Choosing an LSP: How Your Reseller Impacts the Deal

Choosing an LSP: How Your Reseller Impacts the Deal

Introduction – Why the Right LSP Choice Shapes Your Microsoft Deal

If you think choosing a Microsoft reseller is a minor detail, think again. Microsoft routes almost all Enterprise Agreement (EA) transactions through certified partners known as Licensing Solution Providers (LSPs).

In practice, your EA is always sold and managed by an LSP – companies like CDW and SHI in North America, or SoftwareOne and Crayon in Europe. Read our overview for how you should be negotiating with Microsoft Resellers (LSPs)

The specific LSP you select can directly influence your pricing, contract flexibility, and overall deal outcome. Picking the right reseller can mean significant cost savings, more favorable terms, and a smoother experience throughout your EA.

On the flip side, a misaligned LSP could lead to missed discounts, a lack of advocacy for your needs, and plenty of frustration down the road.

This guide is a practical roadmap for CIOs, procurement leads, and IT decision-makers. We’ll break down what an LSP does, how your reseller choice impacts an EA, the factors to weigh when selecting one, and pitfalls to avoid.

What Role Does an LSP Play in Enterprise Agreements?

An LSP is essentially the gatekeeper between you and Microsoft for an Enterprise Agreement.

You cannot sign an EA directly with Microsoft; an authorized LSP must facilitate the transaction. They handle the quoting, paperwork, and billing.

Keep in mind that your LSP is paid by Microsoft, not by you. Microsoft typically gives the LSP a commission or rebate on your EA, meaning the reseller’s income comes from Microsoft’s side of the deal.

This payment model can create a conflict of interest: the LSP might feel pressure to keep Microsoft happy (by selling more or pushing certain products) rather than focusing purely on what’s best for you.

A trustworthy LSP will work for your benefit despite this, but it’s wise to be aware of that dynamic.

LSPs also vary widely in service quality and support. Some are just order-takers that process your requests without much input.

Others act as true partners, advising on licensing options, helping negotiate terms, and advocating for your interests when dealing with Microsoft.

Ideally, you want the latter: a reseller who behaves like an extension of your team, not just a mouthpiece for Microsoft.

Factors to Consider When Selecting an LSP

When evaluating potential LSPs for your Microsoft EA, consider these key factors:

• Geographic coverage: If your organization operates in multiple regions, choose an LSP with a presence (or strong partner network) in those areas. They should handle local currencies, languages, and tax requirements so your global EA runs smoothly.
• Enterprise experience: Look at the LSP’s track record with companies of your size. An LSP experienced in large, complex EAs will know how to optimize big contracts and quickly escalate issues within Microsoft when needed.
• Licensing expertise: Do they simply fulfill orders, or do they proactively advise on the best licensing options for you? Favor partners who can guide you through Microsoft’s complex licensing rules and suggest ways to streamline or save.
• Cloud and hybrid support: If you’re transitioning to cloud services (Azure, Microsoft 365, etc.), ensure the LSP has cloud knowledge. They should be comfortable supporting hybrid scenarios and guiding your move to the cloud, rather than only knowing traditional on-premise licensing.
• Responsiveness and flexibility: How quickly and flexibly does the LSP respond to your needs? A good partner will adapt to your procurement processes, turn around quotes or answers promptly, and adjust to changes in your license needs without fuss. You should feel like a priority to them, not an afterthought.

How LSP Incentives Can Influence Your EA

It’s worth peeking behind the scenes at how LSPs make money, because their incentives can shape the advice they give you.

Microsoft rewards LSPs for driving certain outcomes, such as higher sales volumes, moving customers to cloud subscriptions, and selling premium license bundles. For example, many LSPs earn bonuses or rebates for:

• Azure growth: Getting customers to commit to or consume more Azure services.
• Upselling premium licenses: Encouraging upgrades (e.g., from Microsoft 365 E3 to E5, or adding new products like a security suite or Copilot AI).
• Larger/longer commitments: Signing bigger deals or multi-year terms that align with Microsoft’s targets.

Because of these incentives, a reseller might push you toward options that benefit their scorecard. You might hear suggestions to “go all-in” on an expensive bundle or to commit to more licenses than you initially planned.

That advice isn’t necessarily wrong if those additions truly fit your strategy – but you should double-check that any upsell is in your interest, not just the LSP’s.

Maintain a buyer-first mindset. It’s fair to ask your LSP, “Are there incentives behind this recommendation?”

