Microsoft price hike hits channel

Microsoft price hike hits channel

Microsoft Australia has increased the pricing of its products by 10 per cent in response to worsening exchange rates.

The vendor blamed the poor value of the Australian dollar for the increases, which will apply to all products and licensing agreements purchased from October 1, 2001.

Microsoft Australia has also introduced a monthly review of exchange rates which will mean that if the Australian dollar rises or falls consistently for a period of over two months, Microsoft will adjust the pricing and inform channel partners within 30 days.

The 10 per cent hike is the second such increase for Microsoft in 12 months, a similar change was made last October. "Nobody likes to put its prices up," said Alison Dodd, director of marketing for Microsoft Australia. "We had hopes the original drop in the exchange rate would be a temporary movement. We have been holding off making another change for some time, but now that the exchange rate has stabilised at 51 cents, we have made our move."

Dodd said Microsoft Australia has been carrying the cost of the difference between the prices it set and the falls in the exchange rate for over two years. "For ten months, it has been cheaper to buy software here than in the United States," she said.

Despite such price discrepancies, Dodd said the decision was less to do with the potential for grey marketing activities and more to do with ensuring Microsoft Australia will no longer have to carry any financial burden as a result of fluctuating exchange rates.

Dodd said the vendor worked out that if it had applied the monthly review over the last twelve months, there would have been three or four small price increases rather than two large ones. But she doubts regular pricing updates will cause any issues or confusion among Microsoft's channel partners. "We will use all normal communication vehicles to keep the channel in the loop as to changes," she said.

The decision to change the model came about after a lengthy review of the pricing models of other software vendors, Dodd said. She said she would not be surprised if several other software vendors followed Microsoft's lead. "There were companies that followed suit last October and made adjustments, and many more that have increased prices without any formal announcement," she said.

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