subscriptions to meet specific needs. This flexibility is designed to accommodate organizations that either already use Teams heavily or may not require it as an integral part of their suite.
Microsoft 365 Updates
Copilot Integration
In addition to the changes in Teams licensing, Microsoft is introducing several updates to Microsoft 365 (M365), including the rebranding of Microsoft Copilot as M365. This move integrates AI-driven tools into M365 applications like Word, Excel, and Outlook.
With this rebranding, Microsoft also announced that sales and service plans for M365 Copilot would be adjusted to align with these new capabilities.
For businesses, the introduction of Copilot represents a major shift toward AI-powered productivity tools, which enhance tasks such as writing, data analysis, and customer relationship management. Additionally, self-service purchasing capabilities have been introduced for Microsoft 365 Business Basic, Standard, and Premium customers, simplifying the process of acquiring and managing licenses.
New License Offerings
To address its customers’ evolving needs, Microsoft has launched the O365 E1 Plus license in select markets, including ASEAN, LATAM, India, the Middle East, Africa, and Central Asia.
This new package combines the basic productivity and email features of Office 365 E1 with enhanced security capabilities.
Some of the features included in this new offering are:
- Endpoint Management (Intune)
- Conditional Identity Access (Microsoft Entra ID)
- Data Loss Prevention
This move aims to provide more comprehensive and secure offerings for regions where businesses require robust security features but may not need the full range of capabilities provided by higher-end Office 365 plans.
Read about Microsoft License Models.
Dynamics 365 Pricing Changes
Microsoft has also announced significant pricing changes for Dynamics 365 products, set to take effect on October 1st, 2024. The pricing adjustments include:
- CRM Enterprise licenses: An 11% increase from $95 to $105 per monthly user.
- ERP Enterprise licenses: A 17% increase from $180 to $210 per monthly user.
- Microsoft Relationship Sales licenses: A $15 increase across all tiers.
These price adjustments reflect Microsoft’s efforts to align Dynamics 365 with the rising demand for advanced enterprise solutions. The increases also come as part of Microsoft’s broader strategy to align its products with the growing complexity and scope of digital transformation.
Enterprise Agreement Evolution
Transition to Microsoft Customer Agreement (MCA-E)
In a major shift in how Microsoft handles its enterprise agreements, the company will begin phasing out cloud-based Enterprise Agreements (EA) starting January 1st, 2025.
The transition will impact direct markets, with customers moving to one of two new licensing options:
- Microsoft Customer Agreement for Enterprise (MCA-E) for larger organizations
- Cloud Solution Provider (CSP) program for smaller and medium-sized businesses
This transition is part of Microsoft’s broader effort to simplify its licensing structure and offer customers more flexible, subscription-based models. Indirect EA agreements will remain unaffected initially, but businesses should be prepared to transition to the new models in the coming years.
Changes to Software Components
As part of the transition to MCA-E, Microsoft will offer software components such as SQL Server, Windows Server, and System Center as subscriptions through the MCA-E program starting October 1st, 2024.
This marks a significant shift from perpetual licenses to subscription-based models, reflecting the company’s ongoing focus on cloud-first strategies and greater subscription adoption.
Read about Microsoft’s Licensing in the cloud.
Security and Compliance Updates
Microsoft continues prioritizing security and compliance, especially with the increased focus on AI and cloud security.
A major security addition is the Microsoft Copilot for Security launch, which went live on April 1st, 2024. This new service provides advanced security features such as:
- Incident Summarization
- Impact Analysis
- Reverse Engineering of Scripts
- Guided Response
The service follows a consumption-based pricing model at $4 per hour, leveraging Azure’s Security Compute Units. As organizations increasingly rely on cloud infrastructure, these new tools will help businesses monitor and respond to security incidents more efficiently.
Price Adjustments for 2025
While Microsoft’s licensing structure will be adjusted extensively in 2024, the company has also announced planned price increases for several services starting in 2025. These price increases are part of Microsoft’s ongoing efforts to reflect market trends and the growing demand for advanced features.
