Cloud Solution Provider (CSP): When to Choose CSP over EA
In 2025, the Microsoft CSP program has matured into a mainstream alternative to the traditional Enterprise Agreement (EA).
CIOs, CFOs, and IT procurement leaders are increasingly comparing CSP vs EA as they plan their Microsoft licensing strategy.
The decision comes down to flexibility versus commitment, partner value-add, and overall cost-effectiveness.
For a full overview of negotiations, read our Ultimate Guide to Microsoft Contract Negotiations.
This executive guide explains how the Cloud Solution Provider model works, how it differs from an EA. It provides a framework for selecting the optimal approach —whether CSP, EA, or a hybrid of both —for your organization.
It will highlight the mechanics of CSP, the leverage you can gain through partner relationships, differences in Azure spending commitments, and the impact of Microsoft’s New Commerce Experience (NCE) on subscription terms.
Ultimately, you’ll learn when CSP is the smarter choice, when an EA still makes sense, and how a hybrid strategy can sometimes deliver the best of both worlds.
CSP Mechanics
What is CSP?
The Cloud Solution Provider program is a Microsoft licensing model in which organizations purchase cloud subscriptions (and some licenses) through a certified partner, rather than directly via Microsoft’s volume licensing.
In essence, CSP turns Microsoft licensing into a subscription service managed by a third-party provider. Unlike an EA, which is a direct three-year agreement with Microsoft, a CSP arrangement is partner-driven and highly flexible in structure.
Under CSP, there are no minimum user or spending requirements.
This means companies of any size, from startups to large enterprises, can enroll. You pay for licenses on a subscription basis, typically on a monthly or annual basis, rather than locking into a prepaid multi-year contract.
Billing is handled by the partner, who aggregates your Microsoft services and often provides a single consolidated invoice each billing period.
This subscription billing model aligns costs with actual usage over time, making it an attractive feature for organizations with variable headcounts or shifting cloud consumption patterns.
Microsoft’s New Commerce Experience (NCE) has standardized CSP subscription terms as of 2022. Customers can choose between one-month, one-year, or three-year subscription commitments for most cloud services.
Monthly term subscriptions offer maximum flexibility (allowing you to increase or decrease licenses month-to-month) while annual or 3-year terms lock in pricing for those durations.
The key difference from an EA is that you aren’t tied into a company-wide, three-year contract covering all your Microsoft products. Instead, CSP is more à la carte; you add, remove, or adjust specific subscriptions as needed, on your schedule.
In short, CSP turns your Microsoft licensing into an on-demand service, much like other cloud offerings.
However, flexibility comes with trade-offs. Under NCE rules, if you opt for an annual term to get a better price, you cannot reduce that license count until the year is up. (You can always add more licenses, but reductions or cancellations must wait for the term renewal date, except within the first few days of a new order.)
Monthly term subscriptions allow reduction, but typically cost about 20% more for that privilege. In other words, CSP gives you the option of flexibility, but you’ll need to choose whether to pay a premium for month-to-month freedom or commit for longer periods at lower rates.
This granularity is something an EA doesn’t provide; an EA locks you in for a full three years on a set bundle of licenses, with only an annual chance to true-up increases.
Beyond subscriptions, it’s important to note that CSP primarily covers Microsoft cloud services (like Microsoft 365, Dynamics 365, Power Platform, and Azure).
It also can include some on-premises software licenses (Microsoft has made certain perpetual licenses available via CSP for purchase), but not every product that exists in an EA is available in CSP. Generally, though, any mainstream cloud product can be procured through CSP, making it a viable option for cloud-first organizations.
For companies still heavily invested in on-premises software or those requiring specialized Microsoft offerings, an EA or other volume license may be necessary for specific components. In most cases, however, CSP can effectively address the core needs of a modern Microsoft environment.
Read about Microsoft Pricing, Discounts, and Concessions Strategy.
Partner Leverage in CSP Deals
One of the biggest strategic advantages of the CSP model is the partner ecosystem.
In a CSP deal, your primary relationship for licensing is with a Microsoft partner (reseller or solution provider) who handles your quotes, provisioning, and support.
This creates an environment of partner leverage that simply doesn’t exist in a traditional EA.
With an EA, you generally work with a single Licensing Solution Provider (LSP) or Microsoft account team. Pricing discounts in an EA are largely determined by Microsoft’s volume discount levels and whatever special terms you negotiate directly with Microsoft.
There’s limited competition – once you choose an LSP to transact the EA, the pricing is mostly standardized by Microsoft’s program rules.
