Microsoft's gutting of discounts for some clients likely baked into guidance, analyst says

Core Viewpoint - Microsoft plans to eliminate discounts on enterprise purchases of Microsoft 365 subscriptions and other cloud applications, which analysts believe is already reflected in the company's financial guidance [1][2]. Pricing Changes - The pricing change will affect companies with sufficient employees, categorized into price levels A, B, C, and D, and will take effect for new services or renewals starting November 1 [3]. - Analysts from UBS estimate that customers may face price increases ranging from 3% to 14%, with specific estimates from partners indicating hikes of 6% to 12% [4]. Financial Impact - Microsoft's Productivity and Business Processes unit, which includes Microsoft 365, is crucial for the company's financial health, contributing significantly to the projected $128.5 billion operating profit for fiscal 2025, with 73% of revenue from Microsoft 365 commercial products and cloud services [5]. Customer Behavior - Some customers may opt to pay more to continue using Microsoft applications rather than switching to competitors, although they might reduce commitments in other areas like Azure [6]. - Companies may seek to mitigate price increases by purchasing through cloud resellers instead of directly from Microsoft [7]. Market Performance - Microsoft shares have increased by 20% this year, outperforming the Nasdaq, which has gained about 10% [8].