Google raises prices on its competitor to Microsoft Office for the first time in a decade

Key Points
  • Google is raising prices 20 percent for the basic and business versions of its G Suite productivity apps, like Gmail and Docs, for the first time ever.
  • The price increase comes only months after former Oracle executive Thomas Kurian takes the helm.
  • The price of the enterprise edition is not increasing.
Thomas Kurian, the incoming head of Google Cloud and formerly president of product development at Oracle, speaks at the Oracle OpenWorld conference in San Francisco on Sept. 24, 2013.
David Paul Morris | Bloomberg | Getty Images

Google is raising prices for the basic and business versions of its G Suite productivity apps, like Gmail and Docs, for the first time.

The 20 percent price increase comes soon after the appointment of Thomas Kurian, a former Oracle executive, as the head of Google's Cloud division. While the news that Kurian would replace former CEO Diane Greene was announced last November, he only formally took on the role this year.

The price bumps — from $5 to $6 per user / month for G Suite's Basic Edition plan and from $10 to $12 per user / month for its Business Edition tier — will take effect on April 2 and bring Google's product costs closer to those of rival suite Microsoft Office 365. (The features of the various pricing tiers from Google and Microsoft aren't directly comparable. The differences between Google's basic and business tiers involve storage space, among other features.) Pricing for Google's Enterprise Edition will remain the same and Google will continue to offer free accounts for non-business users.

In a blog post introducing the new pricing Google says that over the last ten years, G Suite has grown to provide more products.

"The one thing that hasn't changed over this time is price," the post says.

While Google doesn't break out its cloud market share or how much the business makes, it said in February 2018 that the cloud unit overall had passed $1 billion in revenue per quarter. Even with that disclosure, it's unclear how much revenue is coming from G Suite versus Google's Cloud Platform. Google's public cloud marketshare is widely seen as lagging behind both Amazon and Microsoft's.

In Alphabet's Q3 earnings, it reported $4.64 billion in its "other revenues" category, which includes its cloud business as well as app store revenue and hardware sales. It will next report earnings on February 4.

Google says that the price changes will not impact current contracts or renewals made before April 2.

Google Cloud CEO Greene being replaced by Oracle exec Thomas Kurian