How Do Office 365 And Google Apps Compare On Price?

How Do Office 365 And Google Apps Compare On Price?

Microsoft officially rolled out its new Office 365 business suite earlier today. How does its pricing compare with its most visible rival, Google Apps?

In Australia, Microsoft is selling Office 365 in partnership with Telstra. The most basic plan for small business costs $7.90 a month per user, and includes Office Web Apps, Exchange Online, Lync Online and SharePoint Online, along with 25GB of storage.

The cheapest enterprise plan is $15.70 per user per month. That doesn’t actually include the Office Web Apps version, but does add Active Directory integration. A plan including Office Web Apps for enterprise runs at $25.70 per user per month, and one which adds full rental versions of the desktop office apps is $40.10 per month. The full list of plans is on the Microsoft site (Incidentally, those prices are higher than the US equivalents, though the US prices wouldn’t include GST while the local ones do — a factor we’ll return to later.)

Google Apps doesn’t have such a wide range of options. It charges $US5 per user per month, or $US50 per user per year. Unlike Microsoft, it doesn’t have specific offerings aimed at replicating Active Directory or some of the other enterprise services, so the most relevant comparison is arguably with the entry-level Office 365 option.

Both Microsoft and Google offer a 30-day free trial, which can be useful for assessment purposes, though in reality you’re not going to migrate your entire user base onto a trial version.

On those prices, Google does come out as slightly cheaper, though not by as much as you might first think when comparing the $US5 and $7.90 price tag. The latter includes GST, which can be offset against the GST your business has to pay to others — an option that doesn’t apply to the Google version. That brings the effective local price down to $7.18. In practice, you’ll almost certainly end up paying currency conversion charges for the Google option.

Telstra argues that an additional advantage of its partnership with Microsoft is that the Office 365 charges can be included on a single bill with other services such as telephony and internet access, meaning there are fewer invoices to process. It also assures us that unlike many of its consumer services, access to a single bill won’t depend on which billing system happened to be in place when you signed up with Telstra.

Microsoft pitches the familiarity of the Office environment as a reason to choose its option over Google. At its Australian launch, customer Andy Springer from Rookie Recruits noted that while his company had initially shifted to Google Apps as a cloud solution, users found the environment was unfamiliar and that features they used regularly didn’t exist in the Google equivalent. Rookie Recruits subsequently switched to the T-Suite offering from Telstra, and will be adding the new Office 365 features.

That’s not going to be the case for everyone by any means, especially if you’re a heavy user of Gmail. However, it does demonstrate that even when the price is, as Microsoft constantly put it, “less than a sandwich” for a month of access, factors other than basic price need to be considered before switching.

Evolve is a weekly column at Lifehacker looking at trends and technologies IT workers need to know about to stay employed and improve their careers.


  • Telstra is off to a not so good start….just tried to sign up for the trial. Half way along, got exception errors…then topped off by a requirement for credit card details…even though the invoice is for $0. Microsoft releases a new product only to be sold using Telstra clunky ecommerce engine. Not a good reflection on either one of them. Google wastes no time in getting you to use their software.

  • The ‘AD equivalent’ is certainly important, but only in some cases – thinking about it, the only way we couldn’t just ‘work around’ that using google apps would be our Microsoft Dynamics CRM install. There’s no easy way to make that single-sign-on with google apps as far as I know.

    Aside from that, We’ll probably jump to the first provider that can guarantee our data will only be stored locally.

    • yep we tried to sign up for the “best thing since sliced bread” 99.99 % up time and yes the sign in process failed. Subsequently successfully signed up for the trial 4 days before Christmas and ran into Telstra’s “sorry mate there are a lot of people away owing to Christmas etc etc” not sure how the 99.99 % works here.
      So I trialled it, we will primarily use it for international video conferences and tested their
      “ maintenance status page” as a way of trialling their service.
      After Christmas their status page was saying the were still working on stuff which should have been finished before Christmas. Called the Telstra 24/7 help desk to get a “oh! that is Microsoft’s problem “response. “we will get back to you “. They did emailed me about an our later saying “ Bob !.from Microsoft said that work is finished they just haven’t updated the status page “ !!
      This page was not updated for over a week. I eventually found someone at Microsoft who would listen, since they were also sending me back to “your local provider” but nothing seems to have changed. In the USA Telstra would be hit with the Monopoly laws
      The 99.99 % money back guarantee from Microsoft has been watered down in the Telstra agreement.

  • I still think Office 365 and Google Docs are useless for most SMB users. There are far too many things out there that “integrate” with the desktop apps.

    Take any business out there with MYOB/Quicken as their accounting/invoicing/crm tool. All of those use desktop word and excel as outputs, and while in 3-4 years time “maybe” they will link to Office online its no good now.

    Heck maybe in 3-4 years Myob/Quicken online will be able to connect to Office online to get the whole lot hosted. Its more than possible if API access is provided.

    But based on the fact I can get Office Home/Business for $280 in a retail box is about 3 years of Office 365. Which is spot on the basic upgrade cycle. However we keep ours a lot longer so I’ll stick with boxed for now.

