Microsoft today announced that it is changing the way it licences its Power BI service product. I want to provide my personal view on why it is doing this, what is good and also what is bad about this change.
The Problem MS is Trying to Address
Let me start by explaining the problem that Microsoft is trying to address (from my perspective). The long and short of it is that the current pricing model does not scale well across all user groups. Take the following examples along with how good the current pricing model is for them.
| Case | Use Case | Price/Value Equation |
|---|---|---|
| 1 | Single User | Free – Fabulous! |
| 2 | Small groups and companies | US$10 per user per month – Fabulous! |
| 3 | Medium sized companies/groups | Great for power users; questionable value for simple “low involvement” consumption of a few simple business metrics at US$10 per user per month |
| 4 | Large companies | Affordable; could get expensive if numbers are very large |
| 5 | Very large companies | Horribly expensive for very large numbers of users |
In my view Microsoft is trying to address specifically use cases 4 and 5.
Introducing Power BI Premium
Power BI Premium is being introduced to address this lack of affordable scalable pricing for the Power BI service. In short, Power BI Premium will be a usage based model that allows consumption of the Power BI service based on capacity rather than a per user licence. All businesses will still need some users with a Power BI Pro Licence. This is needed for maintenance at a minimum, but also for any users that are power users and want to continue to have full access to all features (eg. Analyze in Excel will not be available to users that access solely as a Power BI Premium user).
For big customers this is exactly what is needed. They can…
- host larger models,
- have faster refresh,
- access better scalability,
- obtain dedicated hardware,
- go on premise for those that need it/want it,
- eliminate virtually all limits on everything (eg there is a new max limit of 100TB storage).
The cost of Power BI Premium will be managed based on capacity, so you only pay for what you use and this is perfect for large companies.
For full details of what is on offer along with the pricing you should read the announcement from Microsoft.
More Stuff for Free (Personal) Users
Microsoft is also simplifying the differentiation between the Pro Licence and the Free Licence. What I like about this change is that it refocusses the purpose of the free offering – ie it is designed for personal use for free. If you want to use it to share, you presumably will then get some commercial benefits and that is when you should pay. I really like this model and think it is very fair.
The Bad News for Free Users
In short, you will no longer be able to share anything (other than public sharing) using the Free Service (previously you could share Dashboards and that linked to the underlying Reports) and Analyze in Excel is gone. This will no doubt be a disappointment for many people. I have long encouraged people to pay for this service for those that are getting value. If you want to share, then pay for the service. For small numbers of users the Pro Service it is very affordable. If you want to continue to use personal “Analze in Excel”, then read my post here.
The Good News for Free Users
On the upside, you will now be able to do things that you couldn’t do previously, including using a Gateway, same data limits and refresh frequency as the Pro users among other things.
What Microsoft is Not Fixing
Now for my beef! The thing Microsoft is not fixing is the pricing model for use case 3 in my table at the top of this post. This is a very common customer type (possibly the most common?) and I think think Microsoft is making a mistake by ignoring this group. Let me give you a more specific scenario to explain.
I have a client that sells travel services (holidays, business travel bookings etc). There are around 20 – 40 users that need the full on Power BI Pro licence. These are managers, team leaders, finance managers etc. There is no question about the price or the value for money for this group of users. However there are also several hundred consultants that engage directly with their customers, consult on travel needs and ultimately sell the travel services. These users need information but it is not economic (price or benefit) for them to pay US$120 per year just to get a few business metrics about their own performance from time to time. These “low involvement” users are perfect candidates for the Power BI Premium service. The problem is that Microsoft does not have an economic price point for Power BI Premium for this sized customer group. I think that is a mistake and I hope Microsoft sees the gap and changes its mind.
