The Teams SKU Split Goes Global: What MSPs Should Quote Now
TL;DR
- As of April 2024, Microsoft sells Microsoft 365 and Office 365 commercial plans worldwide with Teams unbundled, extending the model it adopted for the EEA and Switzerland in October 2023.
- Existing subscriptions are unaffected for now and can keep renewing with Teams included under the current model.
- New Business plan purchases can drop Teams for roughly a 10 to 20 percent discount depending on the SKU.
- Enterprise customers who want Teams on a new subscription must now buy a separate Teams add-on, which raises effective M365 E5 pricing about 5 percent.
- Government, non-profit, and education licensing is not affected by the worldwide change.
Thirteen new SKUs, one regulator, and a quiet 5 percent price bump for Enterprise customers who want to keep the product most of them already use. That is the short version of Microsoft's April 2024 announcement standardizing its Teams licensing model worldwide.
The long version starts in Brussels. In October 2023, after the European Commission accused Microsoft of monopoly-like practices for refusing a price break to customers who preferred Slack or Zoom, Microsoft split Teams off in the European Economic Area and Switzerland: a Teams add-on for Enterprise plans, and Business SKUs sold with or without Teams. As of April 2024, that model goes worldwide for the commercial sector. Government, non-profit, and education are unaffected.
Microsoft frames the change as reducing confusion. We would gently note that adding thirteen SKUs and nudging Enterprise pricing upward if you want Teams is the kind of move that makes people resent Microsoft licensing in the first place. Here is what actually changes and what you should quote.
Who is affected, in one diagram
The decision tree breaks down four ways:
- Existing subscriptions: no impact for now. Customers can keep renewing under the current model with Teams included. We do not see a world in which Microsoft never deprecates these legacy SKUs, but as of April 2024 they renew untouched.
- Net-new Business plans: buyers choose between SKUs with or without Teams. Teams-free SKUs carry roughly a 10 to 20 percent discount depending on the plan (Business Premium without Teams is about 10 percent off).
- Net-new Enterprise plans: Teams is no longer in the box. Customers who want it buy two SKUs, the base plan plus a Teams add-on license.
- EEA and Switzerland: market-specific SKUs apply for both the Business plans and the Teams add-on.
What does the math look like for Business plans?
The good news for Business customers: pricing for the bundle that includes Teams, which is what everyone already had, does not change. And customers who genuinely do not need Teams now get a discount. Does that discount cover the cost of bolting on Zoom or Slack instead? Definitely not, but it helps.
Where is the hidden price increase for Enterprise?
The Enterprise story is where Microsoft was subtle without being subtle. If an Enterprise customer wants Teams on a net-new subscription, the combined price of the base SKU plus the Teams add-on runs 5 percent or more above the old bundled price on some Office 365 and Microsoft 365 SKUs.
Take Microsoft 365 E5. The bundled SKU was previously $57 per user per month on annual commit. The new model prices the Teams add-on at $5.25, bringing E5 plus Teams to roughly $60 per user per month, a 5 percent increase for the same functionality.
Microsoft's full pricing breakdown, including the F1 SKUs, is here: Realigning global licensing for Microsoft 365 (opens in new tab). Partner-facing detail: Modern Work for Partners - Sell through CSP (opens in new tab).
What do EEA and Switzerland customers buy instead?
Customers in the EEA and Switzerland have their own SKUs specific to that market. The standalone offering to bolt onto Enterprise plans there is called Teams EEA Cloud Add-On, while every other market buys the SKU named Microsoft Teams Enterprise.
What should MSPs do with this?
Three practical moves for your licensing desk:
- Leave existing subscriptions alone. Renewing under the legacy model keeps Teams bundled at the old price. Do not migrate a customer to the new SKUs without a reason.
- Quote both options on net-new Business deals. A customer standardized on Zoom may genuinely save 10 to 20 percent. A customer who uses Teams sees no change.
- Reprice Enterprise proposals. Any net-new Enterprise quote that assumes Teams needs the add-on line item, and the roughly 5 percent uplift belongs in the conversation before the customer finds it on the invoice.
Frequently asked questions
Do existing customers lose Teams at renewal?
No. Customers with existing licensing can continue to renew under the current model where Teams is included. There is no published end date for that grandfathering, though history suggests Microsoft will eventually retire the legacy SKUs, so plan renewals with that risk in mind.
Does dropping Teams save enough to pay for Slack or Zoom?
No. The discount on Teams-free Business SKUs runs about 10 to 20 percent, which softens the cost of bolting on a third-party communication tool but does not cover it.
Which customers are exempt from the new model?
Government, non-profit, and education customers are unaffected as of April 2024. The change applies to the commercial sector, and EEA and Switzerland customers have their own market-specific SKUs.
Licensing changed. Did anyone check what else did?
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Written by
Nick Ross
CEO · Microsoft MVP · Founder, T-Minus 365
Nick is not just a CEO, he's a respected thought leader and influencer in the MSP space. Tens of thousands of MSPs learn through his YouTube channel, T-Minus365. Nick has been honored as a three-time Microsoft MVP for his educational content; his expertise and influence are the backbone of our mission, ensuring that you are in the best hands when it comes to security.
Nick joined Pax8 in 2017, where he would ultimately oversee product management for PSA and Microsoft integrations. Following his tenure at Pax8, Nick has continued to demonstrate his leadership prowess as an executive at various MSPs, culminating in his most recent role at Sourcepass.
Nick holds a Bachelor's Degree in Business Management from Florida State University, as well as a Minor Degree in Entrepreneurship. In his free time, Nick is an avid hiker, reader, and fitness-junkie.
