Microsoft Raises UK Cloud, Software Prices By Up To 22 Percent Due To Falling Pound

Microsoft is to substantially increase its prices for software and cloud services prices offered in British pounds in order to accommodate the sharp drop in the currency against the US dollar in recent weeks.

The move is expected to mean higher costs for the British government and businesses.

Price hike

Beginning in January 2017 on-premises enterprise software prices will go up by 13 percent and most enterprise cloud prices will increase by 22 percent, bringing them into line with euro prices, Microsoft said.

“We periodically assess the impact of local pricing of our products and services to ensure there is reasonable alignment across the region and this change is an outcome of this assessment,” the company said in a statement, comparing the changes to adjustments in Norwegian krone and Swiss franc pricing earlier this year.

Resellers offering Microsoft products are to continue to determine the pricing they offer.

The changes don’t affect existing software agreements under volume licensing agreements, which are normally subject to price protection during the term of the contract, Microsoft said.

Price protection

Existing subscriptions for cloud services such as Office 365 are also covered by price protection, but the cost of additional products under existing agreements will be be determined by the price at the time they’re ordered.

Microsoft said it isn’t planning to change its prices for consumer software and cloud services.

The value of the pound has fallen by about 18 percent since the EU referendum on 23 June.

Government departments including the Ministry of Defence are amongst Microsoft’s cloud customers in the UK, with the Cabinet Office believed to spend at least £100m a year on Microsoft contracts.

“We are constantly monitoring market and supplier pricing to ensure best value for our customers and the taxpayer,” the Cabinet Office said in a statement. “Where we are made aware of proposed price changes we will work closely with that supplier to identify ways to mitigate any increases in price.”

The government has been pushing through a major drive to cut IT spending, with efforts including consolidating services around shared centres.

Microsoft launched the first UK-based data centres for its Azure cloud platform in September, with the Ministry of Defence and the NHS among its initial customers.

Last week the company reported quarterly revenues of $20.5bn (£16.8bn).

How much do you know about the cloud? Try our quiz!