There is A Work Around
I am a strong believer in paying for what you use, but it is up to the vendor to sell SKUs that target price points that align with the value extracted by the customer. There is no product category where this is more appropriate (and practicable) than with software. If Microsoft doesn’t address this target group, then consultants like me will simply work with clients to find ways to get what they need without purchasing licences for this “low involvement” group of users. I already have working solutions that are perfectly within the licencing agreement for the products. I would much prefer to have my customers use the Power BI service and have them pay a fair price to do so (say US$2.50 per user per month for these low involvement users). Until Microsoft wakes up to this opportunity, feel free to reach out to me to help you build a solution that works around this obvious gap. Spoiler: using Power Update and VBA.
Update: You may like to read my update on this topic here. https://exceleratorbi.com.au/affordable-power-bi-premium-for-small-business-part-1/
Matt, this post might need updating? Seems to be a lot of confusion in the comments. The latest licensing seems a little easier to digest;
https://exceleratorbi.com.au/secret-insider-update-new-power-bi-features-mdis/
Hi Matt,
Microsoft offer a Trial of Power BI Pro which they are now extending for 12 months from 1st June. My understanding is that any company who is currently messing around with PowerBI with the intention of paying for it, per user can still do so for the trial period. So we can publish dashboards, share reports, users can sign up for free to receive them – fully functioning PowerBI until June 2018. Is that your understanding too? It’s great for us as we are c100 users, we know we will have to pay about €1000 per month when we do have to pay but it looks like we won’t have to for another year.
Yes, you are correct. https://community.powerbi.com/t5/Changes-to-the-free-Power-BI/May-3-announcement-overview/m-p/167395
Key words.
For existing users of the free service who have been active within the past year, we’re offering a free, 12-month extended trial of Power BI Pro. The offer will let you take advantage of the full capabilities of Power BI Pro for the next year as a sign of our appreciation for your continued support.
I think this is a genuine sign that MS is trying to do the right thing for people genuinely affected negatively
All: There’s a really good thread at https://community.powerbi.com/t5/Changes-to-the-free-Power-BI/May-3-announcement-FAQ/td-p/167399 that covers a lot of the above. A lot of very, very unhappy campers at that thread.
I’m absolutely staggered that the PowerBI Premium licensing is so lumpy: $60k USD per year. Easy fix, Microsoft: drop the node pricing by a factor of 3, and drop the traffic allowed per node by a factor of 3. That way, you still get $60k USD revenue for x companies with 600-odd consumers, but you also pick up $20k USD annual revenue for x times y companies with 200-odd users.
The current pricing is like a used car lot in a middle-class neighborhood that only has Ferrari’s for sale. And even for the big fish, it’s still not clear to me how they will determine if PowerBI Premium represents value to them. They are entering into an agreement that has a smaller fixed cost component (the amount of pro licences) and a larger variable cost component (the amount of load that their reports incur on the system), with little way of estimating how much larger the variable cost will be compared to the fixed. Microsoft say that the node estimates in their model are a conservative estimate based on simple usage logic and that actual provisioning could significantly vary based on data models, data volumes, number of queries and their complexities, refresh rates, usage distribution and pattern changes over time, and other factors.
So how do organizations of between 400 – 2000 users know if they are making the right financial decision to sign up with PowerBI Premium, or the wrong one. It’s a complete freakin gamble, isn’t it? Even if they have some degree of confidence in their rough estimate of their current load (given existing data models, data volumes, query numbers/complexities, refresh rates, and usage distribution), how the hell do they estimate what those might look like in a year or two? What happens if they find that their node usage completely blows what they budgeted for in the original business case? They are effectively signing up to a plan where they must budget for potentially wildly fluctuating costs month on month. It’s a real case of “suck it, and see”.
Microsoft say that their calculator is conservative. But here’s the rub: If it’s too conservative, you disincentive organizations with between 400-1000 users from signing up. If it’s not conservative enough, you incentivize organizations with between 400-1000 users to sign up, and they get badly burnt when their node pricing blows out.
Who wants that kind of uncertainty hanging over their cost center? Not me.
