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Google shocked its user and partner bases in equal measure this January when it announced (seemingly without warning) that it would be raising prices on G Suite Basic and G Suite Business in very short order. The price increases scheduled to begin in April this year will affect the cost of All G Suite customers, unless they take action by the end of March.
The increase of 20% comes after the appointment of former Oracle executive Thomas Kurian to the head of Google's cloud division. The news that Kurian would be replacing previous CEO Diane Green was announced in November, though Thomas only moved into his new role at the beginning of 2019.
At first glance, the upgrade in pricing doesn't seem like much. Instead of $5 per user per month for your basic G Suite package, you'll need to pay $6 per month instead. Similarly, the G Suite Business tier plan is increasing in cost from $10 per user per month, to $12. You'll begin to notice the pricing changes on the 2nd of April, and the transformation will help to push Google a little closer to rival productivity suite Microsoft Office 365 in terms of costs.
The question is, what does this change mean to your business and its employees? Will Google G-Suite still be worth your investment when the prices rise, and why has Google decided to increase costs in the first place? Here's everything you need to know about the news.
Why Raise Prices for Google Apps?
While there are many benefits to using Google's G-Suite platform besides its cost-effective pricing, it's fair to say that companies appreciated how excellent the service was to their budget. In a world where productivity and collaboration tools are becoming more commonplace, it's easy to wonder why Google would reduce one of its major points of differentiation.
According to a blog covering the key points of the pricing update released by Google, it all comes down to value. For more than 10 years, Google hasn't touched its pricing strategy for G Suite, although they've continued to add new services and solutions to their packages. More than a decade ago, Gmail was the first app that Google introduced, followed quickly by innovative collaboration tools like Google Drive, Google Calendar, and Hangouts. Together, these new apps and more make up the G-Suite experience, complete with some of the most intelligent and secure collaboration tools on the market.
As Google has continued to add more functionality to their G-Suite system, the value of the productivity package has increased, while the price that users paid remained the same. While this was a great deal for users, it wasn't necessarily a good thing for Google. After all, the business needs to keep making a profit if they're going to continue investing in pioneering technology for companies like artificial intelligence and machine learning.
Google believes that if they want to keep pace with the value that they can offer through G-Suite and continue delivering new and fantastic solutions to their users, then they need to adjust the price of their packages. This makes sense on a fundamental level - as you'd expect any software solution that added features to its portfolio to increase in price. The only reason the cost update is such big news is that it's the first time Google's decided to do something about G Suite Pricing and they didn't give users much of a heads up.
If you look back at the initial services you got when you signed up for Google Apps or G Suite and the solutions you can access now like AI, Hangouts, and Google Chat, Vault, Cloud Search, Keep and others it's easy to see that Google needs to bridge the gap somewhere.
Will You Be Affected by the Price Increase?
One important thing to remember as you address these new price increases is that the products you get from Google are going to remain the same and keep improving/innovating. You're still accessing a secure and well-known suite of enterprise-ready collaboration and productivity tools. As always, Google is committed to giving their clients and partners an exceptional value proposition.
Another thing to keep in mind is that, for now, price changes will not have an impact on any current customer contracts or renewals established before the 2nd of April. In other words, if you have a renewal coming up, make sure you act on it as quickly as possible.
The recent announcement means that global list prices for G-Suite for business and basic users will be changing. To help you get a complete overview of the pricing structure today, and from the 2nd of April, here's a basic table:
|G Suite Pricing||Before April 1, 2019||After April 1, 2019|
|G Suite Basic||$5/mo||$6/mo|
|G Suite Business||$10/mo||$12/mo|
|G Suite Enterprise||$25/mo||$25/mo|
Important G Suite Billing Features to Look For
POST-PAY - Pay for G Suite after you use them. example: You are billed on April 1 for G Suite Licenses used in March.
DAILY PRICING - If you add a user on the 5th, you shouldn't pay for what you didn't consume. Likewise, if you remove a user on the 5th, you shouldn't pay for a full month.
Up until now, G Suite has had a different price for monthly and yearly when it comes to using G-Suite's SKUs. However, in an attempt to make the Google portfolio more consistent, Google has removed the difference between prices starting from the 2nd of April. The new rates will be applied to all customers from April, and no Educational SKUs will be impacted by the change.
Crucially, the increase to prices in the G-Suite portfolios will only cover Business and Basic editions of the platform. There are currently no plans to increase the cost of the Enterprise SKU as well according to Google. The team says that they feel Enterprise price already represents the value of the offering correctly.
