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Office 365 – subscribe or buy?

by Office Watch 7 July 2011

If you get Office 365, should you subscribe or buy. An in-depth look at whether the Office 365 software subscription is worth considering.

Office 365 comes with the option to rent Office 2010 software – is that a good choice?

For the most part, Office 365 is a collection of cloud based services in somewhat bewildering combinations but there’s also the option to rent/subscribe for the Office software suite to be installed on your computer.

The big question is whether that’s a more economical option than buying Office software. Microsoft has wanted to switch customers to software subscriptions for many years but has been unable to convince a, rightly, skeptical customer base.

Our analysis shows that the Office 365 subscription option can be surprisingly good value depending on your needs and with one important condition. Most people and organizations could switch to Office 365 hosting combined with their existing Office software.

What you get

Office 365 has only one option for software – the equivalent of the Professional Plus bundle containing nine applications:

Word, Excel, PowerPoint, OneNote and Outlook plus
Access and Publisher plus
SharePoint Workspace, Lync and InfoPath.

All those programs are probably more than most people or projects need. The key applications usually are Word, Excel, Outlook and perhaps PowerPoint.

For Office 365 users the other important program is SharePoint Workspace. This program syncs data from the Office 365 SharePoint site so you can use it offline. It’s an important and useful part of SharePoint but not compulsory. Lync is the client for the Lync real-time communication service.

Microsoft doesn’t mention which version of Office software you subscribe to. That’s because software subscription means you get future versions for no extra charge as long as the subscription is current. This is sold as a benefit to customers however many people and businesses will not want to be forced to accept a changed version of Office on Microsoft’s timetable. If you subscribe now you’ll download the Office 2010 suite.

What it costs

The price is $12 per month, per user for the software subscription component of Office 365. The pricing is quoted per month but is charged on an annual basis.

There is no street price to compare with because the Pro Plus package is only available to volume license customers. The price we could find for Professional Plus is around US$803 for a single license with Software Assurance. Software Assurance means future versions of the software are available for no extra cost as long as the ‘SA’ is paid up. It’s the closest equivalent to the subscription plans feature of providing the latest software as long as the subscription continues. Software Assurance has other features, like the Home Use Program that we’ve talked about at length and in the money-saving Buying Office section of Office 2010: the real startup guide.

This appears to only allow a single installation of Office Professional Plus bundle which is the same as the volume license for that Office bundle.

Will it last?

Microsoft has given no guidance about how long that price will apply for. You can only be assured that a subscription price will apply for the period you pay for. The price may well change when it’s time to renew.

That’s an important consideration for anyone wanting to subscribe to Office over a longer period.

Do you need Professional Plus?

Consider whether you need everything in the Professional Plus bundle. The full Office suite is probably more than many people or organizations need.

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You don’t have to use the subscribed version of Office software with Office 365. According to Microsoft, any Office 2007 or Office 2010 software bundle will work with Office 365 services.

Many organizations and people might only need a few of the Office applications say, Word, Excel, PowerPoint or those three plus Outlook. Outlook is useful but some staff could get by with Outlook Web Access (included with Office 365’s Exchange offerings) for modest email/calendar purposes hosted by Office 365.

Another option for buying Office is the ‘OEM’ package available when you buy Microsoft Office with a new computer. Keep in mind that the ‘Product Key Card’ option for activating Office on a pre-installed computer only permits ONE installation, not the two installs allowed by the retail package with the same bundle name.

Comparing Office options

Let’s look at some price comparisons as examples. We’ll compare Office 365’s $12 subscription price with the price of buying various Office bundles over 1, 2,3 and 4 years.

Microsoft has a complex pricing system for Office designed, in part, to make direct ‘side-by-side’ comparisons difficult. The mix of different Office bundles, some retail and others only available as volume licenses or OEM’s muddies the waters.

Office 365 subscribe or buy? image from Office 365 - subscribe or buy? at Office-Watch.com

Our full price comparison table is too large to display properly on a web page, so we’ve made it into a PDF you can download here. The PDF version is more readable and has additional notes.

One thing is clear, the $12 per month/user subscription price is surprisingly compelling compared to standard software volume licensing, even spreading the cost over 48 months.

The benefits of Office 365 software subscriptions are less obvious if you choose to buy cheaper software bundle. The retail Professional bundle is cheaper than a subscription if you intend to use it for 3 years or more. The green numbers show cost per month values under the $12 per month figure.

Small business users, for whom the Home and Business package is sufficient, will save money buying their software and get two installations of Office (desktop and portable) instead of the single install under a subscription.

Of course, the entire calculation is irrelevant if you have Office 2007/2010 software already. Just use your existing software with Office 365. There’s always the option of changing software or adding a subscription later.

This table is only a guide that you can adapt to your own situation. For example,

Your organization might not need SharePoint Workspace, either because it won’t be used much or staff won’t need the offline access it provides. In that case, Office Professional or Standard might be enough.
Some users might not need all the software options. Part-time/casual staff might be better using Office Web Apps and/or Outlook Web Access via a browser both for cost and portability.
A small business could buy Home and Business software and link into Office 365 for centralized email/calendar/contacts accessible from Outlook, any browser plus a good range of mobile devices.
A tech savvy household could join Office 365 to get powerful email and calendaring services using Office Home and Student software with Outlook Web Access instead of Outlook software.
If immediate cash is a problem, the subscription option lets you spread payments over time. Volume licensing also has options for financing a purchase.
If you have more than 50 users, Office 365 has an Enterprise plan where the additional cost of a Professional Plus subscription is US$8 per user/ per month (the difference between the E2 and E3 plans)
If you qualify for government, charity or other volume discounts.
Schools and Universities have their own version of Office 365 – currently called [email protected] but will soon come under the Office 365 banner. The price with Professional Plus software will be $14 per month for staff and $2 per month for students.