Power BI and Tableau Licensing Deconstructed and Compared

Please note that the original version of this article presumed a free "read-only" license for Tableau Online actually existed. Further research indicates that no such license exists. Therefore, this article has been updated to reflect this.

UPDATE: For further analysis and comparison, refer to the latest article "Power BI and Tableau Licensing Deconstructed and Compared VOL. 2"

As the general BI community is aware of by now, Microsoft recently introduced Power BI Premium to the world. I covered this announcement in my last article and ever since the announcement, I have been helping customers understand the impact of this announcement in terms of pricing and features. As part of this research, I came across Matt Allington's excellent article "Power BI Licences Changes–The Good, The Bad and The Why" in which he essentially laments about Power BI licensing for mid-market customers. This made me stop and think, what we really need is a breakdown of the old and new licensing models for Power BI and when to use one or the other. Oh, and might as well throw in a comparison with Tableau while we're at it. Here we go.

The first thing that we need to agree on are similar assumptions to my article "Cloud vs. On-Premises – Hard Dollar Costs". Specifically, let's focus on hard dollar costs and let's compare apples-to-apples when comparing Power BI and Tableau. As such, we are only going to consider Tableau's subscription-based pricing model as that is what is most comparable with Power BI.

In deconstructing the licensing models, I came up with the following table, which I will explain.

This table might appear confusing at first, but Power BI and Tableau have significantly different licensing models, even only considering Tableau's subscription-based licensing so let me explain the thinking here.

First, Power BI really has two different licensing modes, the classic licensing with Power BI Pro and the new licensing with Power BI Premium. The last three lines deal with Power BI Premium pricing, which starts at $5,000/month for a Power BI P1 instance. With Power BI Premium, report view only users are free but content publishers still need a Power BI Pro license at $10/user/month.

In the classic licensing of Power BI, the Desktop client is always free. The only thing that costs money is the use of Pro features in the Power BI Service and that costs $10/user/month. However, under this model, once Pro features are used in a report, then ALL users, including those that just want to view reports, require a Pro license.

Now, Tableau is somewhat similar but has some nuances. Tableau also has a Desktop but you will pay $35/user/month for their personal edition and $70/user/month for their Pro edition. If you want to publish and share reports via Tableau Online, then this requires another $42/user/month. If users want to be able to view or edit those reports online, then they also require a license at $42/user/month.

OK, so let's look at a simple scenario under the classic licensing model of Power BI and compare it with Tableau. And specifically in this scenario, we are looking for the "break" point in pricing between Power BI and Tableau. So, if we start with the premise that an organization wishes to create a model, publish and share it and have it consumed by a certain number of read-only individuals, what does this look like?

Well, we will assume that we need to have a license for the Desktop and a license to be able to share reports created. In Tableau-land, this means we need a Desktop Pro license at $70/month and a Tableau Online license at $42/month. Through simple math, we know that is $112/month. With Power BI, the Desktop license is free and all we need is a Pro license at $10/month. Now we add 10 "reader" licenses at $42/user/month with Tableau and $10/user/month for Power BI. Guess what? Simple math tells us that there is no break point. Tableau is always going to be more expensive than Power BI:

The above scenario holds in Power BI classic up until you reach a total of about 550 total users. And we will assume that there is a ratio of 10/1 for readers versus authors. Bear in mind that at all times, Power BI pricing beats Tableau pricing hands down.

This is the break-even point with using Premium instead.

So, if your organization has more than 550 people in it, you almost certainly want to look at using Power BI Premium. Also, once you get into this approximate size of organization, Tableau's pricing becomes even less attractive, if that can be believed, since read-only licenses are free in Power BI Premium and, well, not quite so free in Tableau Online.

Circling back to Matt Allington's article, his complaint is the mid-sized customer. Matt isn't exactly clear on what he considers a mid-sized customer but perhaps we can presume that such a customer sits between the user thresholds identified above, let's say somewhere between 10-550 active users. Below that, companies would fall into Matt's "Small groups and companies" category and above that into his "Large companies" and "Very large companies" categories.

I'm not sure I have a response to that exactly except to say that there are plenty of free alternatives within the Microsoft business intelligence toolset. This would include using the free Power BI Desktop and simply putting the files on a file share or within SQL Server Reporting Services. Or using Power BI Desktop and a Free Power BI license and utilizing the free Publish to Web feature. And then there is always Excel, which has a lot of Power BI'ish functionality with PowerPivot.

Now, all of that being said, I do have some rampant speculation with regards to future licensing with Power BI. Unfortunately, I lost my crystal ball in my last office move, so I could be completely off-base here, but one of the things that I noticed around Power BI Premium is that it is dedicated capacity, versus the shared capacity of the general Power BI service. It would not surprise me if Microsoft introduced tiers in between these two classes of service. Think shared capacity that has fewer restrictions than the general Power BI Service but more restrictions than 100% dedicated capacity. It would seem to be that Microsoft could create one or more tiers of service using less restrictive shared capacity that would be optimized to create price points that would appeal to the mid-sized customer, effectively giving them all or most of the functionality of Premium. All of that being said, what's the real incentive to do this when you are already 20% of the cost or lower of your best perceived competition?

In the end, the new licensing model is a boon to large enterprises and, in my opinion, generally enhances Power BI's value proposition. Consider an organization with 5,000 active BI users. The costs to that organization under the old licensing model would be $50,000 (5,000 * $10) per month or $600,000 per year. Under the new licensing model with 2 P1 instances would be more along the lines of $15,000 (500 * $10 + 2 * $5,000) per month or $180,000 per year. That's a 60% cost savings using Power BI Premium versus classic Power BI licensing. And, that same organization would be paying $245,000 (500 * $70 + 350 * $42 + 4,500 * $42) per month or $2,940,000 per year for Tableau.

Now, I am certain that Tableau has some sort of enterprise licensing scheme, not that it is made public, but I find it difficult to believe that a company that essentially has one trick up its sleeve can compete with the low, low price point that Power BI Premium brings to the enterprise market. Just justification for my belief that Power BI Premium is the final nail in the coffin...