Microsoft beefs up cheapest Office 365 plan

Microsoft has announced three new tiers for Office 365, including the online-only Business Essentials plan.

This online-only, entry-level plan will replace the existing Small Business, which it matches on price at US$5 per user per month, but with "improved features" and additional services like Yammer and Active Directory support.

"The higher seat limit of 300 means even more businesses can take advantage of the great value these plans provide," according to a blog post by Kirk Gregersen, senior director in of Microsoft's Business Division.

This entry-level plan goes directly up against online-only Google's Docs suite, which is priced at $5 per user per month with up to 30GB of storage of $10 per user per month for unlimited storage, as long as the account has five or more users. (Microsoft offers 1TB of OneDrive storage for US$5 per user per month on its pre-existing Office 365 Small Business plan.)

The next tier up from the new Business Essentials is Office 365 Business, a device-only plan that offers the full Office suite of applications, Outlook, Word, Excel, PowerPoint, OneNote and Publisher, "with 1TB of OneDrive for Business cloud storage to access, edit and share your documents across your Windows PC, Mac, iPad, Windows tablet and smartphone".

It is priced at US$8.25 per user per month.

Finally, the Office 365 Business Premium plan, priced at $12.50 per use per month, offers an integrated package combining everything from the online and desktop plans.

"This new lineup will replace our current plans for SMBs over time – Small Business, Small Business Premium and Midsize Business," wrote Gregersen.

Microsoft stressed that its policy is to provide 12 months’ notice for any changes to a customer’s core subscription, hence existing customers won’t be required to change until after 1 October 2015.

The new versions also include an increase to the seat cap for smaller customers and reduction in pricing for mid-tier users.

"Small Business and Small Business Premium customers will see their seat cap raise from 25 to 300 while Midsize Business customers, whose seat cap is already 300, will see their price be reduced from US$15 per user per month to US$12.50 per user per month."