How to Benchmark Microsoft EA Discounts at Renewal
Microsoft Enterprise Agreement (EA) renewals are high-stakes for any organization’s IT budget.
Ensuring you’re getting a competitive price is no longer straightforward. Microsoft’s once-transparent volume discounts have faded, and benchmarking EA renewal prices has become essential.
Instead of guessing whether your renewal quote is “good enough,” a how-to benchmark Microsoft EA discounts approach gives you hard data to challenge Microsoft’s pricing. This guide breaks down the steps to benchmark your Microsoft EA discount and negotiate a stronger deal.
For a complete overview, read our guide to Microsoft EA renewals.
Why Benchmarking Discounts Is a Must in Today’s EA Renewal Market
In the past, Microsoft’s “waterfall” volume discounts (Level A, B, C, D tiers) automatically lowered pricing as you bought more. Today, those Microsoft EA discount benchmarks are less obvious – Microsoft has flattened or eliminated many automatic discounts.
That means the price on your renewal quote might not reflect any built-in savings for your organization’s size. If you don’t benchmark, you could be renewing at rates far above what similar enterprises pay.
Renewals often represent your largest single Microsoft spend in a multi-year cycle.
A small percentage difference in discount can equate to millions in Microsoft EA renewal cost savings. Microsoft’s first offer is rarely its best; they count on many customers accepting quotes without question.
By benchmarking EA renewal prices, you arm yourself with facts to push back on an inflated or “off-market” quote. In short: don’t rely on Microsoft to tell you what a fair discount is – do the homework and find out for yourself.
Step 1 — Gather Comparative Discount Data
Start by collecting real-world comparison points for Microsoft EA discount benchmarks. Look for data on what discounts other organizations are getting.
There are a few ways to gather this information:
- Peer Discussions: Leverage your network. Talk to procurement peers in similar-sized companies or within your industry (perhaps through user groups or industry forums). While exact pricing is often confidential, many will share general discount levels or negotiating experiences.
- Consultants and Benchmarking Services: Consider engaging firms that specialize in software license benchmarking and consulting services. They aggregate anonymized data from many EA negotiations and can tell you typical discount ranges for a company of your size and region.
- Internal Benchmarks: If your own company has multiple EAs (for different divisions or regions) or has a history of past Microsoft deals, compare those. Your past discount serves as a baseline – if your new quote is worse without a clear reason, that’s a red flag.
Beware of averages: not all benchmarks are created equal. A 15% average discount doesn’t mean your deal should be 15% off – it might be more if you’re larger, or less if you’re smaller or buying different products.
Match like-for-like – seek data from organizations with similar seat counts, product mix, and deal timing. For instance, a 50,000-seat global bank’s discount will differ from a 2,500-seat local firm. The goal is to find relevant benchmarks that closely mirror your situation, allowing for an apples-to-apples comparison.
Learn about Microsoft EA AI Licensing at Renewal.
Step 2 — Analyze Discounts at the Product Level
Don’t stop at an overall percentage – dive into the details. A common mistake is to focus only on the “average” EA discount. Microsoft EAs bundle many products and services, and the discount can vary by line item.
Benchmark each major product or service in your EA:
- Break down your renewal quote by product segment (e.g., Microsoft 365 plans, Azure, Windows Server licenses, SQL Server, etc.).
- Compare the proposed unit prices or discounts on each category to what you learn from benchmarks. Perhaps Microsoft 365 E5 licenses are 10% off in your quote, but your peers receive 20% off – that’s important to note. Or Azure might have a different discount rate than Office.
- Identify which products make up the largest portion of your spend. These “big ticket” items are where an extra discount will yield the most savings – and also where Microsoft might have more flexibility (or hide higher margins).
It’s common for Microsoft to heavily discount certain new or strategic products while leaving modest discounts on others. For example, they might offer 30% off a new Azure service to encourage adoption, but only 5% off your core Office 365 renewals.
By analyzing the SKU or product level, you can spot such imbalances. Typical EA renewal discount rates aren’t uniform across products – you may find some components are off-market even if the overall deal looks decent.
Armed with this insight, you can target your negotiation at the specific products where you’re under-discounted.
Microsoft EA Renewal Decision Tree: Renew, Downsize, or Exit?