I’m staggered that the PowerBI Premium licensing is so lumpy: $60k USD per year. Easy fix, Microsoft: drop the node pricing by a factor of 3, and drop the traffic allowed per node by a factor of 3. That way, you still get $60k USD revenue for x companies with 600-odd consumers, but you also pick up $20k USD annual revenue for x times y companies with 200-odd users.
The current pricing is like a used car lot in a working class neighborhood that only has Ferrari’s for sale.
Per the documentation the Marketing team has shown publish to web will continue working the same as today and everybody will be able to access those report with no license required
Matt
have you seen that even for premium anyone who export to Excel needs to be a PRO too
https://denglishbi.wordpress.com/2017/05/05/on-premise-power-bi-vol-2/
No, I didn’t realise this. Very interesting and very bad at the same time. I think MS will simply have to back down on this one. If not, it will be the only BI software in the world that doesn’t have an “Export to Excel” Button!
Hi
From 1 June 2017 will dashboards/reports shared using the publish to web, a public URL, also require users to hold a Pro Licence?
Thanks
I believe any public sharing will still work. I haven’t heard this specifically from MS, but it is the only thing that makes sense to me. @chuck, can you confirm?
Thanks Matt. You are really really good at giving people the big picture view. Not only in this post but in many others too. The information you provide is very helpful and saves a lot of time.
Best regards Jes.
Good analysis, Matt. I did a bit of number crunching, and found that the break-even point between the old plan and this enterprise plan under Microsoft’s modelling is 625 users, if you accept MS’s default breakdown of 20% Pro Users, 35% frequent users, and the remainder occasional users. Of course, that break even point relies on Microsoft’s guestimate of how much load such a mix would generate. On that note, I’ve reverse-engineered their guestimate, and have found that their calculator is based on the following assumptions:
* 1 node for every 1000 pro users
* 1 node for every 1430 Frequent users
* 1 node for every 3030 Occasional users
Of course, you are not licensed per user, but for capacity. So as guavaq says over at the powerbi community site, if your users and data sets do not require a lot of compute power, you could potentially have a large userbase on the base level hardware (BUT IT ALL DEPENDS on your workloads and users). In other words, that break-even point above is only a very rough guestimate. Your milage *will* vary.
I posted more on this at http://dailydoseofexcel.com/archives/2017/05/04/to-powerbi-premium-or-not-powerbi-premium/ if anyone’s interested.
http://dailydoseofexcel.com/archives/2017/05/04/to-powerbi-premium-or-not-powerbi-premium/
And for developers who were trying to include Power BI in our applications (embebed) we only have one license, pay $ 5,000 per month
Hi Matt–Thanks for the post and clarification! The company I work for hasn’t selected a Vis. tool yet and I’ve been learning and recommending PWR BI for the last 6 months. We’d have probably 3 report designers, 50 regular users and maybe 100 occasional viewers. In this new pricing scenario, I assume those would all be PRO paid users and that pricing is probably very reasonable (@ $10 per).
The issue we have, is that our data is sensitive and can’t be shared online. I need an on-prem solution and Sql SRV 2016 isn’t an option in the near term. I believe MS offered an On-prem solution with the new pricing but it is pretty expensive. So, I don’t see how anything has changed for me. I still can’t publish dashboard / reports (on-prem) for general use. It seems to me that with this pricing, competitors like Tableau are competitive (at least in my situation). It’s disappointing b/c I really like PWR BI but it’s difficult to commit to an ‘young’ product like this when you can’t be certain of other future changes.
Thanks for sharing Erik. This is a good example of another scenario where a lower price point Premium offer (for smaller customers) makes sense to everyone except apparently Microsoft. I’m certainly so saying Microsoft should give it away, nor allow large company value to be extracted for these lower rates. I just think there is an opportunity to support and sell to this group of smaller customers (that clearly includes you) by designing their pricing better
Great Post Matt
Still one question falls into mind with the solutions that mix free and pro licenses.
I’m hearing you say that the free-users wont be able to share dashboards anymore from 1. June and on. But how about the scenario where you develop a solution as a pro-license, create dashboards and share them with free users. Will free-users still be able to view these dashboards created and published by a pro license?
