23 Jul Microsoft to end plan-based licensing of Dynamics 365 Customer Engagement, aiming for focus on app value
Microsoft will end the use of licensing by “plans” in Dynamics 365, the company revealed at its the Inspire 2019 partner conference this week.
The new approach goes into effect on October 1, 2019, as the above slide and tweet by Dynamics 365 CE professional Tommi Oksanen shows. Existing customers will see the new pricing model starting with renewals in Microsoft’s fiscal 2020 at “the best renewal price” with additional incentives for CSPs selling over 100 seats.
The thinking, as Oksanen captured through a series of Microsoft slides, is that:
80% of Dynamics 365 Customer Experience users use a single app
Plans are not aligning with value. For example, many of those customers end up paying less for the plan than they would if they were buying the single app that they really use.
Plans lead customers to focus on price rather than value in discussions with Microsoft and partners.
Paying for capabilities they don’t need also impacts perception of value.
Plans prevent monetization of future enhancements.
The future for Dynamics 365 Customer Engagement will be to sell a base license with “attach licenses” if needed. Those attach licenses would be heavily discounted, Microsoft says. In the example below, a $95 base license for Customer Service would be augmented with a $20 Sales or Field Service license for a user who needed it. Microsoft believes this will encourage customers to purchase the applications that align to individual users’ needs. For users utilizing two apps, the cost will be the same as the current Customer Engagement plan price of $115, Microsoft noted. Use of three or more apps, which is rare, would rise by increments of $20.
Oksanen also noted that while Project Service Automations is available for purchase as base app (for $95), it is not available as an attach app.
The use of plans for licensing dates back to a change announced three years ago at Worldwide Partner Conference 2016. Apps, plans, and team members were the building blocks of the licensing strategy, partners were told at the time. Some of the goals stated at that time were flexibility, lower prices, and the ability to build in PowerApps and Flow usage.
Two concerns around the change could be both pricing complexity and enforcement, says Directions on Microsoft analyst Andrew Snodgrass.
“My concern here is whether they properly gate the usage of features to enforce subscription rights or if they just provide access to everything and nail customers to the wall at audit time,” he said.
In a follow up comment, Oksanen noted one of the likely concerns of this move, the fact that plans were relatively simple. He wrote:
…Plan licensing has been a very easy model for calculating #MSDyn365 license costs for an enterprise environment. With the attach licenses and other add-on costs the total cost estimating will be harder.
The risk I see with this is too much granularity w/pricing. If each new feature/function requires a purchase, that will discourage implementing said features/functions.
Based on yet another captured slide from Oksanen, PowerApps will still be made available to Dynamics 365 licensees via “seeded” PowerApps licenses. A similar seeded Flow license will also be offered to Dynamics 365 users.