Microsoft NCE

Estimated reading time: 5 minutes

What is Microsoft NCE?

Microsoft NCE stands for New Commerce Experience, a change in how customers purchase and manage their licences. Microsoft launched NCE in January 2022, with the goal of reducing complexity, providing cost savings for long term commitments, and introducing additional features.

NCE offers partners and customers more flexibility and capabilities when purchasing and managing products like Microsoft 365, Dynamics 365, Microsoft Intune, and other services. Some of the new capabilities include:

  • More flexibility for managing subscriptions, such as controlling renewals, upgrading partial seats, and scheduling changes
  • New pricing and add-on options, such as getting pricing programmatically, acquiring add-on services independently, and new monthly term options
  • Simplified and enhanced billing, such as consolidating billing and invoicing, making billing dates consistent, and supporting monthly, annual, or three-year terms for many subscriptions

NCE also introduced a series of price increases for some Microsoft 365 licences, which took effect from March 2022, followed by a further 9% increase in April 2023.

Microsoft NCE

The History of Microsoft NCE

Back in 2021, Microsoft announced their “New Commerce Experience” before launching it in January 2022. Unfortunately for them, this was met with widespread criticism from every side due to the fundamental changes that came with it.

The core premise of Microsoft NCE was the move away from their monthly rolling Microsoft 365 licenses with the promise of better cost-savings, more flexibility and easier upgrades. However, in those early days, the reality was somewhat different…

The average customer saw that their rolling monthly licenses now came with a ~20% premium on top, unless they upgraded to the new NCE licenses that came with 12-month commitments to keep the same price.

The feedback was harsh, and Microsoft initially backed down on forcing the migration from the legacy licenses to the new NCE licenses; giving partners and customers a further 12 months to manage their renewals before forcing them to migrate to Microsoft NCE which expired in October 2022 for most. The last few larger distributers were able to negotiate a little extra time which expires in January 2024.

Microsoft NCE Contracts

The Benefits of Microsoft NCE

It’s not all doom and gloom, with many of the more subtle changes making the management of Microsoft 365 slightly easier. The biggest change was the ability to upgrade licenses, such as from Microsoft 365 Business Basic to Microsoft 365 Business Premium – it’s now just a click of a button and is applied almost instantaneous; previously, you would have to purchase the new license, wait for it to be applied to the account, add the new license to the relevant user, remove the old license and then cancel that license…

Many of the changes take place behind the scenes as Microsoft have overhauled their billing systems, allowing for consolidated invoices, more consistent billing dates and even billing in more local currencies – although we have noticed that they are quite harsh with their exchange rates as shown with the local price increases in 2023 as some countries saw increases above and beyond the standard 9% that the US and UK saw at that time.

Microsoft NCE Flow Diagram

How Does Microsoft NCE Affect Customers?

At its core, Microsoft NCE is following the trend of pushing customers down the long-term commitment route when it comes to licensing and services. It’s not just Microsoft, as more and more companies are doing this within the cloud services space. We have seen a number of companies go down this route, such as Adobe with their Creative Cloud, but thankfully Microsoft have not opted to copy one of the worst offenders with their notorious 3 and 5 year contracts!

Our Recommendations for Microsoft NCE

When looking at your Microsoft 365 requirements for the next 12 months; several questions may come to mind:

  1. How many staff do you have today?

  2. What are your growth plans?

  3. What is your staff turnover rate?

  4. Do you have seasonal or temporary staff?

One of the most effective ways to manage your Microsoft 365 licencing requirements is to separate your licenses into two pots; one set of core licenses for the minimum number of staff that you expect to have over the next 12 months, with a second set of more flexible licenses to cover any fluctuations in staffing levels. Typically, we see roughly 90% of licenses being committed for 12 months, with the other 10% staying on the more expensive rolling monthly licenses. Using this approach, you are able to benefit from the more cost-effective committed licenses for the majority of your licensing needs, while keeping some flexibility in case of need and saving you from paying for licenses that are no longer required.

Microsoft NCE Ship

Do You Need Support?

Here at Iconology, we have an array of knowledge and experience on setting up, managing and administrating Microsoft 365 across our team and are happy to help you navigate Microsoft’s New Commerce Experience to ensure that you have the right setup for your business.

Reach out to us today to discuss your requirements or answer any questions your may have.

3rd Line Engineer at Iconology Ltd