Thanks on behalf.
Sorry, no banana here. This is going too. Personal cannot share (outbound or inbound).
Thanks for the rapid synopsis Matt
Here is a typical group, use case :
1 content creator (myself)
2-3 members of a group workspace required to maintain the solution once I have handed over
20-30 recipients with the data potentially segregated for viewing, refreshed more than once daily
You can see that this scenario invokes some pro features but these are necessary and best practice, i.e. not having everything from my personal workspace (which won’t be possible soon anyway in order to share content)
So in the above, what do the other members need from a licencing point of view to see the content? I’m guessing without Power BI premium it would be Pro licences right?
Just wish that Power BI became part of Office Pro lock stock and barrel and the costs were absorbed that way!
Yes, pro is the only viable option for you. But at about $4k per year this is fabulous value for this scenario you describe (in my view). You won’t get anything else even half as good or anywhere near this price SaaS. No hardware to buy, provision, maintain etc.
MS will never bundle this with Office as they can’t get any more revenue that way. MS is spending a bomb on this and it has to get something back.
How about using PBI embedded for sharing reports with customers and/or consultants? Just provide them a page on your company portal and based upon their logon/credentials they have access to their reports.
But I agree that this should be solved by Microsoft in their licenses (Power User vs.View-Only User)
Embedded is definitely an option as you describe. And as long as you have the scale to afford the minimum price point, it is great. Smaller companies don The have this volume, plus they don’t really want to complicate things with custom builds etc. If they have to go to an Independent Software Vendor to build it, it kind of defeats the entire purpose (in my view)
Great post Matt
As a softner for existing users, MS seem to be offering Free users a Pro trial until May 2018, have you seen that?
“Dashboard sharing will no longer be part of Power BI Free, but will still be available with Power BI Pro. If you’re interested in an extended Power BI Pro trial that will run from 1 June 2017, to 31 May 2018, simply sign in as normal on or after 1 June 2017, and get going”
Yes, I am aware of this. I believe MS is trying its best to move forward while being respectful to companies that have made decisions on the old view of the world.
Fantastic post Matt, Thank you for sharing. I completely agree with you, Group 3 needs to be looked at by MS. Introducing a new User type at a lower cost would be great, even if this user type does not get all of the functionality (i.e. Exports (all types) – Even limiting them to 5 pages per report would be completely acceptable in my view).
I agree that MS needs to find a way to charge less, and give less if that’s what makes it work.
At first I read the Power BI premium pricing as $5,000 per node per year, which seemed like a decent choice for onboarding a lot of report “consumers”. At $5k per MONTH, however, you’re right that the pricing leaves a big hole in the middle of the offering. What’s weird is that as you grow from group 2 to 3 as you described it, your best pricing option seems to actually be to run a server with SQL Server Enterprise running Power BI Report Server. So, it would be
1.Free (Desktop)
->2.Pro (Cloud)
->3.Report Server (On-Prem)
->4&5. Premium (Cloud)
…which of course is a silly progression.
Good point Andy. The other option is Power BI Embedded, but I don’t think that is a good idea for the same reason.
Matt – thanks for posting on this. Are you hopeful that the Power BI Embedded pricing model (£3.70/100 sessions per month) will remain? We are about (or were) to launch a product to around 500 very light users across 100 organisations and I’m estimating the usage costs at around £400pcm – but with Premium, it starts at £3,100pcm. If that is the case, our product is dead commercially, and we have spent months developing it.
But reading around the documentation, the Premium service seems to be for those who want dedicated resource that they can manage and control. So I’m hopeful that Embedded will continue at the lighter end of the scale. I posted on the Power BI Community forum but it’s been held back (along with someone else’s). All very worrying.
Quick clarification: the ‘holding back’ was actually a board problem. I can see my post now.
I haven’t heard anything about changes to Embedded, but I have to say I wasn’t listening too intently at the time it was discussed because I don’t really have a use for it myself. I think the tread in the community forum is the right place to clarify.
