Microsoft Drops Price of Office 365 as Low as $6.99 a Month

Apps & Software

Published: March 17, 2014 6:33 am

Microsoft Corp. (NASDAQ: MSFT) has offered a large tier of pricing in the hopes of driving adoption of its Windows Office 365 software. The latest is the most radical departure from old prices. Office 365 Personal can be licensed for $6.99 a month. Microsoft has to worry that this license will be used by small business owners, and perhaps hurt the company’s license fees within that business part of its customer base.

The plan behind the new price indicates just how far Microsoft will go to draw new customers. Office 365 operates as a part of the software company’s cloud computing product line. Experts believe Microsoft has been late into this business because Office was PC-based for so long, due primarily to the legacy of customers who were wary of cloud-based software. The race to the cloud by both business and consumers, which has been sudden, has forced Microsoft to change its course.

The latest version of Office 365 carries a $6.99 fee. Dubbed Office 365 Personal, the product is for individuals, and not for families. Although the distinction may be lost on some people. The company’s description of the distinction:

Additionally, we’ll continue to offer our Office 365 Home Premium subscription for households, but we’ll be changing the name to Office 365 Home. You’ll see this change when Office 365 Personal becomes available. Whichever Office 365 subscription you choose, you’ll get all of the subscription benefits including 60 minutes of Skype calling per month, 20 GB of additional OneDrive storage and always be up to date with the most recent version of Office.

Perhaps people within one household do not want to share a license. On the other hand, people with small businesses may find the new product fits their modest needs. If so, the pricing to the low end of the business market will be pressured.

Microsoft needs the cloud to keep adoption high. The profit margins it gives up may make adoption a victory not worth having.

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