Recently Microsoft introduced, albeit somewhat quietly, a ‘Pay As You Go’ option to their Microsoft Teams Calling Plans. In this blog we will explore how the plan works and what it means to the enterprise market.
As a reminder, Microsoft Teams Calling Plans are one of the three options available to businesses for adding external calling to Microsoft Teams, the others being Direct Routing and Operator Connect. The latter two option both allow you to utilize third-party operators such as Pure IP, to provide the external connectivity, while Calling Plans on the other hand, uses Microsoft’s own carrier services, meaning your telephony services are provided by Microsoft.
What is the Microsoft Pay As You Go Calling Plan?
Before August 2022, if you wanted to buy Teams Phone PSTN connectivity/phone numbers/minutes from Microsoft you had to buy per user plans (Domestic & International) which included the phone number and a bundle of minutes per user.
These bundles of minutes aggregate into per plan type, per country buckets of minutes to be used by all those users. Beyond that included allocation, you would move into Paying Per Minute through a pre-paid wallet Microsoft calls “communication credits”.
The standard 1200-minute domestic calling plan is $8.00 per user per month, and the standard International calling plan (1200 min domestic or 600 minutes international) is $24 per user per month. The challenge for most businesses is that on average, many users do not make anywhere near the minutes of calls per month included in the plan, so this was leaving unused minutes on the table each month. Minutes don’t roll over month to month, so when they are gone, they are gone. In essence, you are paying for more than they need.
Now Microsoft offers a ‘Pay As You Go’ model for minute costs, where you pay either $2 or $3 per user plus a cost per minute for each outbound call. As with all the options, inbound and peer-to-peer calls don’t incur any cost.
This is somewhat of a hybrid model, as there is a cost per user, regardless of any usage which is charged separately per user. It aligns closer to the more traditional operator model of paying per minute, but operators traditionally charge per DDI and per channel or concurrent call.
Why have Microsoft introduced the Pay As You Go option?
With Microsoft’s desire to grow the adoption of Teams Phone among its user base, this latest payment plan will be all about providing the customer with more choice. The most current utilization figures publicized by Microsoft, suggest that there are 12 million of the 275+ million monthly active Teams users actually using Teams Phone, which represents a huge growth opportunity.
While the traditional ‘bundles’ offer the convenience of a per user pricing model, they can typically be up to 60% more expensive than other models available through other service providers and operators. Consequently, the Pay As You Go model is likely to be a halfway house in bridging that gap in an attempt to drive even more adoption.
How do the Microsoft Pay As You Go Calling Plans work and where are they available?
As mentioned above, the Microsoft Pay As You Go Calling Plans are a bit of a hybrid model in that there are two main components:
- A per user cost of $2 or $3 depending on location (based on the country billing address of your 365 tenant).
- Zone 1 countries ($2 per user, per month) are Canada and the UK
- Zone 2 countries ($3 per user, per month) include Austria, Belgium, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, and Switzerland.
- Usage based on a charge per minute.
Pay As You Go plans are currently not available to customers with a US billing address on their Microsoft 365 tenant (so typically US organizations or an organization head quartered in the US). So, if your Microsoft 365 tenant billing address is in the US, you cannot currently buy Pay As You Go Calling Plans. However, if your billing address is outside the US, you can buy Pay As You Go Calling Plans for users in all countries Microsoft covers, including the US.
How to calculate and compare the cost of Microsoft Pay As You Go Calling Plans
Like-for-like comparisons are always difficult, particularly when the market is full of different pricing models. The key pieces of information you really need to start with are:
- How many numbers do you need, which is usually based on the number of users.
- How many external calls will be made and to what countries. Remember, an internal call using Teams will invariably have no cost associated to it.
With this data you are armed to calculate and compare the costs across different pricing models. For the Microsoft Pay As You Go Calling Plans, you will need to consider the two key elements:
- The monthly per user cost ($2 or $3 depending on the country of your billing address of your tenant)
- The call costs using your historic call record data mentioned above multiplied by the call tariffs. You will need to consider the per minute tariff per country* being called.
*Currently, Microsoft has no countries under 1p per minute. Their lowest cost country, calling the US, is 1.3p per minute and only 24 destinations are under 2p per minute. It goes up from there.
You can see Microsoft’s rates here towards the bottom of the page. Minute costs are based on the country of origin for the call and the destination being called.
Comparing with Pure IP
At Pure IP, we also follow more of a ‘Pay As You Go’ model but with a slightly different construct, preferring a number, channel plus calls approach. From comparisons around different scenarios, we are typically around 25% more cost effective than the Microsoft Pay As You Go option. The big win for the customer with both models is that you gain complete transparency on the costs and will only be paying for what you actually use – which invariably will lead to cost savings over bundled options.
However, while price is an important factor in deciding on your service provide, it is not the only consideration. We would always recommend you consider more than just price when choosing a Microsoft Teams PSTN Operator.
See our ‘5 things to ask your operator about beyond just price’ blog.
Pure IP’s offerings for Microsoft Teams
Pure IP is a certified Microsoft Teams Operator Connect partner and offer Direct Routing as a service and full remote management for customer SBCs for Microsoft Teams. To be transparent, we do not offer Microsoft Calling Plans but can achieve a very similar outcome using Operator Connect, combining the simplified provisioning and management features from within the 365 Admin Center with our ‘pay for what you use pricing model.
Contact us if you would like to know more.