I get the scaleable point for large business. For the rest (apart from free) everything remains relatively unchanged. However, I’m curious about the Power App mention in Premium. My assumption is that Microsoft is developing this as a second front and Power BI Pro users will have access to it. Although I don’t see any mention of this. Perhaps a Power App may be the solution for re-distribution of Power BI content for smaller organisations.
You are right that nothing else has changed. But that’s my main complaint here. This was a chance to fill the gap, but it hasn’t been taken up.
I don’t have a good grip on Power Apps, bu to know it involves some “Dev type work”, and hence it defeated the purpose of self serve BI in my view.
MICROSOFT marketing strikes again!
From a community point of view: only paying users can share, and non paying can read, and embedd… ?
I guess the on-line community will shrink, and start to compare PowerBI-public, with Tableau-public, …
I also think there is also personal spend-limit – how important is PowerBI compared to your other apps.
For bigger companies (like ours >500.000), I guess on-prem solutions will start to look more attractive.
Does this mean I can create a personal account and use it for learning/goofing around/demonstrating a portfolio to potential employers?
Absolutely. You have always been able to do that, and now you can do some more stuff, but you lose Analyse in Excel plus sharing.
Where is the standard pricing tier? Ok to ignore the basic tier but jeez.
AUD6350 is a crazy price of entry. For a business that has a large number of light read-only users.
I was excited to read about this and now it’s economically unfeasible in our use case.
I can help you cover the light users with VBA and Power Update. Let me know if you are interested.
hi Matt;
Thanks for this great post as usual.
You had mentioned that with this option we could go on premise if we wish to. Could you please elaborate this more. We are looking for an on-prem solution for our company.
I don’t know all the detail for now. All I know is that Premium can have it’s own server/hardware. My assumption is therefore that these servers can be inside your firewall. Sorry I can’t be more specific on the detail at this time
Hi Matt,
Thanks for your thought. Very much agree. Premium starts at 4200 euro pm. For cat3 customers that’s to much. Very interested in your workaround.
Exactly right Wouter. I think this is an easy fix. If there is a will, there’s a way. Regarding the work around, I would simply use Power Update to refresh an “Analyze in Excel” workbook that has suitable VBA code to email the recipients a static workbook. Any VBA coder can do this I think, but happy to offer my services to anyone that needs help.
Matt
obviously as a powerBI enthusiast, I am very upset about this change, but i guess this is the risk with software as a service, the provider can change the terms as he wants.
but what concern me the most, Microsoft can block PowerBI desktop local connections, and then all the work i have done for the last 6 months will go away, this is very disheartening.
Mimoune
Where are you seeing MS saying that they can (or will) block local connections, I haven’t seen that yet?
no, but with the last change for PBI service, I hope you understand i can expect anything from Microsoft.
this comment in the forum reflect exactly my feeling,
“For Microsoft to make such a fundamental change to their offering is a massive breach of ‘open’ trust.
– Why would anyone build a visualisation to share openly and freely with the community when the community is now all paying customers?
– Why would anyone contribute to a forum or community just to help Microsoft’s paying customers? Let them do it all.
– Why would anyone promote PowerBI as an open and collaborative tool when you can only collaborate if everyone pays? Haven’t Microsoft understood how collaborative the internet has become?
– Why would anyone trust Microsoft not to simply change the rules again and require everyone to have a Premium licence? Or to just take copyright to your data? Or have Microsoft allowed to give your data away? Or to use your data for their own purposes? Trust is fragile and Microsoft have now shown they can’t really be trusted. Don’t they understand the stupidity of their decision?
– How can Microsoft have the arrogance to use the magical D3 open-source visualisation engine that is the heart of PowerBI and make their implementation proprietary?
So, I’m sure Microsoft think they have been very clever and are going to make zillions of dollars as we all throw money at them for Pro licences, but without a vibrant, collaborative, and contributing open ecosystem, they are going to have to do it all themselves.
It’s very sady that after June 1 collaboration ends.”
