Microsoft’s 2025 Volume Discount Elimination: How to Protect Your EA Budget Before November 1
The Announcement – Volume Discounts Eliminated November 1, 2025
Microsoft has announced that, effective November 1, 2025, it will eliminate volume-based discounts for all Online Services under Enterprise Agreements (EA) and similar volume licensing deals.
In plain English, the automatic price breaks that large customers used to receive (EA Levels B, C, and D) are being discontinued.
Every organization will pay the Level A (list) price for cloud services, regardless of size. This change means many EA customers face an overnight price increase on cloud subscriptions, roughly:
- Level B customers: ~+6% cost increase (previous 6% volume discount gone)
- Level C customers: ~+9% cost increase
- Level D customers: ~+12% cost increase
These percentage increases reflect the “waterfall” discounts that large enterprises currently enjoy. Come November, those discounts vanish.
The policy kicks in at your next EA renewal on or after Nov 1, 2025, or for any new cloud services you add to your agreement after that date. (On-premises software pricing and Education/Government price plans are not affected.)
For a comprehensive guide, read our overview of Microsoft Enterprise Agreement negotiations.
How EA Pricing Worked Until Now
Under the traditional Microsoft EA pricing structure, organizations were classified into Four Price levels (A, B, C, or D) based on the number of licenses or users purchased.
The higher your volume tier, the bigger the automatic discount off the list price. For example, a massive enterprise in Level D (the highest tier) would pay about 12% less per user for Microsoft 365 than a smaller Level A customer.
These volume-based “waterfall” discounts made scaling up a bit more affordable and were baked into EA contracts for decades.
Until now, EA customers could count on these progressive discounts: as you added more users or services, you crossed into higher levels and saw unit prices drop.
This structure has been a cornerstone of EA budgeting and a significant reason why large enterprises continue to stick with the EA program.
The end of Levels B–D discounts means that even the largest organizations will pay roughly the same per-license rate as smaller customers. It’s a fundamental shift in Microsoft’s licensing approach.
Read about Microsoft Audit Defense Tactics.
What This Means for Your Budget
Simply put, expect a budget shock if you’ve been benefiting from Level B, C, or D pricing. With a 6–12% price jump on key cloud services, CFOs and budget owners need to adjust forecasts now.
For many mid-sized and large enterprises, this could translate to hundreds of thousands (or even millions) of dollars in additional annual costs once your EA is renewed.
Consider the following scenario: a company with 5,000 Microsoft 365 E5 licenses under Level C pricing currently enjoys a discount of approximately 9%. If those licenses cost, say, $57 per user at list price, the company might have been paying around $52 with the volume discount.
After November 1, the discount is no longer available at renewal, and the price reverts to $57 per user. Over 5,000 users, that ~9% increase means roughly a six-figure uptick in yearly spending.
Multiply this across Azure consumption, Dynamics 365, and other services in your EA, and you see the issue: unplanned cost increases that weren’t in your multi-year IT budget.
Organizations that planned their 2025–2026 budgets assuming “business as usual” EA pricing must now recalculate their budgets.
The removal of automatic discounts shifts Microsoft licensing costs upward across the board. If your renewal is imminent (late 2025 or early 2026), the impact is immediate.
If your EA term runs further out, you have a bit more time; however, any new cloud services added will incur full price after November.
In either case, you should adjust your internal price sheets and forecasts to reflect Enterprise Agreement pricing changes ahead. No one wants to discover a budget shortfall at the time of true-up or renewal.
Read about Decoupling Unified Support from Your EA
Which Products Are Most Affected
Not all Microsoft products will be affected equally by this change in your budget.
Here’s where the Microsoft EA price increase 2025 will bite the hardest:
- Microsoft 365 (Office 365 suites): Large enterprises with thousands of E3/E5 seats will feel this immediately. These bundled subscriptions (E3, E5, Business suites) form the bulk of many EAs. Losing a 6–12% discount on every seat adds up fast, making Microsoft 365 EA pricing changes a top concern.
- Azure cloud services: If you consume Azure through an EA, your Azure spend will now align with standard pay-as-you-go rates. Microsoft already moved Azure to unified pricing, so new Azure EA enrollments often had no volume discount by design. In the future, any EA customers still on older Azure pricing will see that Microsoft Azure EA pricing impact – essentially paying the same rate as any other customer. Expect Microsoft to push Azure customers toward consumption-based commit discounts (like Azure Savings Plans or negotiated commitments) since the old volume-based EA savings are gone.
