Microsoft Announces New Price Increases. Are you prepared?

What do Microsoft price increases and soda have in common? They both “pop.” Bad. Very bad. (Yes, I am a dad, and yes, I stand by that pun.) But beneath the humor lies an unfortunate truth. As of January, Microsoft announced price increases across various licensing programs—including our dear friend, SPLA (Service Provider License Agreement). Major product lines like Windows Server and Microsoft Office are impacted globally. These changes aren’t limited to a single program or corner of Microsoft’s ecosystem; they’re shaking up the entire landscape for service providers, ISVs, and IT teams.

If you want more specific details tailored to your region or your licensing scenario, I encourage you to reach out. The devil is always in the details when it comes to Microsoft licensing.

The reality is: price increases are as inevitable as the rising price of a cheeseburger. We all see prices climbing at the grocery store, at the gas pump, and at our favorite fast-food restaurants. So, the real question is not “Will prices go up?” (Spoiler alert: Yes, they will.) The real question is: What will you do about it? How will your business adapt, optimize, and—yes—thrive despite Microsoft’s new pricing changes?

Before we get to the strategies, it’s helpful to take a step back and consider the “why” behind the price changes. Microsoft, like other major technology companies, routinely reviews, updates, and increases its prices to reflect shifts in the global economy, currency fluctuations, ongoing product investments, security enhancements, and the increased value of their features.

This is not unique to Microsoft. We’re living in an era of inflation, rising operational and supply chain costs, and relentless pressure to innovate. For providers like Microsoft, keeping services secure, performant, and competitive means investing billions in R&D, infrastructure, security, and support. But those costs don’t stay in Redmond—they get passed along, in a variety of forms, to you and your customers.

Some hosters and managed service providers (MSPs) have expressed concerns about how these latest increases may seem “just business as usual,” while others see this as a bigger red flag. The lesson? You can’t control Microsoft’s price increases—but you can control your business’s response to them.

While conversations about price increases often center exclusively around the SPLA program, the bigger reality is that costs are only a significant issue if they are isolated—for example, if SPLA went up but other Microsoft or cloud programs did not. In truth, that rarely happens. Price increases typically ripple outward. Your customers’ choices aren’t just about the sticker price anymore.

Cost is absolutely important, but so are other vital factors:

• Regulatory compliance (GDPR, HIPAA, etc.)
• Unique business requirements (integration, scale, vertical-specific needs)
• SLA (service level agreement) requirements (uptime, support responsiveness)
• Geographic data residency
• Security and privacy guarantees
• The ability to innovate quickly

For most end customers, the lowest price is rarely the lone decision driver. If it were, we’d all be running the same base software stacks with little customization or value-add. But in the real world, value trumps price—and your job is to deliver that value better than your competitors.

In conversations with hosters, I’ve found there’s often too much focus on the “headline” price hike and on compliance/audit fears. It's as if the only thing that really matters is whether you can avoid an audit or survive one without hefty penalties.

Compliance is critically important—no argument there. At Octopus, we help clients prepare for and survive audits every day. But the most successful service providers aren’t just playing defense. They’re playing offense by thinking bigger: How can we reduce licensing costs proactively, rather than just react to price increases after the fact?

Over-Licensing: The Hidden Cost

Let me ask you something: When was the last time you thoroughly checked whether you were over-licensed? It happens all the time. Your environment grows, users are added, products are shuffled around, but no one does a regular spring cleaning. Months—or even years—later, you’re paying for more than you use, just because it’s “the way we’ve always done it.”

Now imagine you could:

• Reduce your SQL Server footprint by analyzing which instances are truly necessary.
• Restrict access to RDS (Remote Desktop Services) to only authorized users, rather than blanket-assigning access just in case.
• Leverage SPLA’s little-known benefits—such as internal use rights, trial provisions, and administrative user access allowances (20 users per data center, plus two per operating system environment).

Yes, that’s right: Certain SPLA rules actually benefit hosters and give you flexibility—if you know how to take advantage.

Too many hosters keep their SPLA reporting on autopilot. They submit the same usage numbers month after month, year after year—with almost zero fluctuation. What story does that tell? Either your entire environment is frozen in time (highly unlikely), or your reporting doesn’t reflect what’s really happening in your datacenter.

Instead, treat your SPLA usage reporting as business intelligence. Here’s what you could be doing:

• Analyze usage patterns: What are users actually accessing? When? For how long? Are there opportunities to consolidate workloads, sunset unused products, or right-size your environment?
• Improve security: If you spot unused or rarely used accounts, tighten up access controls. This doesn’t just reduce licensing costs—it also strengthens your security posture.
• Track customer deployments: Are you accurately tracking what software your end customers are using? Do you have a mechanism to verify whether customers have underlying licenses or Software Assurance (SA) that can be leveraged?
• Plan smarter: Use real data—not just assumptions—to forecast future demand and prevent over-buying.

Think of your SPLA report as more than a compliance checkbox. It’s a snapshot of the health, efficiency, and opportunity within your ecosystem. This reporting can guide business decisions, illuminate inefficiencies, and drive continuous improvement.

There’s a reason you’re under SPLA. You’re providing a service that adds value beyond what end customers would receive by purchasing retail or volume licenses on their own. This unique value proposition means you must stay on top of licensing updates, pricing changes, and—crucially—the hidden advantages available to hosters.

Staying current gives you a competitive edge:

1. Knowledge as Power: By understanding the intricacies of licensing—including price increases and program changes—you gain leverage in negotiations, customer discussions, and in internal planning.
2. Agility: As Microsoft evolves its offerings, those who adapt quickest prosper. Whether it's adjusting your offerings, updating internal processes, or capitalizing on new incentives, agility pays.

Layered Value: The more you can demonstrate expertise—not just in infrastructure, but in compliance and licensing best practices—the more trust you’ll build with customers, regulators, and partners.

Let's make this actionable. When Microsoft raises its prices, here’s what you should do next:

1. Audit Your Licensing Estate

Thoroughly review your current product usage and allocations. Are you running legacy apps that nobody uses? Are there dormant accounts skimming your license count? Regular audits help you pay only for what you use.

2. Educate Your Team

Ensure your IT, sales, and customer-facing teams understand what’s changing with Microsoft licensing. The more they know, the less likely you’ll be caught off guard by a customer inquiry, an auditor, or an unexpected bill.

3. Engage with the Community

Participate in discussion forums, licensing expert groups, and communities like Octopus Cloud Community. Here, you’ll find breaking updates, best practices, and a network of peers facing the same challenges.

4. Embrace Automation

Manual tracking of licenses is a recipe for mistakes and excess costs. Invest in intelligent platforms that automate discovery, usage tracking, and compliance reporting. At Octopus, our tooling not only assists with audit defense but also automatically uncovers underutilized resources and optimization possibilities.

5. Communicate with Your Customers

Transparent communication builds trust. Proactively notify customers about price changes, why they’re happening, and what steps you’re taking to maximize their value while minimizing unnecessary cost increases.

6. Leverage SPLA’s Benefits

Don’t ignore the favorable provisions for hosters: internal use rights, customer trial allowances, administrative user counts, and more. These can make a surprising difference to your bottom line when used strategically.

7. Plan for Flexibility

Never assume today’s environment will be tomorrow’s norm. Build flexibility into your contracts, service bundles, and technical architecture so you can easily adjust to further changes (because there will be more).

Microsoft price increases aren’t fun. But they do force all of us—service providers, hosters, MSPs, and IT professionals—to re-examine how we operate and how we deliver value. Don’t let these increases simply eat into your margins or pass through unquestioned to your customers. Instead, treat this as a catalyst for growth and optimization.

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