In contrast, with CSP, you have thousands of partners worldwide who can sell Microsoft subscriptions to you. This means you can shop around, or even use multiple CSPs for different needs, to get the best value-added deal.
CSP partners differentiate themselves by the services and incentives they offer. Since Microsoft sets the core software prices, a partner might entice customers with extra support, migration services, training, or even slight discounts (from the margin Microsoft pays them) to win your business.
For example, one CSP partner might bundle in 24/7 helpdesk support for no extra fee, while another offers specialized consulting on Azure cost optimization.
This competition allows savvy procurement teams to leverage partners against each other – effectively creating a bidding situation for your Microsoft spend, something you can’t easily do with an EA renewal (where Microsoft ultimately controls the pricing).
Additionally, working with a CSP partner can simplify your life by providing a single point of contact and integrated managed services.
Many CIOs appreciate having a dedicated partner manage their licenses, monitor usage, and provide proactive advice. The partner can serve as an extension of your IT team, optimizing licensing on an ongoing basis to ensure optimal performance.
Under an EA, you typically have to manage true-ups and compliance yourself (or pay additional for Microsoft support or a third-party advisor). A good CSP partner will actively help you right-size licenses monthly, potentially avoiding unnecessary costs.
This value-added relationship is especially beneficial for mid-market organizations that may not have large in-house licensing teams.
From a negotiation standpoint, the CSP model gives you commercial leverage.
If you’re unhappy with the service or pricing from one CSP reseller, you can switch to another at the end of your subscription term relatively easily.
This puts pressure on partners to keep you satisfied. Microsoft’s CSP program even allows customers to transfer subscriptions between providers.
By contrast, if you have an EA and become unhappy with Microsoft or the LSP, your only leverage is to threaten not to renew in three years – a big stick, but not one you can wield mid-term. The competitive dynamic in CSP deals often leads to enhanced customer service and, in some cases, more favorable pricing.
In summary, CSP lets you treat Microsoft licensing more like a marketplace.
You can harness partner competition and expertise to drive savings and better support. Enterprises that want more hands-on assistance or to break free from the one-size-fits-all EA pricing will find the partner leverage of CSP very attractive.
Read more about Microsoft Unified Support Renewals.
Azure Commit Flexibility
A critical area of comparison in Microsoft CSP vs EA is how each handles Azure cloud consumption. Microsoft Azure is a significant (and growing) part of many enterprises’ IT spend, and the contracting model for Azure under CSP is fundamentally different from an EA.
Under a traditional Enterprise Agreement, Azure is typically purchased through an upfront commitment. In an EA, you agree to a certain monetary commitment for Azure over the year (or three-year term). For instance, you might commit to spend $1M on Azure in a year – Microsoft invoices you for that amount, and you draw down against it as you use Azure services.
If you consume more than your commitment, you will pay an overage fee at year-end or quarter-end; if you consume less, you will still be charged for the full commitment (use it or lose it).
The benefit of this model is budget predictability and potentially discounts: Microsoft often offers better unit pricing or credits as an incentive for a large commitment. However, it puts the onus on you to accurately forecast usage, and it carries the risk of over-committing (paying for capacity you didn’t end up using).
In the CSP program, Azure is offered as a pure pay-as-you-go model. There is no requirement to commit to a specific spend upfront. You simply deploy Azure resources and pay the monthly bill for the resources you use, similar to how one would consume Azure directly via credit card or a Microsoft web agreement.
This consumption-based approach provides maximum flexibility – if you ramp down a project, your costs go down immediately, and you’re never stuck paying for unused Azure credit.
For organizations with unpredictable or fluctuating cloud workloads, this model can result in significant cost savings and reduced waste. It’s also a simpler conversation for CFOs: you’re aligning costs directly with actual usage, which is the essence of the cloud’s value proposition.
Another aspect is Azure’s commitment flexibility in negotiations. If you’re a larger enterprise with significant Azure spend, you might wonder if CSP can offer any discounts similar to an EA. While the standard CSP Azure rates are essentially Microsoft’s retail pricing, a motivated CSP partner does have some room to provide competitive pricing.
Microsoft provides partners with incentives and wholesale rates for Azure, and a partner may pass some of these savings on to you (for example, offering a percentage discount on Azure consumption or bundling consulting hours). They can also help you optimize Azure costs continuously.
