Microsoft Partners make sense of global pricing changes for Azure

Back in October 2022, Microsoft announced that it would establish a more “transparent cadence” to align Azure cloud pricing to US dollar prices so that customers around the world would have consistent pricing based on exchange rates. In July, the company went a step further, implementing price list changes to standardize prices to global levels and achieve local pricing stability for on-prem.

New prices are set to take effect on September 1, 2023. Going forward, customers and partners will need to adapt to this new cadence, preparing for pricing changes in September and March on the planned twice annual schedule. Microsoft indicated in a statement:

Microsoft will continue to assess pricing in local currency as part of a regular twice-a-year cadence, taking into consideration currency fluctuations relative to the USD. This will provide increased transparency and predictability for customers globally and move to a pricing model that is most common in our industry.

As these pricing changes come into effect, what do they mean for partners and customers? MSCN reached out to the Microsoft cloud partner channel for insights.

Gordon McKenna, CTO of Public Cloud at Ensono, explained that although global price changes are new, regional price swings have a lot of precedent. Many customers running on-prem datacenters have experienced price spikes due to hardware availability, and UK-based customers experienced a price surge when the UK left the European Union.

Will this have an impact on whether a customer moves from on-premise to the cloud? Probably. There has definitely been a global decline in customers executing cloud projects due to many feeling the effects of the global economic tailwinds, and this will be an additional reason on either delay or indefinitely postpone a project. But the cost of running an on-premise datacentre will also be a key consideration in the decision to move, [when weighed against benefits that] the cloud clearly brings like sustainability and flexibility. Overall, I would definitely expect there to be an increase in decisions to go Hybrid as many CPU or IO intensive workloads may look more costly to move to the cloud, meaning customers opt to leave these behind when they decide to move to the cloud.

In the September, 2023 price updates, Canadian and Australian customers are among those that will experience price changes, while some other regions remain unchanged. Will Thomas, Managing Director at global consulting firm Protiviti, anticipates that customers will fall into one of three categories in their response to the price changes. Some will accept the change and move forward, others will start by considering product comparisons, and still others will move off maintenance and seek a mitigation plan.

Regarding hybrid cloud plans, Thomas anticipates that customers will engage in more rigorous cost benefit analysis of hybrid vs. on-prem, and come to realize that migrations out of SaaS may be more difficult than a migration from on-prem. “A strong consideration when comparing on-premises, hybrid, and multi-cloud would be to leverage Azure Arc from a view-only perspective at a minimum,” he said. "Azure Arc offers platform management and governance across a customer’s infrastructure and will provide valuable insights that can help decision-makers when considering upcoming projects and service destinations. By enabling Azure Arc, clients may also receive additional incentives as part of their Microsoft agreements for leveraging credits or other funding programs to help offset some costs for their projects as well."