In response to criticisms over the high cost of VSTS for small organizations, Microsoft is changing its pricing and some of the packaging of Visual Studio Team System and the MSDN Subscriptions. Changes include a user limited version of Team Foundation Server to ship with any Team Edition and a lower costs for renewals of subscriptions.

The restricted version of Team Foundation Server will include a license for only five developers. It is unclear if you will need to upgrade to the full version to add individual licenses.

Pricing changes are:

• Universal subscribers that want all of the client functionality of Team System will be able to upgrade to Team Suite by paying just the incremental software assurance or renewal price for the duration of their agreement. In retail, this amounts to around $2300 and for most customers this represents a 75% or more discount on the full price of Team Suite. Volume customers will, of course, pay less. Renewals for volume license customers continue at the promotional price for as long as you are an active volume license subscriber.
  
• Universal subscribers who want Team Edition for Software Architects, Team Edition for Software Developers, or Team Edition for Software Testers will continue to be able to upgrade at no additional cost. Each of these “role Editions” includes the MSDN Premium Subscription which will come with the limited TFS.
  
• Universal subscribers who want the 2005 equivalent of MSDN Universal can simply choose Visual Studio 2005 Professional Edition with MSDN Premium Subscription. Universal subscribers who choose this option at renewal will get the functional equivalent of MSDN Universal for about 15% less than what they paid today. This version will not have any of the role based features nor will it include the limited TFS.

[Via Rick LaPlante's Blog]