Microsoft Office Retail v Subscription. What should you buy?

Microsoft Office Retail v Office Subscription what should you buy?

With the advent of cloud computing, Microsoft have developed their business model to encourage customers to look at either a purely cloud based subscription or a hybrid model of retail and subscription products to ensure recurring revenue.

For many customers a purely cloud based infrastructure isn’t a cost-effective solution as they rely on specialist software which needs to be installed on a server which doesn’t need to be particularly powerful but needs a 1Gb ethernet connection to allow the smooth running of the program for clients.

This could be moved to a cloud server, but with the server cost with Microsoft Server Essentials (which is designed for companies with 25 users or less) being around £2000 with a 5 year onsite warranty for the hardware, then it’s a no brainer to go for a physical server rather than incur the costs of renting a piece of cloud which could be around £35 per user per month.  For one of my customers with 10 staff, £2000 rather than £21,000 over 5 years isn’t even worth contemplating going cloud based for their server.  The server should be good for around 7 years so over the life of it potentially they are saving £27,000 by investing £2000.

When it comes to Office, it just depends on how you are going to use the software as to whether a retail product is cheaper for you than a subscription.

There are 2 different versions of the retail product, Microsoft Office Home and Business and Microsoft Office Professional. They retail at £249.99 and £419.99 respectively.

Office Home and Business 2021 come with Word, Excel, PowerPoint, Outlook and OneNote, whereas Office Professional also includes Publisher and Access for the additional £170.  They can be used on a single PC and the product has to be redeemed via Office.com using the supplied Activation Code., so you have to use an email address to register the product.  There is one caveat on registration, and that is that you cannot use an email address which is registered with Microsoft 365, so if you use Exchange Online or Microsoft 365 Business Basics, you can’t register the software using your emails address.  You can however setup a new email address with Outlook.com to register it and still use it for your business.

I setup a local account on my client machines and register the software on the machine using that account, then the user just signs in as themselves so they can use the software, but access company resources such as SharePoint and OneDrive without having to use the Outlook.com account I’ve used to register the software.

It’s a very strange situation to have to be in to use a Microsoft retail business product, but they are desperately trying to force businesses down the route of subscription rather than retail for the reasons I’ll show you soon.

Microsoft 365 Business subscriptions for Office (I've shown the prices including VAT @ 20%) are available as a bundled product, or as a separate Office subscription just to get the Apps.  I don’t recommend anyone to just get Microsoft 365 aps for Business which is £9.96 per month, but allows you to install on 5 PC’s, 5 tablets and 5 phones per user.   Great if you have 5 of each device, but at most you’ll have a phone, a tablet and maybe a laptop and a PC. You can’t let someone else use your subscription either, so installing it on 5 machines for different users with a single subscription is illegal use of the software, you need a £9.96 subscription per user per month.

The bundled Office products are Microsoft 365 Business Standard which is £12.36 per month, but includes 1TB of OneDrive disk space, Exchange Online with a 50GB mailbox, SharePoint and Teams as well as Office Apps for Business for 5 devices, and Microsoft 365 Business Premium which is £21.72 per user per month and includes some additional products like Advanced Security and Device Management functions. With the subscription you receive the latest versions of Office, and when a new release comes out, you can upgrade at no additional cost so provides futureproofing for those that need the new functionality provided by new releases.

Microsoft announced that they would be removing the ability for Office 2013 and early versions of Office 2016 to connect to Microsoft 365 from 1st November 2021.  As of late December 2021, we are starting to see the impact of these restrictions on Outlook 2013 where Out of Office isn’t available through the desktop App, but it can be changed using Exchange online (so there is a workaround), but I have been recommending my customers to upgrade since January 2021, but I’ve advised them to wait until Office Home and Business 2021 was released to make the most of the product.

Now I’ll demonstrate why I’ve been predominantly installing Office Home and Business rather than sign customers up to an Office subscription (even though I’m a Microsoft Cloud Partner and have been since 2012)

Client A purchased a new machine in January 2014 which was provided with Office Home and Business 2013 for an additional cost of £229.99. They have a Microsoft 365 Business Basic subscription which gives them email and 1TB of OneDrive space per user, plus SharePoint which they utilize as a business for file sharing and costs them £5.88 per user per month.

The don’t use Access, or Publisher.  They don’t use any advanced features or connect to SQL databases so have no requirement to keep updating the software nor are there any future plans to do so.

Their outlay for the user for Office for 8 years which has provided every bit of functionality they have needed has been £229.99.

If they had been on an Office subscription the additional cost per user would be £6.48 per month to get Office on their single device (as they only have one device to use). Add that up over the period their machine has been in use and the cost to provide office for them via subscription would have been £622.08 so £392.09 more expensive than buying Office Home and Business.  That business had 3 machines replaced around the same time, so have saved £1176.27 by using a retail product rather than a subscription.

I am in the process of replacing those 3 PC’s and actually going on a higher spec device which should have a working life of 5 – 7 years (although should last longer if needed).  The machines will be provided with Office Home and Business 2021 which will meet all their business needs for the systems they use until around 2029, so over a 15 year period, their outlay for Office for a single user will be £479.98.  If Microsoft does not increase the price for subscriptions, it would cost them £1166.40 to provide the same functionality and a whole lot more they don’t need.

For 3 users that represents a saving of £2059.26 over 15 years.  Given they have 15 staff, they will pay around £11,000 less over 15 years using the retail version of Office compared to subscription.

For businesses who only provide a single device per user, retail will always work out cheaper than subscription unless you need to be running the latest version of Office rather than a “live” supported version.

I do however have customers who have Office as a subscription rather than using retail versions simply because they use multiple devices.  I’ve just migrated one of my customers over to a subscription because they have a laptop, tablet and 2 PC’s.  They have been added at different times over the years and when they added an additional PC it made no sense to install Office Home and Business 2019 which was the latest release, when we needed to upgrade a laptop and PC so they were all running the same version.  Moving them to subscription has cost them £6.48 extra per month, but as they only intend to trade for the next 3 – 5 years, it makes more sense than having an initial outlay of £749.97 to get all the devices to the same version (and a new version of Office would have been released 5 months later).

A ruling by the EU meant that retail versions of Office could be moved from one machine to another or even sold as second hand software, so the death of a machine no longer means the death of the software installed on the device, however you can only have the software installed on a single device if you buy retail versions.