A reliable partner will be transparent about why they suggest a certain product or tier. Ultimately, make your decisions based on your organization’s needs and strategy, not simply on a reseller’s sales pitch.

Comparison Table – Evaluating LSP Options

Not all LSPs are created equal.

Here’s a comparison of how a strong LSP versus a weak LSP tends to perform on key factors during an EA negotiation:

Aim to choose a partner that ticks most of the “strong LSP” boxes above.

Checklist – Selecting the Best LSP

Before you finalize your reseller choice, run through this quick checklist:

• Define your needs up front: Outline your user counts, product needs, and goals internally before talking to LSPs. This way, you set the scope, rather than letting a reseller define what you “need.”
• Get multiple proposals: Engage at least two LSPs and request quotes. Compare not only pricing but also what services and support each one includes.
• Probe their expertise: Favor LSPs that volunteer helpful insights or cost-saving suggestions during your discussions. If a partner is proactively advising you (not just taking orders), that’s a good sign.
• Discuss flexibility: Ask how the LSP handles changes like adding or removing licenses during the EA term. The ideal partner makes annual true-ups (and any allowed true-downs) simple and fair, instead of penalizing adjustments.
• Ensure support fit: Make sure the LSP’s support model aligns with your organization. A global company will need an LSP with international reach, while a smaller firm might prioritize a local, dedicated account team.

Pitfalls to Avoid When Choosing an LSP

Even savvy buyers can stumble into these common traps when selecting a Microsoft reseller:

• Letting the reseller drive your requirements: Don’t let an LSP tell you what you need without verification. If you simply accept their recommended license quantities or products, you might over-buy. Always validate the scope against your own analysis (or get a second opinion) to ensure it truly fits your business.
• Falling for “special discount” claims: Be wary if a reseller claims they have a unique relationship that guarantees better pricing. Microsoft’s EA discounts depend on your deal’s size and terms, not on which partner you use – no vendor has secret pricing beyond that. Such promises are just sales talk.
• Choosing solely by price: The cheapest quote up front might cost you later. An LSP offering rock-bottom pricing may skimp on support or expertise. Remember, this is a long-term partnership, so it can be worth paying a bit more for a provider that supports you.

Its essential for any end customer to understand the dynamics between LSP and Microsoft, LSP Margins and Incentives for Microsoft Licensing.

FAQ – Choosing the Right LSP

Q1: Do all LSPs offer the same pricing?
In theory, Microsoft’s enterprise pricing and discount tiers are standardized, so your EA should cost about the same no matter who transacts it. In practice, you might see slight differences. One LSP might waive certain fees or give up a bit of their margin to win your business. The core license prices come from Microsoft, but those little extras (or added services) can make one proposal more attractive than another.

Q2: What questions should I ask a potential reseller?
Put together a list of questions that test the LSP’s transparency and capabilities, such as:

• How does Microsoft compensate you for my business, and will you disclose any incentives or rebates related to our deal?
• What value-added services do you include with an EA (for example, license optimization workshops, usage reports, or dedicated support resources)?
• Can you provide references from similar customers you’ve worked with, or examples of how you helped another client save on licensing?
• How do you handle changes during the EA term – if our needs decrease or we move users to the cloud, what flexibility do we have?

Q3: Can I switch LSPs mid-term in my EA?
Typically, customers stick with their chosen LSP for the full 3-year EA term and then consider alternatives at renewal. However, you’re not absolutely locked in. Microsoft does allow a mid-term change of the LSP on an active EA with ~90 days’ notice. It requires coordination and some paperwork to transfer your agreement, so weigh the hassle versus the benefit. Often, issues can be worked out by talking with your current LSP or Microsoft rep – a switch mid-stream is only worth it if the partnership is truly broken.

Q4: How much influence does my LSP have on Microsoft’s discounts?
Microsoft sets base discount levels mostly according to your deal’s size and scope, so no reseller can bend those rules. However, a proactive LSP will still advocate to maximize any additional discounts or concessions. They might leverage time-sensitive promotions or bundle certain products to strengthen the case for a better deal. In short, a good LSP makes sure you’re not leaving any potential savings on the table – but if Microsoft has a hard limit, even the best partner can’t exceed it.

Q5: Should I engage more than one LSP before deciding?
Yes. It’s wise to get proposals from multiple LSPs rather than relying on just one. Even without starting a bidding war, speaking to two or three providers gives you different perspectives. For example, one LSP might suggest creative cost-saving approaches or include superior support services, while another might come in with a lower price. By comparing them, you can see which deal offers the best value for your organization.

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