Microsoft has announced that it will raise the prices of its on-premises server licenses in July 2025. Exchange Server, SharePoint Server, and Skype for Business Server will become 10 percent more expensive. Customers who depend on these on-premises solutions must pay more for server and client access licenses. Microsoft continues to encourage the transition to cloud subscriptions.
The price increase for on-premises server products is part of a broader strategy. Microsoft increasingly focuses on cloud solutions. Although the company recognizes a continuing need for on-premises implementations in specific customer environments, the licensing model has a clear shift.
Subscription model replaces traditional licenses
In addition to the 10 percent price increase for standalone server products, Microsoft announced that the Core CAL Suite and Enterprise CAL Suite (Client Access License) will become 15 and 20 percent more expensive, respectively. These price increases will take effect on July 1, 2025. They only apply to the on-premises versions of these products.
Exchange Server Subscription Edition and Skype for Business Server Subscription Edition will also become generally available in the same period. This aligns Microsoft’s products with SharePoint, which transitioned from a three-year version cycle to a ‘version-free’ cloud product. Regular updates via the Modern Lifecycle policy will be provided.
It is important to note that customers with active Software Assurance (SA) can only use these subscription editions. Alternatively, customers who purchase a user subscription for all users and devices that want access to these servers may use them as well. Microsoft emphasizes that these changes are necessary to continue to support ongoing maintenance and updates for their on-premises server products.
Is the switch to cloud solutions inevitable?
This strategy fits into the broader picture of Microsoft’s effort to move its customers towards the cloud. In January, Microsoft announced that Exchange 2016 and 2019 will reach end-of-life in October 2025. Customers are urged to migrate to Exchange Online or the new Exchange Server Subscription Edition.
The price increases for on-premises licenses clearly push customers toward Microsoft’s cloud products. Microsoft also states that cloud solutions are the best choice due to guaranteed performance and scalability. Although they understand that on-premises implementations will be needed in certain customer environments. Customers will increasingly pay more for this and ultimately get less in return.
With cloud solutions, your organization receives continuous updates and product improvements. Old-fashioned licenses remain available but offer a less favorable experience and are updated with new features less frequently.