On October 1, Microsoft will revamp its Office 365 plans for small and medium businesses.

The good news is that the new plans are more flexible and slightly cheaper than the small business plans available today.

The bad news is that Microsoft cannot find its way out of the branding maze it has created and the new plans only increase the confusion.

Since we haven’t gone through this for a while, let’s start with the big picture, then find our way into the details.

Overview – Office 365 for business vs. Office 365 for individuals

Microsoft offers two completely different services under the name Office 365.

Office 365 for business – a large collection of services including hosted Exchange mail, online file storage (“OneDrive for Business”), SharePoint, and more. Office 365 for business also offers subscriptions to the Office programs (Word, Excel, Outlook, etc.), currently under the name “Office ProPlus.” There are a multitude of plans that slice and dice the various services into different packages – Small Business, Small Business Premium, Midsize Business, Exchange Online Plan 1, Enterprise E1, Enterprise E3, Enterprise E4, and more, oh so many more.

Business Office 365 services are accessed through an Office 365 account, also referred to as an organizational account.

Office 365 for individuals – subscriptions to the Office programs (Word, Excel, Outlook, etc.) are sold to home users under the names “Office 365 Personal” and “Office 365 Home.”

Consumer Office 365 subscriptions are accessed through a Microsoft account.

Office 365 accounts and Microsoft accounts are not linked and have no relationship to each other. This article explains the difference between an Office 365 account and a Microsoft account. Microsoft trapped itself when it created two different types of accounts. Almost no one understands that they have two separate accounts when a prompt comes up for something related to a Microsoft service and it is seldom obvious which one is called for. At some level it makes sense to have a place for businesses to administer their employee accounts, separate from the individual accounts we set up for ourselves, but it should have been easy to see that the result would be confusing for everyone.

Last year Microsoft began to use the Office 365 name inconsistently and created a branding nightmare. By using the Office 365 name for both consumer and business subscriptions and services, it has been rendered meaningless – but Microsoft still expects people to understand the significance of having two accounts, a Microsoft account and an Office 365 organizational account.

The confusion is compounded by the way Microsoft has handled the OneDrive name. OneDrive is a lovely service for individuals to store files online and share them, similar to Dropbox but with many more features. Microsoft has been steadily improving OneDrive to differentiate it from Droxbox by building OneDrive deeply into Windows and by integrating the service with its traditional stronghold, the Office programs.

The branding of the Microsoft service staggered when the company was forced to change its name earlier this year after giving up the name “Skydrive” in a British lawsuit, but OneDrive is a nice name and they could have survived that transition.

But Microsoft couldn’t resist bringing the name into the business services and created “OneDrive for Business,” which is shortened to “OneDrive” when you view it in the Office 365 business portal. Alas, it is built on completely different underpinnings than the consumer OneDrive service. Conceptually it has a different purpose. It has different features, a different look online, different apps on computers and mobile devices, different sharing options, and sadly it is nowhere near as reliable as the consumer service at syncing files. Yet there it is, with the same name and no clear explanation to help you understand the differences between the two services.

Changes to Office 365 small business plans

Last week Microsoft announced changes to Office 365 plans for small businesses. The new plans will first become available on October 1. Once again, names will be changed arbitrarily without any increase in clarity.

Office 365 Business – This is the new name for a subscription to the Office programs (Word, Excel, Outlook, etc.). It might replace the current name “Office ProPlus,” but it’s not easy to tell because Microsoft’s announcement never mentions the Office ProPlus name. The announcement also does not mention the Access database program, currently part of the Office ProPlus suite, as if it will be sold separately instead of being included with the subscription as it is now. The good news is that the Office programs will be $99/year per user, considerably cheaper than they are now for business users.

Office 365 Business Essentials is the new name of a plan currently sold as Office 365 Small Business. It includes the hosted services – Exchange, Sharepoint, etc. – for $60/year per user. The name will change but the price and services stay the same, more or less. (The new plan includes support for Yammer and Active Directory integration, neither of which are relevant for very small businesses.)

Office 365 Business Premium is the new name for a plan that combines the online services and the Office programs. It will cost $150/year per user, the same price as the almost identical Small Business Premium plan today.

Presumably there is a marketing team that believes these changes will alleviate confusion. That team is fooling itself but there is a superficial appeal. Here’s the shortened version of the Office 365 lineup – and trust me, Microsoft does not anywhere present the lineup this coherently. (Rest assured that there are a thousand details to make things more complex than this list suggests.)

•  Office 365 Personal: Microsoft account; subscription to Office programs (1 license)

•  Office 365 Home: Microsoft account; subscription to Office programs (5 licenses)

•  Office 365 Business: Office 365 account; subscription to Office programs

•  Office 365 Business Essentials: Office 365 account; hosted online services

•  Office 365 Business Premium: Office 365 account; hosted online services and subscription to Office programs

Want to make it even more confusing? The Microsoft announcement gently urges all existing Office 365 small business customers not to move to the new plans when they launch this October. The suggestion is that most customers “should simply continue using their current plans as they do today and move to the similar new plan at their first renewal after October 1, 2015.” (That’s 2015, not 2014.) It’s possible that an Office 365 subscriber could renew their Small Business Premium plan in September 2015 and not move to the replacement plan until September 2016. In other words, all of these names, old and new, will be floating around for more than two years.

There is one change in the new plans that will be important for some of my clients: the new Business Essentials and Business Premium plans cover up to 300 users, raising the cap from the current 25 users. Businesses approaching the 25-user cap will be able to move easily to a similar plan and keep growing instead of making a disruptive change to an enterprise plan.

Hard to follow? Don’t worry. It’s all good news. All you need to know is that prices are going down and features are being added for enterprise-quality services. Microsoft continues to struggle with overly complex licensing schemes and poor branding decisions, but that’s been true for decades. Office 365 should continue to be a core resource for most businesses.