Step 3 — Understand Microsoft’s Discount Drivers & Pricing Trends
To effectively benchmark, you need to know why Microsoft might give one organization a better deal than another.
Several factors influence Microsoft’s discounting and pricing strategy:
- Volume and Commitment: Size still matters. Larger user counts or bigger spending commitments justify deeper discounts in Microsoft’s eyes. However, since volume-based tiers are no longer automatic, you must explicitly negotiate these. If your usage has grown significantly since your last EA, that growth is leverage for a bigger discount.
- Product Adoption Priorities: Microsoft often has strategic products they’re pushing – for instance, transitioning customers to Microsoft 365 E5, Azure cloud services, or new security add-ons. Discounts tend to be richer on products that align with Microsoft’s current sales priorities. Identify which parts of your stack Microsoft is keen to expand. You might leverage their eagerness (e.g., “We’ll consider deploying Teams Phone or Power BI enterprise-wide, but we need better pricing to justify it.”).
- Timing and Fiscal Year: Microsoft’s fiscal year-end is June 30, and many sales teams rush to meet targets in the final quarter (April-June) or at the end of quarters. If your EA renewal coincides with these periods, Microsoft may be more flexible to secure the deal. Conversely, if you’re renewing just after a big policy change or price increase, you need to be extra vigilant. (For example, if Microsoft has just eliminated a standard discount program or raised list prices, you should negotiate an offsetting discount so you don’t end up paying more.)
- Recent Pricing Changes: Stay abreast of Microsoft’s licensing news. In recent years, the company has moved to “standardize” pricing, which sometimes means removing legacy discounts or raising cloud subscription prices by region. Understanding these trends helps you ask the right questions. If an automatic discount was removed (say, a regional pricing level or volume tier), recognize that any discount you get now is entirely a negotiated concession – making your benchmarking data even more critical.
By understanding Microsoft’s pricing mechanics, you can put your quote in context. Ask yourself: Is Microsoft giving me a lower discount because I’m a smaller fish, or because I didn’t push back? Are they dangling a better price on Product A but overcharging on Product B? Use your knowledge of their drivers to spot where your deal might not align with market norms for an organization like yours.
Step 4 — Use Alternative Offers as Benchmarks
Another powerful benchmarking tactic is looking outside of Microsoft’s ecosystem.
Use competitive alternatives to create a benchmark and leverage in negotiations:
- Cloud Services: If part of your EA covers Azure cloud spend, obtain a comparison quote from AWS or Google Cloud for equivalent usage. A side-by-side pricing analysis vs. alternatives can be eye-opening. If Amazon or Google is offering better rates or incentives for a similar commitment, you can bet Microsoft has room to negotiate on Azure to keep your workload. Let your Microsoft rep know you have a “compelling offer from AWS” for certain projects – it signals that Microsoft must match the value or risk losing that business.
- Productivity and Collaboration: For Microsoft 365 (Office apps, email, Teams), consider the pricing of Google Workspace or other productivity suites. Even if you have no immediate plans to switch, mentioning that some teams “are evaluating Google Workspace for cost comparison” puts pressure on Microsoft. The same applies to communication tools: if you’re paying for Microsoft Teams Phone or conferencing, note that you’re also likely to consider Zoom, Cisco, or other providers. Microsoft doesn’t want to lose seats to competitors.
- On-Premises or CSP Models: If you’re not fully committed to Microsoft’s cloud subscriptions, consider alternatives such as staying on-premises longer or using a Cloud Solution Provider (CSP) reseller quote as a pricing reference. For instance, if a CSP can license certain Microsoft products at a lower price for a short term, you might use that as a benchmark to say, “Why is our EA per-user cost higher than what a CSP could offer?”
The key with competitive benchmarks is credibility. Don’t bluff unrealistically – Microsoft’s account team will recognize an empty threat.
Instead, identify plausible scenarios in which you’d diversify away from Microsoft. Perhaps it’s moving a portion of workloads to AWS or keeping a subset of users on a more affordable plan. Communicate those considerations to Microsoft: “We’re comparing this EA renewal against putting some services out to bid with other vendors.”
When Microsoft realizes your entire spend isn’t guaranteed for them, they are far more likely to sharpen their pencils. Using competitive benchmarks in EA renewal talks often yields an extra few points of discount as Microsoft fights to retain your business.
