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/