With help from major retailers, Microsoft has new ways to make people pay more for Office 365 Home or Personal. Amazon and Best Buy now offer Office 365 renewals charging full price for the first and later years.
Ever since Office 365 plans started, Microsoft has enticed people with low prices in the first year then automatic full price renewals in later years. The lower Office 365 prices were from retailers who regularly undercut Microsoft’s prices by 20% and more.
For just as long, Office Watch has explained how easy it is to continue paying less for renewals. Just buy another year of Office 365 retail and use the product key to top up your existing plan. See Office 365 Money Saving Roundup
Microsoft now makes that harder by blocking discount purchases of single Office 365 Home or Personal plans. Instead retailers sign you up for automatic renewals at full price — more profit for Microsoft and the retailer – not great for customers.
Larger retailers sell automatic renewals to Office 365. Until now all renewals were done by Microsoft. The renewal is at full price charged by the retailer, giving them an incentive to sell ongoing Office 365 plans.
In effect, Microsoft is allowing large retailers to become partners in very profitable Office 365 renewals.
The really sad thing is that this trick will work. Most people just blindly follow the default options offered without considering alternatives. It’s not just Office 365 renewals that are a trap. Almost any ongoing charge like insurance, subscriptions, phone plans etc. are likely to charge more than necessary.
Here’s how it works. The top result for Office 365 at Best Buy in the USA is an ‘Auto Renew’ product that’s not been available before.
There’s a similar Office 365 Personal plan at the full $69.99 price.
Down in the product details it’s explained that the renewal is through Best Buy and cancelling requires a phone call. Presumably the phone call requirement is to make it a little harder to cancel, compared to an online option.
” Auto-Renew Subscription
Automatically renewing Microsoft Office Home subscription will renew each year for $99.99 (or then-current price) unless canceled before yearly renewal date by calling 1-888-BestBuy.”
It’s a little clearer on Amazon USA. There are three Office 365 Home (or Personal) options. The common discounts for Office 365 have almost disappeared.
Download – get the Office 365 Product Key electronically to add to your Office 365 account at Microsoft.
Key Card – a physical card is sent to you. That card has the Product Key which you type into a page on your Office 365 account. At the moment it’s a mere $10 discount.
Auto-Renewing Subscription – Amazon charges you for renewals each year at full price.
Auto-Renewing Subscription is new for retailers. It’s the same high price trick that Microsoft is using, except the retailer manages the renewal and presumably gets a cut.
Download and Key Card were often discounted from full retail price and ideal ways to extend your Office 365 plan on the cheap.
Obviously, we don’t know what happened between Microsoft and the retailers.
The advantages for both parties are clear. So are the DISadvantages to customers.
Retailers would not have liked selling a year of Office 365 then seeing Microsoft get all the renewal income for the later years. They were losing business on Office sales that they’d been getting for many years.
Microsoft didn’t like customers avoiding their highly profitable renewals with discounted purchases elsewhere.
The compromise seems to be Microsoft allowing retailers a piece of the renewal income in exchange for fewer discounts on sales of single year Office 365 plans.
What can customers do?
Our money saving advice still stands.
Do NOT automatically renew Office 365 – either direct from Microsoft or a retailer.
If you must or have bought an ‘auto renew’ plan, you can still cancel the auto-renewal at any time.
Discounted and legal Office 365 single year products are a little harder to find, at least for the moment. Presumably there are retailers out there willing to discount.
Microsoft, their retail partners and customers will have to deal with renewal confusion in the years ahead. There will be customers who bought Office 365 not realizing they’d bought an auto-renewing product not a single purchase. Also plenty of scope for renewal confusion with people not knowing who is handling the renewal, Microsoft or another retailer.