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Ryan Plourde, Crowe Horwath

How to Save Money With Waterfall Pricing for Dynamics 365

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Unlike Dynamics CRM, with the new Microsoft Dynamics 365 pricing model, more users equals a lower cost per user.

This is technically called “tiered” pricing, but “waterfall” is common industry term and better evokes the image of a downward flow of your cost per user.

Let’s look at the Dynamics 365 waterfall pricing in its simplest form.

Microsoft Dynamics 365 users can license individual apps a la carte (such as Sales, Marketing etc..) OR the user license can be for a PLAN, which allows access to all the apps. It is important to realize that waterfall pricing is only available for PLAN users (or Team Member users in the Enterprise Edition only).

 Waterfall pricing for Dynamics 365 Business Edition Plan.

Right now, Business Edition is only available for individual apps. When the Business Edition “Plan” option launches in 2017 the price tiers are currently listed as:

Tier 1: 1-14 users - $50 per user

Tier 2: 15-49 users - $39 per user

Tier 3: 50-74 users- $34 per user

Tier 4: 75+ users - $28 per user (limit of 300 users)

waterfall-1

Note: There is no waterfall pricing for team members in the Dynamics 365 Business Edition.

Waterfall Pricing for Dynamics 365 Enterprise Edition Plan 1

The Enterprise Edition has waterfall pricing on Plan 1 and Team Member licenses. Current prices are:

Tier 1: 1-99 seats - $115 per user

Tier 2: 100-249 seats - $90 per user

Tier 3: 250-499 seats - $80 per user

Tier 4: 500-999 seats - $70 per user

Tier 5: 1000+ seats - $60 per user

waterfall-2

Note: Waterfall pricing is not available for Enterprise Edition Plan 2. BUT Plan 2 seats count toward Plan 1 tiers.

Dynamics 365 Tiered Pricing FAQ

Which subscriptions count toward tiered pricing?

  • Dynamics 365, Enterprise edition Plan 1 and Plan 2 subscriptions both count towards the Dynamics 365, Enterprise edition Plan 1 price tiers.
  • Dynamics 365, Enterprise edition for Team Members subscriptions count only towards Dynamics 365, Enterprise edition for Team Members price tiers.
  • (FUTURE) Only Dynamics 365, Business edition plan subscriptions count toward Dynamics 365, Business edition plan price tiers.
  • Tiered pricing is not available in the Microsoft Online Subscription Program (MOSP), nor for EDU or charity pricing in any program.
  • Annual subscription commitment is required for a subscription to qualify for tiered pricing.

How is the price calculated if user license subscriptions are purchased at different times?

The price tier is calculated by adding the existing number of licenses plus the new licenses being ordered. For example, if you place an order for 150 Team Members, this initial order will be priced at Tier 2. Six months later if you add an additional 100 Team Members the second order will be priced at Tier 3 since your total Team Member users is 250 (150 from the initial order plus 100 new users). 

Will the price of the original licenses go down when I purchase more licenses?

No, previously purchased seats stay at the price they were purchased until renewal. The lower tiered price only applies to the new licenses being purchased.  So you can have licenses at different price points depending on when you added them. However, when you renew your contract, all licenses will be counted together and renewed at the same lower price.  In the example above, the initial 150 users will still remain at Tier 2 pricing until renewal. At renewal, all 250 users (including the initial purchased users) will move to Tier 3 pricing.

What if I reduce the number of licenses that qualify for tiered pricing?

Microsoft uses the principle of LIFO – last in first out. So the last licenses purchased will be the first ones to be reduced. Which means you can’t choose to eliminate your more expensive licenses first.

Just to make it a bit more complicated, if you reduce users at your renewal date and you no longer own the number of seats that qualifies you for the tier you last purchased then you must replace the tiered seats you haven’t owned for a full year with tiered seats at the price tier that equates to your new qualified seat total.

Next Steps

Clearly, there is a lot to understand about the different users who qualify for tiered pricing.  And you should have a strategy on the timing and quantity of user licenses you purchase.

Those questions are best directed to your Dynamics 365 partner who can work through the intricacies of this new subscription model for Microsoft Dynamics. Whether you’re a current user of Microsoft Dynamics CRM or a prospective user of Dynamics 365, you’ll need the expertise of a partner, like Crowe Horwath, to navigate the ins and outs these new cloud solutions.

Update: As of May 1, 2017 Team Members tiers are being consolidated to a new single price point in Microsoft Dynamics 365. This means ALL Team Member licenses are $8 regardless of the quantity.

If you are looking for a Microsoft Dynamics 365 Partner to help you make a strategic purchase, contact us at 877-600-2253 or [email protected].

By Ryan Plourde, Crowe Horwath, a Microsoft Dynamics CRM Gold Partner www.CroweCRM.com

Follow us on Twitter: @CroweCRM

 

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