In an EA, you get a negotiated discount at signing, but it’s generally fixed until renewal – and you might be paying for unused capacity. In CSP, you might not get “volume discounts” in the same formal way, but you avoid committing to unused spend, which is itself a form of savings.
Some customers use CSP to pilot or test Azure projects without a commitment, then move stable, long-term workloads into an EA if that yields better pricing. However, increasingly, even sizable Azure consumers are opting for the freedom of a CSP’s approach over the constraints of an EA commitment.
It’s also worth noting that Microsoft has been evolving its contracting for Azure. In recent years, Microsoft introduced the Microsoft Customer Agreement (MCA) for direct enterprise Azure purchases, moving away from EA commitments for many mid-sized customers.
The CSP program’s Azure plan is aligned with this trend of greater flexibility. In fact, in 2025, Microsoft began steering some customers who only use cloud services (such as Azure and Microsoft 365) away from EAs and onto CSP or MCA agreements.
The message is clear: if you want cloud on your terms, Microsoft is happy to let partners manage it through CSP. For you, the customer, the advantage is not having to predict the unpredictable.
You pay for Azure as you need it, and you’re free to dial usage up or down without contract penalties – a compelling proposition for any cloud-driven organization.
Monthly vs Annual Terms under NCE
Microsoft’s New Commerce Experience (NCE) has standardized how subscriptions are sold under CSP, and understanding these terms is crucial for making an informed decision between CSP and EA.
NCE introduced the concept of term-based subscriptions for Microsoft’s cloud products, which affects flexibility and cost:
- Monthly Term: You can opt for a month-to-month subscription for licenses (e.g., 100 Microsoft 365 E3 seats on a monthly term). This allows you to reduce or cancel at the end of any month, providing ultimate flexibility if your headcount or needs drop. The trade-off is cost: monthly-term licenses come at a premium (roughly 20% higher price) compared to locking in longer terms. Microsoft added this premium specifically to incentivize longer commitments. For organizations with seasonal staff or highly uncertain needs, the monthly term is a valuable option despite the higher rate.
- Annual Term: This is a 12-month commitment for a given number of licenses. You typically pay annually or monthly for those licenses, but crucially, after the first 7-day cancellation window, you cannot decrease the quantity until the 12 months are up. The benefit here is a lower unit price (avoid the 20% monthly premium) and price protection for that term – you’re shielded from any price increases Microsoft might implement during the year. Most stable or growing organizations will opt for annual terms on core user licenses to get better pricing. Compared to an EA, the annual term in CSP is similar to how an EA works every year: you commit to X seats for the year. However, one difference is billing frequency – CSP allows you to choose between being billed monthly for those annual licenses (which helps with cash flow) or paying upfront. Starting in 2025, Microsoft introduced a small (~5%) surcharge for choosing monthly billing on annual terms, essentially a financing fee. Even with that, many customers appreciate the ability to spread payments out, a flexibility not offered in a standard EA (EA payments are typically annual upfront for each year’s worth of licenses).
- Multi-Year (36-month) Term: NCE also allows certain subscriptions (like longer-term Azure reservations or specific Microsoft 365 SKUs) to be locked in for three years. This provides the maximum price protection (no increases over three years for those licenses) and sometimes even a slight discount for the commitment. It mimics an EA’s length. The downside is the rigidity – you’re fully committed, just like with an EA. Few organizations use 3-year CSP terms except when they are very certain about a static need (or if Microsoft runs a promotion, making it very attractive). Generally, if you’re ready to commit for 3 years, an EA might be considered as well, but some companies choose a 3-year CSP term on a specific workload to avoid the EA entirely.
The key point about NCE is that CSP now gives you a spectrum of term choices. In the past, CSP was extremely flexible (you could cancel at any time without penalty). NCE removed some of that unlimited flexibility in exchange for giving the program more structure (and making it more financially comparable to an EA for Microsoft).
Now, CSP customers must actively choose: pay a bit more for month-to-month agility, or commit longer for savings. In contrast, an EA imposes a one-size-fits-all commitment (all licenses for 3 years, with the option to add more licenses annually).
You can think of CSP under NCE as flexibility on demand – you decide where you need it. For example, you might put your core 500 users on annual terms (with a low price and no mid-year drop) but keep 50 contingency licenses on monthly terms that you can drop if not needed.
This kind of fine-tuning is not possible in an EA, which is a blunt instrument by comparison.
From a cost perspective, CSP’s term flexibility can prevent overspending.
Companies often over-buy in an EA “just in case” because reductions aren’t allowed mid-term; CSP lets you strategically use monthly subscriptions for those “just in case” extras and only pay when needed.
