Included CALs and Tiered Pricing

I have to say that when I wrote my post last week on TFS and VSO related licensing and packaging changes, I didn’t think I’d be writing another one quite so soon.  But I found out that we’re disclosing the next set of changes this week to help people plan, even though they don’t go into effect for another month.

This isn’t some random path we are on.  We have a reasonably clear picture of where we’re headed and we have quite a number of changes we are making on that journey.  Please don’t ask me to describe the destination quite yet because I’m not ready to reveal all of it and many of the details are yet to be hammered out and I don’t want to be making you promises that change between now and when we finalize the details.

Let me focus on the changes we’re announcing this week.

We are fundamentally changing the way we do per user licensing for TFS and VS Online.  There are two key changes:

Visual Studio Online includes a Team Foundation Server CAL grant

When you buy a VS Online Basic. VS Online Professional or VS Online Advanced license, you will get a TFS CAL for that named user with it.  This means that by purchasing one thing, you get rights to use a VS Online account *and* any TFS server within your organization.  To be clear, with this purchase, you can use VS Online or TFS or both VS Online and TFS.  We hope this will simplify the purchasing for organizations by giving one thing to buy and then a choice about which to use – cloud and/or on premises.

There are numerous benefits to this:

  1. One thing to buy instead of two gives you more flexibility.
  2. You can now “rent” a TFS CAL.  Rather than having to pay a onetime $499 (list price) license cost, you can pay a MUCH lower monthly cost for as long as you need it.
  3. Companies using vendors/contractors now have a simple way to manage people who need temporary access to their TFS.
  4. You get all the Azure purchasing advantages for TFS CALs now.  Easy credit card purchasing, an ability to spend Azure prepaid funds (“monetary commitment”) on it, etc.
  5. The CAL is “always up to date”.  Because it is a subscription rather than a onetime purchase, you don’t have to deal with buying/renewing your CALs when new TFS versions come out.  The CAL that comes with a VS Online license works with any TFS version, whereas a traditionally purchased CAL supports only a given TFS version and earlier.

It’s simple: pay for a VSO user, use VS Online in the cloud, TFS on premises or both.  Keep it as long as you want and reassign it at will.

This will not replace the ability to purchase a CAL like you do today.  Some people will prefer to buy a perpetual CAL license.  We will continue to sell CALs that way for people who want it.

And, of course, MSDN subscribers are set because, an MSDN subscription includes a CAL and a VS Online subscription so you are set (and always have been :)).

New Pricing for VS Online Basic Users

We are also making some changes to the VS Online Basic pricing that will make it even less expensive for organizations of all sizes.  Today VS Online Basic is a flat cost of $20 per user, per month, regardless of how many licenses you have.  We are both reducing the price and adding volume discounts.  The new pricing structure is like this:

0-5 users Free
6-10 users $6/user/month
11-100 users $8/user/month
101-1000 users $4/user/month
1001 users and up $2/user/month

Let me tell you how to apply this.  Pricing is cumulative.  So, for instance, if you want to license 45 users, it would break down as follows:

5 free users, 5 users at $6/user/month and 35 users at $8/user/month or, in total $310 per month.

We’re doing it this way so:

  1. You can guy exactly the number of users you need.  There’s no need to pay for 100 users if you only have 30.
  2. There’s no cliff.  You don’t have a weirdness where 49 users is, in total, more expensive than 50 users.  You don’t have to try to compare options to find the best price.

The goal is to make it super simple by allow you to buy exactly what you need and know you are getting the best price.

And, as I said, the result is MUCH less expensive.  Today, 45 users using VS Online Basic is $800 per month.  That makes the new cost less than half of the existing one.  And as quantities get higher, the difference gets more dramatic.

Again, of course, all your MSDN subscribers already have VSO included with their subscriptions so they get to use your VS Online account at no extra charge.

We are not changing the pricing on VS Online Professional or VS Online Advanced licenses at this time.  As you might imagine, given this change, we do have plans to make some changes there too but we aren’t quite ready with them yet.

Small caveat, we are not yet able to support tiered pricing in Azure sold under Enterprise Agreements (you’ll know if this is how you buy it) so, for now, we are using a fixed price of $4 for VSO Basic licenses beyond the 5 free users.  We will adopt the same tiered model I described above for Enterprise Agreement customers as soon as possible.

When you put these two together

When you put these two together, it’s a huge game changer.  Now you can buy your TFS CAL with your VSO subscription for between $24/year and $96/year (depending on volume) rather than $499.  It makes TFS dramatically less expensive too.

Conclusion

Lower pricing for VSO Basic will go into effect on September 1st.  If you already are paying for VSO Basic, you don’t need to do anything – your bill will just get smaller.  If you need more subscriptions, now is a great time to purchase them.  Also, don’t forget the change we made a while back to make Stakeholders free – so people just checking on the status of your project or entering a bug/suggestion don’t have to pay anything.

The TFS CAL grant will be phased in over a few months.  Enterprise Agreement, MPSA, and Open customers (i.e., direct enterprise customers and those buying Azure and thus VSO users through a reseller) will get the TFS CAL grant first, on September 1.  All other Azure customers (e.g., using the Pay-As-You-Go or other Azure offer transacted directly with Microsoft) will get the TFS CAL grant starting in October or November, we’re still finalizing the timing on that.  But soon.

We’ll be making some more changes later this Fall so stay tuned for future announcements.

Brian