Level A is the price that every Enterprise Agreement customer now pays for online services. Before 1 November 2025, Level A was the entry-tier reference price; volumes above 2,400 seats stepped down to Level B, C, or D. The B/C/D tiers were eliminated. The list price itself did not change. What changed is that the volume discount that used to apply on top of Level A is gone. Mid-market and large enterprises now pay the same per-unit price the smallest EA customers used to pay.
What Level A actually is
Level A is the published per-unit list price for Microsoft online services purchased through Enterprise Agreement. It applies to Microsoft 365, Office 365, Dynamics 365, Power Platform, and GitHub Enterprise. Before November 2025, Level A was the worst available EA price — the price a 250-seat customer paid, with discounts kicking in at 2,400 seats (Level B), 6,000 seats (Level C), and 15,000 seats (Level D). From 1 November 2025, Level A became the only available EA price. A 250-seat customer and a 60,000-seat customer pay the same per-unit amount.
The naming is now somewhat confusing because there are no other lettered tiers to compare it to — but Microsoft has kept the “Level A” nomenclature internally and on commercial documentation. For procurement teams reading new EA quotes in 2026, every line item is implicitly Level A; the letter is not always shown.
Why Microsoft restructured this way
Two strategic forces drove the change. First, Microsoft has been steadily reducing the channel preference EA used to enjoy. The company’s preferred direct channel for the mid-market has shifted to Microsoft Customer Agreement-Enterprise (MCA-E), a Microsoft-direct construct with flat pricing. EA volume tiers were inconsistent with MCA-E pricing, and the inconsistency made channel migration commercially unattractive. Eliminating the tiers makes the channel landscape simpler — from Microsoft’s perspective.
Second, Microsoft commercial leadership concluded that the tier mechanic was no longer serving its original purpose. The tiers had been designed in an era of perpetual licence sales where unit costs genuinely declined with volume. In a SaaS world, the marginal cost of an additional Microsoft 365 seat is effectively zero, and Microsoft saw the tier discount as legacy structure that left revenue on the table without strategic benefit. The collapse recovers that revenue.
From the buyer’s perspective the rationale matters less than the consequence. The consequence is that the automatic volume reward built into EA economics for the past fifteen years no longer exists.
What still has volume mechanics, and what does not
The tier collapse is narrower than the headline suggests. Three categories of EA spend are unaffected and still operate under prior mechanics:
- Azure consumption. Azure under EA already used a unified pricing model. There were no A/B/C/D tiers for Azure consumption. The tier collapse has no effect on Azure economics, and Azure remains the largest single source of negotiation leverage on a 2026 renewal.
- Perpetual software licences. Windows Server, SQL Server, and other perpetual licences purchased through EA still benefit from volume tier discounts. The change applied only to online services.
- Software Assurance. SA pricing on perpetual licences continues to operate as before, with volume discount mechanics intact.
For a typical large enterprise EA that splits roughly 60% online services / 25% Azure / 15% perpetual+SA, the tier collapse therefore affects approximately 60% of the contract value — not 100%. This proportion is important when modelling the impact: the cost wave looks dramatically different if you accidentally apply the structural increase to the wrong portion of the bill. Our guide on the scope distinction covers the modelling in detail.
What Level A pricing means for your renewal
The practical impact of universal Level A pricing depends on where you were before the change. Three cohorts experience it differently:
| Previous tier | Seat range | Effective impact on online services |
|---|---|---|
| Level A (already) | 250–2,399 | No direct price change. Loses future option to migrate to Level B as the organisation grows. |
| Level B | 2,400–5,999 | ~6–8% structural cost increase on affected line items at renewal. |
| Level C | 6,000–14,999 | ~10–12% structural cost increase on affected line items at renewal. |
| Level D | 15,000+ | ~13–15% structural cost increase, largest absolute dollar impact. |
Note that the percentages describe the impact on the affected portion of the bill — not the whole EA. A Level C customer whose EA is 60% online services / 25% Azure / 15% perpetual+SA experiences a roughly 6–7% increase on the total EA, not 10–12%.
Negotiation implications of universal Level A
The shift from tier-based to flat pricing changes the negotiation mechanics in three concrete ways. First, the volume threshold that used to be procurement’s leverage point — “we are about to cross into Level B/C/D, build that into the proposal” — no longer exists. The leverage that came from volume itself is gone. Microsoft account teams cannot offer it because it does not exist in their pricing system.
Second, the line-item discount — the negotiated discount on the Level A list price — is now the only commercial lever left for online services. Previously, the line-item discount and the volume tier worked together; the volume tier did the heavy lifting, and the line-item discount provided some incremental concession. Now the line-item discount has to do all the work. This means line-item discount negotiation matters substantially more than it used to, and procurement teams who treated it as a minor element of the renewal need to reweight their attention.
Third, the comparative position of Microsoft direct channels has shifted. MCA-Enterprise, which uses flat pricing comparable to Level A, is now a credible alternative for organisations that previously dismissed it because EA tier pricing was cheaper. The cross-over point between EA and MCA-E for online services has moved — see the EA-vs-MCA decision framework for the specifics.
What to do with this information
Three practical steps separate procurement teams who navigate the new Level A reality from teams who simply absorb it. First, recalculate your baseline. The reference price for your next renewal is not last year’s paid price minus a tier discount; it is last year’s paid price with the tier discount removed. Make sure internal stakeholders — particularly finance — understand that the baseline has moved before the renewal conversation starts.
Second, reweight your negotiation effort toward the levers that survived. The five recovery levers from the tier collapse pillar guide — term commitment with price-lock, Azure consumption co-commitment, Copilot attach commitment, competitive displacement, and fiscal year-end timing — collectively recover most of the lost tier benefit when worked systematically.
Third, document the change properly in your procurement file. Future renewals (2029 and beyond) will reference the 2026 renewal as the baseline. The cleaner the documentation of how the 2026 price was constructed — what was tier discount, what was line-item discount, what was term concession — the easier subsequent renewals will be.