How Does This Affect Google's Competitive Position?
If you're a Google G-Suite enthusiast you might be wondering how Google's decision to alter their prices impacts their competitive nature in the collaboration and productivity world. Gartner currently suggests that G-Suite had a share of about 9% of the office suite market in 2016, and Microsoft was responsible for about 90%. It's safe to say that Google has had some catching up to do, but it's been doing increasingly well in recent years. Google has some added benefits in its portfolio when it comes to disruptive technology like AI and machine learning.
The price increase for G Suite could be a positive thing for Google's reputation as it continues to grow. According to some experts, a low price can sometimes cause customers to look at an alternative to Microsoft Office as inferior. A higher cost may mean that today's end-users begin to take Google more seriously.
It's also worth noting that although Google's pricing changes bring it closer to Microsoft, Google is still the cheaper option for most businesses, small or large. Microsoft's Office 365 pricing packages differ depending on the apps and storage you need. Microsoft Office pricing packages are also harder to get a grip on than Google's. The G-Suite prices are more straightforward, so you're less likely to be caught off guard by an unexpected expense. The price of both G Suite Business and Basic SKUs from Google remain lower than the cost of a single service from many of the major competitors in the space - even following the update. This means that although Google is moving its pricing structure to align with the competitors in its space, it's maintaining its competitiveness as a lower-priced solution for companies with a budget.
According to Google estimations, a subscription to G-Suite now comes with triple the storage and products that you used to get back in 2007, along with a massive increase in features and capabilities for each product. If you had to purchase each of the elements that you now get from Google G-Suite separately, then you would need to pay a lot more overall.
For businesses in search of innovation and growth, nothing about the G Suite Roadmap is changing.
G Suite Pricing Tips for Google Customers and Partners:
The recent announcement about G-Suite pricing packages won't just affect end-users looking to improve their cloud productivity; it will also have an impact on the customers and partners that want to differentiate themselves with cloud services from Google.
Access help from Google: If you're concerned about adjusting your strategy according to the new pricing, then you can check out the G-Suite updates blog to find out more about this change.
Understand Enterprise amendments: If you signed up for the G-Suite Enterprise amendment that went out in 2017 and 2018, your renewal details will be different and based on your individual contract. The prices should remain unchanged for the extent of their contract, and they will not go above the old business listing price until the end of their amendment period.
For everyone else the new prices will go into effect this year, with regional market adjustments for certain regions. You should contact Google if you're interested in learning more about discounts for specific locations and remember that current contracts will be honored until they're complete.
Is G Suite Still 'Worth It' ?
Perhaps the biggest question on everyone's lips following the price increase this year is: Is Google G-Suite still worth my investment? Obviously, as with anything else in your collaboration and productivity strategy, only you can know what you need from your provider. While Google doesn't share information publicly about its cloud market share or revenue, the cloud unit achieved more than $1 billion in revenue per quarter - showing just how popular and valuable the tools can be.
There are currently more than four million businesses using G-Suite, and this number continues to grow as Google invests in pioneering new ideas to transform productivity for their users. As the years have gone by, we've seen G-Suite evolve drastically with everything from real-time communication and collaboration methods, to analytics backed by artificial intelligence. For businesses in search of innovation and growth, nothing about the Google strategy is changing. The only difference is that users will be paying a price that's closer to a reasonable margin for the level of features that they're getting.
Considered from an objective point of view, it's difficult to argue with the fact that Google's decision to update its pricing makes sense. It's difficult for any company - even one as big as Google - to continue offering incredible capabilities for a low price for too long. Ultimately, innovation requires investment one way or another. However, as technology prices creep higher for everything from cloud storage to analytics, it's easy to see how end customers and resellers alike might be perturbed by the idea of paying more for the services that they depend on.
The good news is that although the Google team will continue to reserve the right to make any necessary adjustments to their pricing patterns going forward, they're not planning on making any more changes soon. Google knows that its customers don't want to deal with higher prices, but they hope that the value they get for what they pay will help to even things out.
To learn more about moving to G-Suite, migrating your services, or launching a new productivity strategy, contact Coolhead Tech today. We'll guide you through how you can make the most of your increasing Google and G-Suite investments.
What do you think about the changes to G-Suite pricing? Do you understand the need for an update? Let us know in the comments section, or on social media.