    • @Blake

      You need to compare Office 365 to hosting SharePoint, Lync Server and Exchange, not to Microsoft Office desktop product.

      There are options to include Office Pro Plus in the monthly fee so the real advantages come when you have a scalable workforce so you don’t have to purchase licenses upfront. you can reduce your user count as your business grows and contracts.

    • Blake, couldn’t disagree more and it must be that you’ve never used Office 365 (or BPOS before it) in a live small business with at least 2 staff.

      As Andrew says, it’s not about the Office desktop applications.

      It’s about giving Small Businesses capabilities most would have never thought were within their grasp, and limited to their “enterprise” competitors.

      From email on mobile devices, through to document control/versioning, being able to collaborate in real time on documents, new methods of communicating via useful presence and IM, voice & video chat, ability to access documents from anywhere and have them synchronised online and offline, ability to build useful work flows and processes within Sharepoint Online…..I could go on.

      Your example of MYOB/Quicken in the context of Office 365 makes no sense. Here’s a reality: A small business owner can export their customer list from MYOB directly to Excel 2010 on their desktop – no big deal, as you point out. But with the right tools (Office 2010 Pro Plus and the basic Office 365 P1 suite) the small business owner could save that Excel file directly to Sharepoint Online without leaving the Excel application, then their sales reps in NSW, VIC and QLD could immediately all simultaneously open the Excel file within the browser using Excel Web App and, while in an online meeting utilising Lync Online, collaboratively work through the list of customers in real time, each sales rep marking each customer they believe is a high potential candidate for their great new service, and the Excel file updates in real time so each sales rep can see what the others are doing.

      Any small business that thinks “sticking with boxed for now” is of any benefit to their business needs a reality check.

      If you’re not using technologies like Office 365 can deliver, competitors will surpass you, customers will leave you, and new talented staff won’t be interested in working for you.

      • Look I will agree there are a lot of great features beyond the Office apps.

        The point is there are desktop apps that rely on the desktop office apps. e.g. we have CRM & Document mangement software which relies on the desktop versions of Word/Excel/Outlook to assign docs to clients via addons & toolbars. That can’t happen (currently) in hosted apps.

        From the sound of it your solution (which is the best of both sides) is to have desktop office apps installed + use office 365. But then I would consider that is less an “office” replacement as it is a SBS/Exchange server replacement. (which I would happily pay for as a hosted service)

        The E3 level package is actually quite a good deal for what it offers, giving you the desktop apps as well.

        Also if you are going to complain about my choice of boxed office – then your example of anyone using MYOB/Quicken with a users in 3 states is just as bad. They don’t handle the multi-user experience well at all, and a business should have moved onto something else as well.

        • What you’re saying about current on premise LOB apps not integrating with hosted apps probably applies to Google Apps. I think your misconception is Office 365 is a replacement for Office on the desktop. I don’t believe this is the intention at all. Office Web Apps is an extension of the Office desktop application. Your on-prem LOB apps still integrate perfectly with Office desktop apps, which integrate perfectly with Office 365 components.

          Good call re MYOB in multi user….used to get sick of the emails coming from admin staff saying “everyone needs to log out of MYOB ’cause I need to do blah blah….” 😉

        • Hi Blake,

          Interestingly, with google apps you can actually get a fair bit of integration within gmail/google docs, but I’m not a fan of any of the CRM apps that have made the effort yet – zoho and and the rest are still quite simple.

          I haven’t seen any evidence of direct integration with office 365 yet, but I wouldn’t be surprised if they make it an option for some partners. Given microsoft has their own CRM software already in the cloud (ms dynamics online) and their own web-based document management, I’d be surprised if you didn’t have that option in the next year or so.

  • My current concern is that a lot of my users are SMB’s – 1 – 15 users. They don’t have big budgets, and as such tend to be slow in upgrading their OFFice desktop apps. ie. Most of them still have quite a few versions of Office 2003 running.
    Now that Office 365 is rolling out, they (it seems) are only going to have 2 choices in order to migrate from BPOS Exch Online to Office 365 Exch Online – upgrade all copies of Office to 2010 (If they’re not 07 or newer already), or migrate away from Exchange Online. This was advertised as a ‘cost effective’ solution, but dictating (effectively) when a customer MUST upgrade to a newer version of Office, which could run to the thousands of dollars in cost, is not (IMO) ‘cost effective’ or fair.

  • Partnering with Telstra is in my opinion a big mistake. Telstra do not exactly have a good reputation with SME’s in Australia, be it mobile phones, internet or fixed line phones. Why would anything change?

  • Pricing is already higher than other countries. Misrosoft never bothered to answer my question relating to price for their products in Australia Vs USA or Canada. Office professional was twice the price to purchase on line in Australia as it was to purchase in the USA. This was when the exchange rate was .95AUD to USD. I wrote to microsoft on numerous occations without so much as an acknowledgent of my corrospondance.Once again we are getting to pay more even tthough the exchnge rate is in our favour!

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