On the other hand, if you know certain licenses will be required for a full year or more, you lock them in via CSP annual term and likely pay the same or even less than an equivalent EA license (since CSP and EA pricing are usually comparable at list price).
The NCE model provides you with tools to continuously optimize your Microsoft licensing costs, rather than making a one-time big bet every three years.
When to Choose CSP over EA
Every organization’s situation is unique, but we can draw some general guidelines for when CSP is the smarter choice versus an EA. Below is a decision framework from a licensing strategist’s perspective:
CSP as the Smarter Choice:
Choose the CSP program when flexibility and simplicity are top priorities for your organization, or when you fall below Microsoft’s traditional enterprise size thresholds. Suppose you are a mid-market company (for example, hundreds of users rather than many thousands) or a fast-growing (or fluctuating) business.
In that case, CSP will usually align better with your needs. It allows you to scale up or down without waiting years to adjust contracts. Organizations that are “cloud-first” or entirely in the cloud often prefer CSP because you avoid the rigid commitments of an EA and pay only for actual consumption.
Cost optimization is a big driver here – CSP can reduce waste by letting you drop licenses you don’t need and avoid over-committing on Azure. Additionally, if you value close partner support or have limited internal licensing expertise, CSP is a viable option.
Your partner will handle a lot of the management and provide services that you’d otherwise have to source or staff yourself. In short, if you need agility, personalized service, and the ability to continuously optimize costs, CSP is likely the better choice.
When an EA Still Makes Sense:
Despite CSP’s advantages, there are scenarios where a traditional Enterprise Agreement is still the right tool. Large enterprises with fairly stable requirements (often thousands of users, e.g., 5,000+ seats) may find that the volume discounts of an EA outweigh the flexibility benefits of CSP.
Microsoft rewards big commitments – if you can commit to that scale for three years, you might negotiate pricing in an EA that is meaningfully lower than CSP’s standard rates. Additionally, if you have a complex mix of needs, including on-premises software, specialty products, or legacy systems, an EA can simplify everything under one umbrella.
Some products or advanced use rights are only available with Software Assurance under an EA. For example, certain server licenses, VDA rights for virtual desktops, or long-term upgrade rights might necessitate an EA.
Moreover, organizations that require fixed annual budgeting love the EA’s price protection: you negotiate once and then your per-user or per-core costs are locked for the term, shielding you from price hikes. If your company doesn’t expect to downsize and values predictable costs over nimbleness, the EA provides that certainty.
Also, suppose you already have an EA and are satisfied with the discounts and service. In that case, there may be no compelling reason to switch – especially if Microsoft is giving you incentives to renew.
Finally, consider that Microsoft often provides enterprise-only perks (like some training vouchers, Premier/Unified Support discounts, or strategic planning services) to EA customers; if those are important to you, weigh them in the decision.
Using a Hybrid Strategy:
Increasingly, savvy customers adopt a hybrid approach – leveraging the best of both CSP and EA. This might involve maintaining an EA for core stable licenses (to obtain high-volume discounts on, for example, Office 365 for 10,000 employees), but utilizing CSP for specific needs, such as Azure or smaller subsidiaries.
For instance, a large enterprise could retain its EA for Microsoft 365 and Windows licenses, but purchase Azure through a CSP to avoid an upfront cloud commitment and take advantage of partner cost-management services.
Or vice versa: sign an EA for Azure if you’re confident in a huge 3-year cloud usage, but fulfill your Microsoft 365 licenses via CSP to allow easier adding/dropping of users as your workforce changes.
A hybrid model can also be temporal – you might let your EA expire and transition to CSP for a year or two to see how it goes, keeping the option open to return to an EA later if needed.
Microsoft’s contractual landscape in 2025 is more accommodating of switching: they have even introduced the Microsoft Customer Agreement, which some view as “EA lite.”
In any case, you can use CSP as a negotiation lever. Even if you ultimately renew your EA, obtaining comparative quotes from CSP partners and demonstrating to Microsoft that CSP is on the table can prompt Microsoft to reconsider its EA pricing.
As a negotiation expert, I often advise clients to evaluate CSP at EA renewal time – sometimes the mere possibility of switching from EA to CSP yields better terms from Microsoft.
Bottom line: If your organization values flexibility, rapid scaling, and ongoing cost efficiency, CSP is likely the right choice. If you highly value deep discounts in a steady-state environment and have the scale to attain those discounts, an EA might still win on cost.
