UK businesses that buy enterprise software or cloud services from Microsoft are facing a price hike from January 1.
On Friday Microsoft quietly released the news of changes to pricing for volume licensing products via its UK TechNet blog for IT professionals — saying it was revising pricing in pound sterling to “ensure there is reasonable alignment across the region”.
On-premise enterprise software prices will be rising by 13 per cent, while “most” enterprise cloud prices in British pounds will increase by 22 per cent to — in Microsoft’s words — “realign close to euro levels”.
The reason for rising prices is of course the June referendum in the UK on continued membership of the European Union — with the shock no vote sending the value of the pound nosediving. Some analysts are now predicting Sterling will hit parity with the euro and drop to just $1.10 by the end of 2017.
Microsoft doesn’t mention the ‘B’ word specifically but describes the price rise as a “harmonisation adjustment” — similar to ones it made in April for pricing in Norwegian krone and Swiss franc.
“Even after this adjustment, customers across the region buying in British pound will still find our cloud offerings highly competitive,” it claims.
What can UK companies do to protect themselves against b2b pricing fluctuations in the post-Brexit reality? Ellen Leith, founder, of the P2PNetwork, says the startup made the decision to be billed “as much as possible through the US company” after the referendum vote.
“Usually we pay for software in dollars now. Not sure how that’s ‘taking back control’ but there we are…” she adds.
Back in August several startups also told TechCrunch they were having to be generally more “currency aware” in the wake of Brexit.
“We have been forced to be more currency movement aware,” said Hubbub founder and CEO Jonathan May at the time.
“Almost our entire cost base is in GBP but increasingly our revenues are in USD or EUR, so we have needed to spend a bit more time making sure we’re not wasting money invoicing in the wrong currencies, and given the long sales cycles in our space, we’ve been careful to make sure quotes or price estimates are in the right currencies and have expiry dates on them.”
Microsoft notes that UK customers with annuity volume licensing agreements for products that are subject to price protection will not face the price hikes during the term of their agreement.
While for products sold through resellers, it confirms final prices and currency of sale will “continue to be determined by them”.
It’s not the only company rethinking UK pricing in the wake of the pound’s dramatic fall. In August HTC bumped up the price of the HTC Vive VR headset by £70, for instance.
Although, in the Microsoft case, the Brexit-induced price hike only affects its enterprise products.
“This pricing change will not apply to consumer software or consumer cloud services,” Microsoft added.
TechCrunch’s Mike Butcher contributed to this reportFeatured Image: Chris Ratcliffe/Getty Images