Microsoft uses its market dominance in production software to compel certain customers in its office to make major decisions to pay more or commit to a longer subscription.
In 2022, Microsoft introduced the so-called new office business information, redesigning the way customers buy software through business partners. Although the agency has not publicly announced a specific price change, it has informed partners that monthly payment organizations will face a 20% increase unless they move to annual subscriptions.
For Microsoft, the opportunity to lock customers in long-term plans means better visibility of revenue and less worry about churn, an important factor for registered businesses. Software vendors usually offer annual subscription discounts compared to monthly subscriptions, and many large businesses opt for that option.
However, some small agencies that are trying to save money as they face challenges related to the pandemic are frustrated with the changing model, which came after the announcement of the August 365 price increase, known as office 365.
In the meantime, Microsoft is thriving. Its stock has risen 46% this year, pushing its market beyond $2.4 billion, with revenue growth reaching 20% in the last two quarters.
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Most of Microsoft’s revenue comes from business customers, rather than consumers, and 95% of commercial revenue comes from our partners. Clients who specialize in Microsoft’s cloud-based solutions are the ones who are most affected by changes to the registration process, and Microsoft does not disclose what percentage of its customers purchase such products.
Mansfield said one of the concerns about Microsoft should be the opportunity for unhappy customers to choose a different public cloud provider when it comes to future projects. In that market, Microsoft is following Amazon’s web services, while Google is investing heavily in attracting new customers.