Step 5 — Craft Your Argument with Internal and External Data
With all your benchmarking research in hand, it’s time to formulate a clear argument to take to Microsoft. This step involves combining data with narrative – explaining to Microsoft why your requested discount is justified, supported by facts.
Here’s how to craft a compelling case:
- Lead with Benchmark Facts: Begin discussions by calmly laying out what you know: “Organizations of our size in the market are typically seeing about a 15–20% discount on enterprise plans. Our current quote is coming in significantly lower than that range.” Citing specific peer benchmarks (without naming the peer) can immediately signal that you’ve done your homework. For example, “We engaged an advisor who indicated a company with a similar 5,000-seat profile achieved roughly an 18% discount on Microsoft 365 E5 – we’re only at 10%. We need to close that gap.”
- Focus on Key Discrepancies: You don’t need to contest every line item – prioritize the largest shortfalls. If your analysis found that Azure pricing or Office 365 pricing is notably off, zero in on those. “Our biggest spend is Azure, and we’re seeing almost no discount there, whereas industry benchmarks for our size show at least 10% off Azure consumption. That’s a focal point for us to continue with Azure versus exploring other cloud options.”
- Integrate Your Usage and Plans: Use your internal data to reinforce your case. If your usage has grown, mention it: “We’ve increased our Microsoft footprint by 30% over the last term – that should warrant a better rate, not a worse one.” Conversely, if you have unused licenses (shelfware), subtly imply you might trim them: “Frankly, we’re evaluating our true license needs. If pricing isn’t aligned to the market, we will have to right-size our deployment to control costs.” This combination of external benchmark (“others pay less”) and internal reality (“we might cut back”) creates pressure from both sides.
- Be Concise and Fact-Based: Executives and Microsoft reps alike respond to a crisp business case. Prepare a summary document or talking points. For instance: Benchmark comparison – list your current discount vs. benchmark, Impact – what that difference costs over three years, and Ask – what you want (e.g., “increase our discount on Office 365 from 10% to 18% to meet market level”). By framing it as a business rationale rather than an emotional plea, you invite Microsoft to solve a problem with you (how to bridge the gap) instead of putting them on the defensive.
The tone of your argument should be professional and firm. You’re not accusing Microsoft of overcharging on purpose; you’re showing that, based on objective data, the quote doesn’t meet your expectations of a fair market deal.
This collaborative, yet data-driven stance often earns respect from the vendor and sets the stage for more productive negotiations.
Step 6 — Tactics to Push for a Correction When Your Quote Looks Off-Market
Even after presenting your case, Microsoft might come back with only modest improvements or claims that “this is the best we can do.” At this point, it’s time to employ some tactical negotiation moves to correct an off-market quote.
Here are several strategies:
- Call Out the Discrepancy Clearly: Sometimes a direct approach works best. For example, you can frankly say, “This quote is 5–7 points above market benchmarks — can you revisit it?” This signals to the rep that you know the quote isn’t competitive. Pair this with a willingness to continue discussions: “We want to make this work, but we need that pricing closer to what we’ve seen elsewhere.”
- Leverage Timing and Deadlines: Use Microsoft’s sales calendar to your advantage. If you’re in a part of the quarter or year where you know the rep wants to close the deal, don’t rush to accept. Let them know you’re prepared to wait or even pause the renewal if needed. For instance: “We are not prepared to finalize at these prices. If it takes going past our renewal date or exploring month-to-month extensions, we will do that rather than sign a bad deal.” Often, the prospect of a delayed or lost deal motivates the representative to seek additional discount approvals. (Caution: always have legal/operational alignment internally if you play hardball with timing, but know that Microsoft can accommodate extension quotes if pushed.)
- Offer to Adjust Scope: Another tactic is to strategically change the deal scope if pricing isn’t improved. “At this price level, we’ll need to remove Product X from the agreement to fit our budget,” or “We might reduce our license count for Y if we can’t achieve a more reasonable rate.” This creates a lose-lose for Microsoft: either they concede on price or they face a smaller sale. Frequently, they prefer to come back with a better discount rather than see the deal value shrink or components drop off.