And for many, a combination will provide the optimum balance – use an EA where it makes sense, and supplement or segment with CSP where it adds agility and savings.
The good news is that Microsoft’s ecosystem now supports all these approaches, so you can tailor your licensing strategy instead of feeling forced into a one-size-fits-all deal.
FAQ – CSP vs EA in Practice
1. Is the Microsoft CSP program only for small companies?
No. While CSP is ideal for mid-market and smaller organizations due to its no-minimum, flexible model, large enterprises can also use CSP. Many Fortune 500 firms use CSP for certain workloads or subsidiaries. There is no size limit – the difference is that very large enterprises might have more negotiating power in an EA. However, if a large company prefers flexibility or has cloud-centric needs, CSP can still be a viable option. Microsoft is increasingly allowing and sometimes encouraging larger customers to adopt CSP, especially for cloud services.
2. Which is more cost-effective, CSP or EA?
It depends on your situation. CSP can be more cost-effective if you tend to scale down usage or want to avoid paying for unused licenses – you only pay for what you use. It also lets you competition-shop among partners for better deals or added services. On the other hand, EA can be cheaper per unit if you’re able to commit to a high volume (thousands of seats or large Azure spend) and negotiate a strong discount with Microsoft. There’s a breakeven point: below a certain size or commitment, an EA provides little to no discount, making CSP the obvious choice. Above that point, an EA’s volume pricing might yield savings. It’s wise to compare the cost of a CSP quote with your EA renewal quote to see which one nets out better over the term.
3. Can we mix and match CSP and EA at the same time?
Yes, many organizations use a hybrid licensing strategy. You might keep an EA for a portion of your licenses and use CSP for others. Microsoft allows this – for example, you could have Office 365 users covered under an EA, but purchase additional Power Platform licenses or Azure services through a CSP partner. Some companies also run out their existing EA until it ends and gradually migrate certain parts to CSP during or after the term. The key is to manage them separately and ensure compliance in each program. One thing to watch: you typically shouldn’t double-pay for the same license in both EA and CSP, so plan which licenses are procured under which agreement. A hybrid approach can provide the stability of an EA in areas where it is needed and the agility of CSP where it adds value.
4. What about Software Assurance benefits and support – do we lose anything by going CSP?
Almost all traditional Software Assurance (SA) benefits that matter in a cloud-first world are included with the subscription licenses in CSP. For instance, rights to new software versions, use of online services, server upgrade rights with subscription editions – these are baked into the subscription model. There are a few legacy perks (like long-term downgrade rights or home use programs) that differ, but for most companies these aren’t critical in 2025. Regarding support, an EA by itself doesn’t include Microsoft Premier/Unified Support – that’s a separate contract you must buy. In CSP, support is provided by your partner at no additional licensing cost. A good CSP partner will handle most day-to-day support issues and escalate them to Microsoft as needed. Many customers find partner support more responsive and tailored than Microsoft’s standard support. However, if you require direct Premier Support from Microsoft, you can still purchase that separately, whether you’re on CSP or EA. In short, you’re not losing major benefits by leaving EA; you’re mostly changing who manages your services (a partner instead of Microsoft) and how you pay for them.
5. How do we transition from an EA to CSP, and what’s the best timing?
The optimal time to consider switching is at your EA renewal or expiration. That way, you can let the EA end without penalty and seamlessly start your subscriptions under CSP for the next day. Preparation should start a few months in advance: engage one or more CSP partners, have them analyze your current usage, and provide equivalent CSP quotes. Suppose your EA has a non-coterminous mix of products (some expiring earlier). In that case, you might even move certain workloads to CSP as those come up for renewal (for example, move Azure to CSP when your annual Azure commitment is complete, even if the EA for other parts continues). Technically, moving to CSP is straightforward – it often involves simply reassigning licenses in the Microsoft admin portal from EA to the new CSP subscriptions (with partner assistance). Microsoft and partners can perform tenant-to-tenant migrations or transitions of cloud subscriptions with minimal disruption. Be sure to plan the cutover to avoid double billing. Additionally, use the end of your EA as a negotiation moment: obtain a CSP proposal and an EA renewal offer, and compare them. Even if you intend to switch, having the EA offer as a benchmark helps ensure the CSP pricing is competitive. With proper planning and a good partner, transitioning to CSP can be smooth and can begin immediately after your EA ends, ensuring you remain fully licensed without overlap or lapse.
Read about our Microsoft Negotiation Services.
