Changes to Dynamics 365 Business Central on-premise licensing: What you need to know

Apr 11, 2023

Microsoft announces changes to Dynamics 365 Business Central on-premise pricing and licensing

Dynamics 365 Business Central can be deployed either on-premise or in the cloud, with most deployments of Business Central being in the cloud. Microsoft recently announced major updates to the pricing and licensing policies for the on-premise version of Business Central, marking a significant shift in the way customers can license and deploy this system. These changes are part of Microsoft’s ongoing efforts to modernize licensing for on-premise solutions and bring greater simplicity and choice to customers. In this blog post, we will outline the key dates and what these changes mean for customers.

Key dates

  • October 1, 2023 – Price increases for subscription and perpetual licenses of on-premise Business Central. Additionally, Enhancement Plans and Advantage Plans will increase by 1 percent
  • April 1, 2025 – Perpetual licensing will no longer be available for new customers purchasing Dynamics 365 Business Central on-premises. New customers will only be able to license BC on-premises via subscription licensing.

Pricing updates

Over the next three years, Microsoft will aim to align subscription prices for Dynamics 365 Business Central on-premises with their Dynamics 365 online CSP pricing. The initial adjustment will take place on October 1, 2023, where the price of Dynamics 365 Business Central on-premises subscription licenses will increase by 4% in the United States and 10% in Eurozone and Africa. On the same date, perpetual licenses will increase by 9% in Great Britain and India, 11% in Eurozone, Denmark, and Norway and 15% in Sweden and Japan. There will be no BC perpetual license increase in the United States. 

Additionally, Annual Enhancement plan (EP) and Advantage Plan (AP) rates will increase by 1 point for renewals and new sales. The rate for a three-year Advantage Plan will also increase from 57% to 60% of the protected price list (PLP).

Licensing updates

Effective April 1, 2025, new customers purchasing Dynamics 365 Business Central on-premises will be limited to subscription licensing as perpetual licensing for BC on-premises will be discontinued. This means that new Dynamics 365 Business Central on-premise customers will not be able to select perpetual licensing. Instead, they will need to subscribe to the solution on a recurring basis with the subscription licensing model.

This announcement will not affect existing Business Central on-premises customers using perpetual licensing. With an active enhancement plan, these customers will continue to be able to add functionality or users to their perpetual licenses. The on-premise version of Dynamics 365 Business Central will still be available for customers who need it, however Microsoft is encouraging businesses to consider moving to the cloud, which it believes is the preferred approach for most customers.

Want to learn more?

Microsoft’s licensing and pricing updates represent a significant shift towards the subscription-based model for licensing Dynamics 365 Business Central on-premises. These updates may cause some confusion among customers so Microsoft recommends that customers work with a certified Microsoft partner to navigate these changes and to determine the best course of action for their business. Additionally, the right Dynamics 365 Business Central partner can provide additional insight, support, and enhancements to your system.