- Escalate if Necessary (Tactfully): If your main point of contact indicates they have no flexibility, consider involving higher-level personnel – both within your company and at Microsoft. You might want to mention that your CIO or CFO is concerned about the pricing about benchmarks. Similarly, request that the Microsoft rep involve their sales manager or the Microsoft pricing desk to review your counteroffer. A respectful way to frame this: “Given the gap we’re seeing, I’d like to ensure we’re exploring all options. Can we have your pricing specialist take another look, or perhaps have a brief call with your regional manager to discuss our constraints?” This shows you mean business and know there are approval layers above the rep. Microsoft reps won’t take offense if you position it as trying to “find a solution together.” It can give them cover to go back internally and push for a better deal on your behalf.
- Stay Firm but Cooperative: Through all these tactics, maintain a tone of partnership. You’re not issuing ultimatums for the sake of it; you’re trying to find a mutually acceptable number. Reinforce that you value the Microsoft relationship and the products, but also that you have a responsibility to ensure the investment is cost-effective. When Microsoft sees that you are serious—that you will walk away from certain parts of the deal or delay signing if needed—they will usually come back with a concession or two.
Remember, EA discount strategies often hinge on confidence and information asymmetry. Microsoft has extensive data on what other customers pay, but they won’t disclose it.
By doing your benchmarking and pushing back, you even the playing field. Don’t be afraid to politely call out an “off-market” quote and ask for it to be fixed. The weeks leading up to your renewal are when you have maximum leverage – use it fully, before you lose the opportunity once the deal is signed.
Step 7 — Reinforce Through Sign-Off, Documentation, and Governance
After hard-fought negotiations and finally securing a better discount, don’t let the win be undone by paperwork or future complacency.
Reinforce the improved deal in writing and your organization’s processes:
- Get the Discount in Writing: Ensure the final agreed pricing is documented in the Microsoft Customer Price Sheet and the EA contract. If you negotiated a specific percentage off the list price for certain SKUs, check that the math in the quote reflects it. Don’t rely on verbal assurances. For example, if you increased the price of Microsoft 365 E5 from $X to $Y per user, that should be the listed price – or the discount % should be noted. This seems basic, but mistakes happen, and you don’t want to find out later that the paperwork doesn’t match the handshake.
- Include Terms for Future Purchases: If part of your negotiation was securing a discount level, see that it applies to any additional licenses you add during the EA term (often called “price protection”). Microsoft might agree that any new licenses you add will also receive the same discount. Without this, you could end up paying full price for growth or true-ups. Also be wary of any “declining discount” structures – sometimes a deal might offer a front-loaded discount in year one and reduce it in later years. Push for a consistent discount across all years, unless a step-down was something you knowingly accepted as a trade-off.
- Internal Sign-Off and Documentation: Internally, communicate the outcome and its baseline for the future. Let your finance, sourcing, and IT leadership know what discount you achieved and how it compares to benchmarks. For instance: “We negotiated a 20% discount on our Office 365 E3 licenses, which is in line with market benchmarks for our size. This will save us approximately $X over the term versus the initial quote.” This not only validates the effort, but it sets an expectation for the next renewal. Suppose everyone is aware that 20% off is attainable and fair. In that case, it will be much harder for a future quote to be accepted with, say, only 5% off – stakeholders will immediately question it.
- Integrate Benchmarks into Governance: Make benchmarking a standard part of your EA renewal playbook. Keep a record of the data points you gathered, the final negotiated terms, and any lessons learned from the process. Three years is a long time; team members change, memories fade. Having a documented file that says “Here’s how we benchmarked and won better pricing” is gold for whoever handles the next cycle. It ensures continuity in strategy. Some organizations even build an approval checklist for renewals that includes a section for “pricing benchmark validation” – meaning no EA deal gets approved unless someone confirms it’s at or better than market rates.
- Continuous Monitoring: Lastly, treat this as an ongoing discipline. The market shifts, Microsoft’s pricing evolves, and your usage will change. Periodically (say, annually or when Microsoft announces significant changes), take stock: Are there new benchmark insights we should gather? Are we still getting the value we negotiated? By staying proactive, you won’t be caught off-guard in the next renewal; you’ll already have a pulse on where your deal stands.
Securing a great discount is a significant win. By documenting it thoroughly and educating your leadership about what was achieved and why, you ensure those hard-fought gains are preserved. Procurement and IT can then present a united front in the future, armed with benchmark data and past success, to keep Microsoft pricing in check.
Read about our Microsoft EA Optimization Service.
