Google ups prices for G Suite Basic and Business customers

As of early April, prices for Google's productivity and collaboration software suite are set to rise. The increase brings G Suite pricing closer to that of rival Office 365.

Google is set to increase G Suite subscription prices for the first time since the productivity and collaboration software suite was launched; Google said the move follows the addition of a variety of new features in recent years.

As of April 2, G Suite Basic Edition will increase from $5 per user per month to $6 per user per month; the G Suite Business Edition will go from $10 to $12 per user/month. Pricing for G Suite Enterprise Edition ($25 per user/month) will remain unchanged. 

G Suite was initially built around core apps such as Google Docs, Calendar and Drive, but has added a range of other tools, including a video-conferencing tool (Hangouts Meet); team messaging (Hangouts Chat); and enterprise search (Cloud Search - only available on Business and Enterprise tiers). 

“Over the last 10 years, G Suite has grown to provide more tools, functionality and value to help businesses transform the way they work. The one thing that hasn't changed over this time is price,” David Thacker, Google’s vice president of product management for G Suite, in a blog post on Thursday. 

Recent additions to G Suite include Smart Compose for Gmail, as well as improved security and analytics for enterprise IT admins. 

“G Suite has evolved significantly in the last two years; Google’s explanation that the price increase reflects the value it provides seems like a fair explanation,” said Raúl Castañón-Martínez, a senior analyst at 451 Research. 

Google has seen the number of G Suite customers swell in recent years. There were 4 million businesses using G Suite as of 2018, up from 3 million 2017 and 2 million in 2015. 

According to Gartner Inc., G Suite had a 9% share of the $17.1 billion enterprise office suite market in 2016; that compared to 90% for Microsoft’s Office 365. 

Office 365 has a more complex pricing structure, with a variety of subscription options. Small business customer subscriptions cost $5 per user/month for Office 365 Business Essentials, $8.25 for Business and $12.50 for Business Premium. For larger enterprises, prices range from $8 per user/month up to $35 per user/month.

Although it is difficult to compare the two suites precisely, Google’s G Suite increase brings its pricing closer in line with Microsoft’s subscriptions.

For Google, the G Suite price increases could actually be beneficial as it takes on Microsoft, said Castañón-Martínez. “Keeping its price below Microsoft could result in organizations perceiving it as an inferior alternative, when in fact – in more ways than one – G Suite outperforms Office,” he said.

“While it still lags Microsoft in terms of market penetration, the move reflects how Google is evolving as an enterprise software vendor; in other words, its go-to-market strategy is catching up with its product strategy,” he said.

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