Microsoft raises Office 2013 prices to push new Office 365 sub plans

Tipping point for Office 365 subscription plans: Use four or more of the five allowed installs

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Office 365 is a deal in that scenario, and on a per-license basis is 29% cheaper. But that presupposes that the customer needs and uses all five licenses offered in Office 365.

"Will the average household equip all five seats?" asked Michael Osterman, president of Osterman Research. "Five devices that need Office, even in an average tech household, that's iffy, very iffy."

If a household buys into Office 365 Home Premium, for instance, but actually only uses two of the five licenses, the per-license, per-year cost shoots up to $50, or nearly double that of two copies of Office Home & Student 2013, which revolves to $28 per license per year.

Even at three licenses of the five allowed, the $33.33 per-license, per-year cost of Office 365 is still higher than buying three copies of Office Home & Student, where the per-license, per-year number remains at $28.

The tipping point for Office 365 Home Premium is four licenses. If a household activates four or more of the five permitted licenses, the subscription is less expensive than the same number of copies of a traditional, buy-it-own-it edition.

Use fewer than four, however, and Office 365 costs more on a per-license, per-year basis than a corresponding number of Home & Student perpetual licenses, even with Microsoft's price hike.

The same holds true for Office 365 Small Business Premium when compared to Office Home & Business 2013: Four is the magic number. Anything less and it's cheaper to equip each device used by a worker with Home & Business 2013.

The comparisons are not apples-to-apples, of course, because the Office 365 subscriptions come with bonuses, including Microsoft's promise to provide frequent upgrades, the additional storage space, Skype calling time (Home Premium), and shared calendars and video conferencing (Small Business Premium). The SKUs are hard to compare head-to-head as well, since Office 365 is a kitchen-sink edition, with applications absent from Home & Student, or even Home & Business.

(Only Office Professional 2013 includes the same set of applications as an Office 365 plan.)

But the numbers made analysts pause.

Osterman, for one. "For the average household, say with someone who does [office] work at home some of the time, this still looks like a premium model," Osterman said of Office 365's pricing. "I think Microsoft's going to be hard-pressed to sell this [to consumers]."

Miller gave Office 365 Small Business Premium a better shot at success, even though, like its consumer cousin, that subscription allows five installs of Office. "The [Office 365] Small Business sounds palatable, and I think many small businesses will adjust to the subscription concept, but for the consumer I'm not quite as convinced," said Miller. "I'm not necessarily convinced that consumers would actually use Office enough to justify the five licenses."

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