Google Workspace launches annual plans, 20% price increase for monthly users

Don’t get too distracted by today’s big “AI for Google Workspace”announcement, because it’s also a day of Google Workspace price hikes. Last month, Google announced that prices for the most common versions of Google Workspace for business will increase by 20%, and the company will launch an annual billing option on March 14. The higher prices hit the Google Workspace sign-up page for new users. Existing users will also see a 20 percent price increase at some point in the future, with the earliest rollout occurring in April. If you don’t want to pay more for Workspace, the new annual plan will allow you to use Workspace for a year at the old rate.

Annual plans were previously available to businesses through the old route of calling a company sales representative, but now any business administrator will be able to sign up for an annual plan online. Unlike the “Flexible”monthly plans, Google’s deal states that you’ll be tied to the number of users you choose at the start of the year, and while you can add new users and pay more, you can stick with them. Even though you’re locked into a year of service, billing is still on a monthly basis and added users will increase your bill in the future, so they’re allocated pro rata. You cannot cancel a trade early.

New users pay more today, existing users pay more starting next month.

Many of these software-as-a-service companies offer you a deal if you sign up for a whole year. Instead of a discount, Google is actually raising the price of Workspace month after month, so tying into an annual plan can save you money. It’s hard to imagine that it will be possible to opt out of email anytime soon, right?

Clearly, Google would like everyone to stick to a yearly plan rather than a monthly plan. These new prices are already listed on the Google Workspace pricing page, although it defaults to the monthly cost of an annual commitment, not the price of the flexible plan that you would actually pay if you paid monthly. If you hover over the tiny “i”icon, you’ll see that the flexible monthly price is now 20 percent higher.

It is difficult to determine the exact time when prices will rise for existing users. Google says that “the new pricing will be in effect from this April until 2024, depending on factors including the number of user licenses, current contract terms, and payment plan. For example, prices for existing Google Workspace subscriptions with 10 or fewer user licenses will not change until January 2024.”So… somewhere within the next nine months, maybe longer, I think. Google says, “Customers will be notified via the Google Workspace Admin Console at least 30 days before their pricing changes go into effect and will be provided with more specific information to help them navigate those changes.”

It’s not hard to imagine why Google raises prices. Google Cloud, which includes the Workspace division, is still not profitable, and higher prices for its most popular product will help. Google Cloud employees — and only Google Cloud employees — were recently asked to share real estate consolidation desktops, so there’s some real belt-tightening going on here. Assuming the recently announced Google Workspace Generative AI features ever go mainstream, using these features also means a significant increase in the cost of servers for Google, and someone has to pay for it too.