Paying and Saving with Office 365

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Paying and saving money for your Office 365 service.

When you’re getting near the end of your Office 365 trial and you’ve decided to continue with it, there comes the time to pay for Office 365.

As usual with Microsoft, it helps to know some extra things before trying to pay.

In addition to a credit card, you’ll also need:

  • An address and phone number in the country nominated for your Office 365 service. Microsoft calls this the “service usage address”.

  • A credit card billing address in the same country

  • Be prepared to pay a little more than the advertised price.

  • Be prepared for your payment not to appear in your Office 365 account

The address details should not be a problem if you’ve setup Office 365 in your true country.

However quite a few Office 365 users are choosing another country for various reasons. These include, avoiding technology restrictions, legal restrictions in their own country or unreasonably high prices in their local country. Only customers in listed countries can buy Office 365 but those customers can nominate users almost anywhere in the world (except Cuba, Timor-Leste (East Timor), Iran, Democratic People’s Republic of Korea, Myanmar, Sudan, and Syria).

Since Office 365 servers are only in three broad regions (North America, Asia and Europe) your selection of country doesn’t mean the hosting will be in the country of your ‘service usage address’, in fact it probably won’t be.

Selecting USA or some other location as the Office 365 account location is perfectly OK and there isn’t anything wrong with it we can see. But you need to have some links in the nominated country.

The address and phone number is requested by Microsoft but there’s no indication that these details are ever used or checked. Or maybe only for some marketing purposes.

The credit card billing address can be harder. Some credit cards permit registration of a ‘secondary’ address, usually for shipping purposes. Or you might try getting a prepaid card in the country you’ve stated.

It’s a good idea to pay at least a few days before your trial expires. This will give you time to work around any issues in setting up a paid account.

There is an invoice option for large enterprises.

In our tests we could only pay monthly. There was no option to pay in advance for 6 months or a year which some customers might want for budgeting or tax purposes. Monthly charging means that Microsoft can change the pricing at any time which is a worry for anyone trying to budget their technology costs.


In most cases, the price you’ve seen quoted with without taxes. When it comes time to pay, you may see a slightly higher price including state taxes.

If you’ve given a US address then the taxes may be based on the address you’ve given or the location of the data server Microsoft is using for your account. European users are charged VAT or local equivalent. Australian customers are charged GST, which is included in the advertised price.

In our tests we could not work out how the US local taxes were calculated since no details are given. The amounts charged were near but not exactly the tax values we’d expect. Microsoft doesn’t seem to disclose how it calculates US state sales taxes, perhaps because it’s such a sore point with many people.

For customers paying Microsoft a large amount for hosting, it’s worthwhile to investigate the tax situation since it could add significantly to the total bill.

Tip: You could try reducing the additional tax charge by giving a ‘service usage address’ in a US state with low sales tax such as Alaska, Delaware, Montana, New Hampshire or Oregon. No guarantee this will work given the lack of disclosure by Microsoft.

Where is the paid licence?

After you’ve paid for Office 365 service and your credit card is debited, you’d expect the Office 365 paid account details to show up under Subscriptions | Manage – but they don’t. Only the trial subscription appears!

The trial licence is shown but if there’s no option to convert to a paid licence (under Subscriptions | Purchase ) then your payment has been accepted. When the trial expires, the paid subscription should appear in its place. Not a very clear or reassuring way to deal with customers, but Microsoft considers it sufficient.

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