Mimoune, do. you mean for the free product? I think MS has demonstrated the opposite by increasing connectivity. I don’t see why they would block anything for a paid service.
I meant, there is a risk Microsoft may block the port for the PowerBI desktop in a future release ? i don’t really trust them now
Mimoune, I understand your frustration as posted in the 7:33pm comment. You feel as you do, but my view is different. Most software as a service on the internet has a free offereing and then a paid service as you extract value. E.g., my mailing list software was free when I had a few hundred subscribers. But now I have thousands of subscribers, I pay for the privilege. As my number of subscribers increases, I have to pay more. Free to try, then pay when you get value.
I don’t think Microsoft ever meant free users to be able to gain commercial scale benefits. These users did commercially benefit, and MS created this as the baseline expectation. It has to accept the flack it gets for the change of course.
But to expect any retail software company will provide commercial scale software, where you can gain commercially from its use “for free” is unrealistic in my view.
Wouter
why not just distribute pbix files, PowerBI desktop is still free, and if the model is too large, or you want real time, you can use Direct Query, lack of printing is inconvenient, but the users can always take a screenshots.
obviously if you have Tabular as a backend it is even better.
I think there is another use case that isn’t covered that’s very similar to your case 3 in problems: Smaller groups/companies that need to share data with customers. I can’t make my customer get a license, and I especially can’t make a dozen customers get licenses. Without some kind of option where we can pay some nominal amount and let customers look at the reporting, I’m having a lot of trouble seeing how to do a case study to make the point that we need this.
Interesting point Matthew. But if they are your customers, presumably you are making money from your business with them. Can’t you pay US$120 per year to seamlessly send them data? Just give them an email address on your tenant and away you go.
The price might be workable (though could get problematic when you talk about porting over the current model of large distribution lists, so it’s not one customer that needs to log in but, say, 5 people at each customer). I don’t have the slightest idea how to get a customer an email on our tenant, much less the problems that can come with mixed logins. I can’t, for instance, log into Power BI from anything except a work computer that I am signed in as me on. I would imagine the same issue would arise for customers.
Matthew, to me this sounds like a use case for Power BI Embedded (https://azure.microsoft.com/en-us/services/power-bi-embedded/). Then you don’t pay per user, but per session. You are not allowed to use it inside your organization (at least not for users who don’t have a pro license as well, thereby eliminating possible price advantages), but it’s great when offering Power BI data outside the organization (for example, to customers inside an app / website).
Hello Koos, absolutely, if you have the know-how to build those kinds of apps in the first place or someone you can tap to do so. That’s outside of my wheelhouse, unfortunately (I’m coming at this from the business side, not the IT/developer side), so I admit to being more than a little intimidated at the idea.
@Matthew, isn’t this example you describe a great usecase for Power BI Embedded? (https://azure.microsoft.com/en-us/services/power-bi-embedded/)
@Koos, unfortunately current Power BI Embedded will go away and will be merged into PBI Premium going forward.
While Azure Embedded is, like you correctly say, per session, Premium will be capacity based, starting from 5K USD/Month….no hope for independent or SMBs…
I had this exact issue with wanting to share dashboards external w customers. To some point the external customer could see my data w a pro trial. Then on an update, my model was not available for them to view. I can’t make them sign up and pay for pro. Nor can I set them up and pay myself for them. We decided to host them on a new domain we bought and pay and maintain their accounts. Next June we’ll have to start paying for pro for them.
Matt, are you saying that w the new free account that I’ll be able to share my auto refresh dashboard through the gateway to free (non pro trial) users? Or just that the free user will be able to use the gateway for themselves?
It’s the latter. Previously you couldn’t use a gateway on a free account, now you can. There is no sharing possible at all with the free product.
Thanks for clearing this up, the note from MS was, as usual, cryptic. Your explanation helped clarify this and I agree that group #3 has been left out of this.
Can you give a hint about the “work around” solution you talk about?
VBA and automated refresh using Power Update xbi.com.au/update