by Scott Jack
Content Contributor, E-N Computers
More than a decade of experience in technical support including end user support, mobile device management, application deployment, and documentation.
Microsoft 365 nonprofit pricing changes, like price increases and annual prepayment, can strain a tight budget. Balancing your nonprofit’s tech needs with these changes is challenging. Understanding current pricing helps you plan an IT budget that works now and supports future growth.
While there may be some temporary discomfort around pricing changes, Microsoft 365 for nonprofits continues to offer valuable productivity and collaboration tools at deep discounts. Nonprofits can access Microsoft 365 at a fraction of the cost of commercial licenses—often 60–75% less!
Our favorite plan combination, Microsoft 365 Business Premium with the Defender Plan 2 add-on, comes in at about $7.50 per user per month. On top of that, Microsoft provides the first 10 Business Premium licenses for free. With this plan, you can enjoy:
- powerful Microsoft 365 features like identity and access management;
- enterprise-grade cyberthreat detection and response for cloud services, workstations, and servers;
- Office desktop apps;
- collaboration and productivity tools like Teams and SharePoint;
- ample OneDrive storage for each user;
- and business email.
The same plan combo costs commercial businesses about $25 per user per month.
Without further ado, here’s a round-up of the Microsoft 365 nonprofit pricing changes that you need to be aware of as you plan your budget and strategy.
QUICK ANSWER:
How will Microsoft pricing change in 2025?
Beginning April 1, 2025, annual prepaid licenses will be the default option for Microsoft subscriptions, with alternative billing options available at additional cost. Annual subscriptions with monthly billing will incur a 5% premium and have a one-week window each month for making changes. Monthly subscriptions with monthly billing will incur a 20% premium.
Changes to Microsoft 365 nonprofit pricing
New annual commitment
Beginning April 1, 2025, annual prepaid licenses will be the default option for Microsoft subscriptions, with alternative billing options available at additional cost. Annual plans with monthly billing will incur a 5% premium. Monthly subscriptions with monthly billing will incur a 20% premium. Commercial and nonprofit customers will see this change reflected in their next renewal on or after that date.
Prorated licenses with synchronized renewal
Customers on a prepaid annual subscription can add and upgrade seats partway through the year without issue. New licenses will be billed on a prorated basis for the remainder of the year, and their renewal date will match your existing annual subscription.
If you have an annual subscription with monthly billing, any licensing changes have to happen within a seven-day period each month. If you frequently onboard new employees or volunteers. You may have to adapt your onboarding processes to account for this short window. Good communication between HR, managers, and IT will be critical.
Price increases
Microsoft made several changes to its pricing and grants for nonprofit organizations in 2023.
| Product | Old price (USD/user/month) | New price (USD/user/month) |
|---|---|---|
| Office 365 E1 | 2.00 | 2.50 |
| Office 365 E3 | 4.50 | 5.75 |
| Office 365 E5 | 14.00 | 15.20 |
| Microsoft 365 E3 | 8.00 | 9.00 |
| Microsoft 365 Business Premium | 5.00 | 5.50 |
What stayed the same in Microsoft 365 for nonprofits
Even though Office 365 E5 went up in price, Microsoft 365 E5 stayed the same at $22.80 per user per month. Microsoft 365 E5 includes all the features of Office 365 E5, plus Windows Enterprise licensing, advanced security features like Microsoft Defender XDR and Microsoft Defender for Endpoint, and Entra ID Plan 2 for identity and access management. This is a phenomenal value for nonprofits with greater compliance and security needs.
Microsoft Business Standard and Frontline licenses also went unchanged.
Some grants continue to be available, including:
- 10 licenses of Microsoft 365 Business Premium
- 300 licenses of Microsoft 365 Business Basic
- 2,000 licenses of Office 365 E1 via Enterprise Agreement
Azure nonprofit grant reduction
Starting in October 2023, the Azure grant for nonprofits was reduced from $3,500 to $2,000 per year. With careful management, this could be used for a file server or SQL server. However, be alert to the pay-as-you-go fees you will incur if you go over the grant amount.
Next steps: Plan your IT strategy
READ: Take advantage of nonprofit discounts for Microsoft 365 and Azure
As you build out your IT budget and strategy, we encourage you to think about how you can get the best use from Microsoft 365 while controlling costs. While we recommend Microsoft 365 Business Premium with Defender P2 add-on for most small businesses, our experts can help you find the right fit for your needs. As part of our managed IT services, we keep a close eye on licenses to make sure you only pay for what you need. We also provide you with strategic planning services so that you always have a tech roadmap tailored to your mission and budget.
When you have the right people working together, you can implement systems and processes that actively help you reach your business goals. We sometimes call this IT maturity. But for many organizations, something is off when it comes to their partnerships, strategy, systems, and settings. How can you know what’s working well and where you have room for improvement? Start by taking our free IT Maturity Self-Assessment. You’ll walk away with some pointers and, if you want, a free appointment to discuss your results.
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