Don’t get too distracted by today’s big “AI for Google Workspace” announcement, because this is also the day that the price of Google Workspace will increase. last month, google announced that prices for the most common “business” editions of Google Workspace would increase by 20 percent, and the company would launch an “annual” billing option on March 14. Today is the big day, and with that new billing plan, higher prices have hit the Google Workspace signup page for new users. Existing users will also see that 20 percent price increase at some point in the future, with the first launch taking place in April. If you don’t want to pay a lot more for Workspace, the new annual plan will let you commit to a year of Workspace at the old rate.

Google’s new Workspace branding is a bit confusing. Google used to only brand the paid business edition of Google apps, which come with a custom domain option for your Gmail account. Previously the name was “G Suite” and before that it was “Google Apps for your domain”. However, the new branding, “Workspace,” applies to both paid business accounts and free consumer accounts. So, to be clear, Google’s free consumer accounts for Gmail and Docs and whatnot are still free, but the three most common business editions (Business “Starter”, “Standard”, and “Plus”) are going up in price. Businesses pay for these accounts on a per user per month basis, so the price can add up quickly.

Annual plans have been available to businesses before via the old-school route of calling a corporate sales representative, but now any business manager will be able to sign up for an annual plan online. Unlike “flexible” month-to-month plans, Google Terms for the deal, say you’ll be limited to the number of users you choose at the start of your year, and while you can add new users and pay more, you can’t remove them. While you are locked in to one year of service, billing is still month-to-month, and additional users will increase your bill in the future, so they are prorated. It is not allowed to cancel the deal 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 full year. Instead of a discount, Google is actually increasing the price of Workspace on a month-to-month basis, so locking yourself into an annual plan can save you money. It’s hard to imagine leaving email anytime soon, right?

Prices are up 20 percent overall for the three main “business” editions. The “Business Starter” edition, which offers 30GB of storage per user, will drop from $6 per user per month to $7.20. “Business Standard” bumps it up to 2TB per user and adds more Google Meet features like noise cancellation and meeting recordings. This used to cost $12 per user per month, but will now be $14.40. Business Plus, the 5TB plan, used to be $18 per month, but is now $21.60.

Obviously, Google would like everyone to commit to an annual plan instead of a monthly one. These new prices are now available on the Google Workspace Pricing Page, though it defaults to showing the cost for one month of the annual commitment price instead of the flex plan price you’d pay if you paid month-to-month. If you mouse over a tiny “i” icon, you’ll see that the flexible month-to-month price is now 20 percent higher.

It’s hard to pinpoint the exact moment when prices go up for existing users. Google says that “new pricing will roll out from April of this year through 2024, based on factors including number of user licenses, current contract terms, and payment plan. For example, subscription pricing existing Google Workspace with 10 or fewer user licenses it won’t change until January 2024.” So… sometimes for the next nine months, and maybe longer than that, I guess. Google says: “Customers will be notified via the Google Workspace Admin Console at least 30 days before price changes take effect and provided with more specific information to help them navigate these changes.”

It’s not hard to imagine why Google is raising prices. Google Cloud, of which the Workspace division is a part, is still unprofitable, and higher prices for its most popular product will help with that. Google Cloud employees, and Google Cloud employees only, were recently asked to share desks to consolidate real estate, so there they are tightening their belts. Assuming Google Workspace’s recently announced generative AI features reach the masses, running those features also represents a huge increase in server cost for Google, and someone has to pay for that, too.