Teams Phone Services
Starting April 1st, 2025, the price of Teams Phone service will increase to $10 per user per month, a 25% rise. Similarly, Teams Phone Frontline Workers will see a monthly price increase from $4 to $5 per user. This price adjustment reflects the increasing value of Teams Phone as a central hub for business communications, particularly for organizations relying on cloud-based phone systems.
Power BI Adjustments
Power BI will also see price adjustments in 2025. These changes include:
- Power BI Pro: A 40% increase to $14 per user per month
- Power BI Premium: A 20% increase to $24 per user per month
These price increases support the continued development and expansion of Power BI’s capabilities as businesses rely on data analytics and business intelligence tools to drive decision-making.
Product Lifecycle Changes
Windows Server 2025
One of the most significant product updates for 2024 is the announcement of Windows Server 2025, which is currently in public preview, with general availability expected later in 2024. This release will focus on several key areas:
- Advanced security features
- New Azure hybrid capabilities
- Enhanced performance for AI workloads
- Modernized server experience
These changes underscore Microsoft’s commitment to hybrid cloud environments and the growing role of AI in enterprise infrastructure.
Microsoft Publisher End of Life
Microsoft has announced that Microsoft Publisher will be discontinued in October 2026. After this date, the product will no longer be included in Microsoft 365 or supported in existing on-premises suites. Businesses that rely on publishers must consider alternative solutions as they plan for the future.
Remote Desktop Services Price Increase
Starting November 1st, 2024, Microsoft will implement a 20% price increase for Remote Desktop Services Client Access Licenses (RDS CAL). This price adjustment aligns with broader Windows Server 2025 pricing changes and is part of Microsoft’s effort to balance the costs of maintaining and developing these essential services.
Privacy and Security Enhancements
Microsoft has also updated its Privacy & Security Terms, particularly AI services. The company has consolidated service coverage information onto a central page and introduced new security practices for various products, including GitHub Enterprise and Copilot offerings. These updates ensure that businesses can rely on Microsoft’s services to maintain robust security practices, particularly in the face of evolving threats.
FAQs
What are the new pricing changes for Microsoft 365?
Microsoft has introduced new subscription prices for Microsoft 365, focusing on larger enterprises with more comprehensive service bundles.
How does the new security emphasis affect businesses?
Microsoft adds advanced security features to enterprise-level plans, ensuring better protection against evolving threats.
What will happen to older Microsoft products in 2024?
Some older versions, like Office 2019, will no longer receive support. Businesses must transition to newer versions.
Are there changes to Azure pricing in 2024?
Yes, Microsoft has updated Azure pricing, focusing on offering more flexible service tiers based on usage and scale.
What is changing in Windows Server licensing?
The new licensing model for Windows Server in 2024 will focus more on cloud integration and server core-based models.
Will there be any changes to Office 2021?
Yes, Office 2021 will see price adjustments and certain features may require subscription upgrades.
Do these changes affect small businesses?
While many changes focus on enterprise-level customers, some adjustments may affect small business pricing and service options.
Are there new licensing options for hybrid work environments?
Microsoft has introduced flexible licensing options for businesses adopting hybrid or remote work models.
How will the pricing changes affect existing subscriptions?
Existing subscribers will see gradual price increases. Customers should review their agreements for specific adjustments.
Can I continue using older versions after 2024?
Many older versions will no longer receive support or updates after 2024, so it’s best to upgrade.
What happens to products with perpetual licenses?
Perpetual licenses will still be available, but businesses may find it more cost-effective to shift to subscription-based plans for better support and scalability.
How will Microsoft handle cloud service usage?
Cloud service usage will be billed differently, with new tiers and flexible payment structures designed for scalability.
Do these changes impact educational institutions?
Educational institutions may see specific pricing models adjusted, often with discounts, but the overall framework will remain similar.
What’s the best way to handle these licensing changes?
Businesses should evaluate their needs, compare new pricing models, and consider working with a Microsoft partner to optimize licensing decisions.
Is there a grace period for transitioning to new licensing models?
Some businesses may receive a grace period to transition to new models, but it is best to plan for changes well in advance.
Will Microsoft offer training or resources for the new licensing?
Microsoft will provide resources and training to help businesses understand the new licensing options and how they impact their operations.
