Call us on: 02920 887 362
Insights /

Microsoft’s new 365 Licensing Model – What you need to know

Microsoft are changing the way end users and partners purchase their 365 License subscriptions.  The new purchasing framework is referred to as NCE (New Commerce Agreement).

You may be be familiar with CSP (Cloud Service Provider); the framework many MSP’s, including excellence IT, have with customers to pay for their Microsoft 365 licenses. NCE is being phased in to replace CSP. NCE represents the biggest change Microsoft have made to the framework since its launch.

As a Microsoft Partner, we wanted to provide an outline of the programme as it stands today (always subject to change from Microsoft) to run through what changes Customers can expect when their Microsoft 365 licenses are purchased through the NCE platform.  Also giving some timelines against the changes and the options available to Customers.

When is this happening?

NCE is being introduced in phases. Here’s what the timeframe looks like:

1st January 2022

NCE for Modern Workplace and Dynamics reaches general availability, meaning customers are able to purchase their Microsoft 365 licenses under the new NCE framework.

1 March 2022

Any new Microsoft 365 license subscription will be purchased under the NCE framework.  Any existing CSP subscription that has a renewal date after the 1st March will be renewed under NCE

1 July 2022

All remaining Microsoft 365 Subscriptions will ned to be purchased through NCE.  Any subscription that renews after this date will renew under NCE

What are my options as a Customer?

At the moment, there are essentially two choices for customers:

Stay with CSP (for now)

You can stick with the current model up until the 1st of July 2022, at which point you’ll need to re-purchase your licences under the NCE model. Note that Microsoft price increases coming into effect from the 1st of March will still apply to the following licenses: Microsoft 365 Business Premium, Office 365 E1, Office 365 E3, Office 365 E5, Microsoft 365 E3.

Switch to NCE now

If you switch your current 365 licenses on CSP to NCE before 1st March 2022 you can take advantage of 2 incentives:

  • 5% saving on your current CSP prices as long as you take an Annual NCE Contract. Your prices for subscription/licenses will be fixed for the term you choose (12-month ; 36-month)
  • You will avoid any Microsoft Subscription prices rises for the remainder of your NCE contract term.

However you will not be able to reduce the license count against your NCE subscriptions during the NCE contract term.


What are the terms for NCE subscriptions?

  • Licences can be bought on a 1 month, 12 month, or 36 month basis. Monthly arrangements offer the most flexibility, but also carry a 20% premium.

Can I change the number of licenses associated with my subscription?

  • You can increase the license count associated with your subscription at any time. The monthly charge will pro rate to accommodate the new quantity.  Reducing the number of licences can only be done within the first 48 hours of purchase.

Can I change my subscription mid-term?

  • Yes, though it depends on what you are upgrading from and to, as you can’t upgrade any licence to any other licence. Microsoft has specified ‘upgrade paths’ which determine which licences can be upgraded to and from.

What happens when a subscription term ends?

  • The subscription will automatically renew for another term, and the license count in place at the time of the renewal will carry forward into the next term. If changes are required, you’re required to provide 90 days notice to prevent unwanted subscriptions being renewed.

Can I cancel my subscription mid-term?

  • Strictly speaking, yes you can ‘cancel’ a subscription mid term, but you must still settle the balance for the time left.

If you have any questions for us regarding changes being brought in by NCE, feel free to send an email to and we’ll be happy to help.

You might also be interested in:

A Quick Intro to Patching

What is patching? And why do IT people talk about it so much?

When should you outsource your IT?

The short answer, and the one you’d expect from an IT support provider, is as soon as you can. But there’s a bit more to it than that.

Excellence on Ice