- Dynamics 365 (CRM/ERP): Enterprises running Dynamics 365 applications (Sales, Finance, etc.) under EA will now pay list price per seat. These are high-value, high-cost licenses, so a lost 9–12% discount can significantly increase CRM/ERP operating costs. Dynamics 365 EA price increase is a reality – plan for list rates on all your Dynamics modules at renewal.
- Power Platform, Windows 365, and others: Other Online Services, such as Power BI, Power Apps, Windows 365 Cloud PCs, security & compliance add-ons (EMS), and more, are also under the “online services” umbrella. If you’re using any of these under EA, assume their pricing jumps to Level A as well for heavy Power Platform usage licensed via EA or large deployments of Windows 365 cloud desktops, and factor in the loss of volume-based savings.
In short, any cloud service you buy through EA – Microsoft 365, Azure, Dynamics, Power Platform, you name it – will cost a bit more once the volume discount goes away. Enterprises with seat-heavy services (such as Office/M365) or high consumption (like Azure) will see the biggest dollar impact.
Why Microsoft Is Making the Change
Why would Microsoft upset customers with a price hike? The official line is that it’s about pricing simplification and consistency.
By eliminating complex tiered pricing, Microsoft moves to a single, transparent price for online services across all channels.
Here are the key drivers behind this move:
- Simplified, Transparent Pricing: Microsoft wants to streamline its licensing model. Having a single price for a cloud service, regardless of whether you purchase it via EA, Cloud Solution Provider, or web portal, simplifies comparisons. It’s pitched as removing complexity and improving clarity – no more digging through discount level tables.
- Alignment Across EA, CSP, and MCA: This change aligns the Enterprise Agreement pricing with other purchase channels, such as the Microsoft Customer Agreement for Enterprise (MCA-E) and the Cloud Solution Provider (CSP) program. Microsoft has been moving in this direction for years (e.g., introducing unified pricing in Azure in 2017, removing the Level A tier in 2018, etc.). Now, EA customers and CSP customers will effectively see the same list prices, leveling the field.
- Revenue and Investment Needs: Let’s be frank – removing discounts will boost Microsoft’s revenue per user. Microsoft is investing heavily in new technologies (think AI and Microsoft 365 Copilot, cloud infrastructure, etc.). Eliminating volume discounts is a way to increase revenue from its largest customers. Microsoft likely expects enterprises to pay near list price, or negotiate based on aggregate spend commitments, rather than automatically receiving a 10% discount. It’s a strategic move to protect and grow margins while funding new services.
From Microsoft’s perspective, large customers will now negotiate on value and long-term commitment, rather than relying on an automatic volume price cut.
This encourages deals focused on overall cloud consumption growth (for example, “commit to spend X million on Azure and we’ll give you a break”), which can drive more revenue.
It’s also meant to push customers and partners to focus on value-added services rather than on squeezing out an extra discount purely due to size.
What You Should Do Before November 1
Faced with the imminent Microsoft EA renewal 2025 cost increases, CIOs, CFOs, and procurement leaders should take proactive steps now to blunt the impact.
Think of the period before Nov 1, 2025, as your window to prepare and protect your budget. Here’s what to do:
- Update your price sheets and forecasts: Immediately revise your internal pricing documentation to reflect Microsoft licensing costs 2025 under the new rules. Calculate the post-November list price for all the cloud services in your EA. Identify which current discounts (6%, 9%, 12%) you will lose at renewal, and update budget projections for 2025–2026 accordingly. Communicate these changes to finance stakeholders so everyone is aware of the upcoming increase. (Tip: If there are Microsoft Online Services you plan to buy soon but haven’t yet, consider adding them to your EA before Oct 31, 2025. Services added to your EA’s customer price sheet before the deadline may retain the old pricing until renewal.)
- Consider early renewal or extension: If your EA is set to renew in late 2025 or early 2026, discuss with your Microsoft account team the option of renewing early (before November 1) or extending your current agreement. The goal is to lock in today’s pricing (including any volume discounts) for a few more years. Be aware that Microsoft may not always approve out-of-cycle renewals solely to avoid the price hike – it depends on your situation and leverage. However, it’s worth exploring. Even a short extension or renewal executed in October 2025 could buy you time under the older pricing model. Don’t assume this is automatic; initiate it soon if it makes sense for your organization.
- Evaluate CSP and MCA-E alternatives: With EA volume discounts gone, the value proposition of a traditional EA vs other licensing vehicles changes. It’s a good time to compare Microsoft CSP vs EA 2025 pricing and flexibility. In the CSP (Cloud Solution Provider) program, you buy through a partner who might offer custom discounts or added services – and you can scale licenses up/down more fluidly (monthly or annual terms instead of a three-year lock). Similarly, look at the Microsoft Customer Agreement for Enterprise (MCA-E), Microsoft’s newer direct purchasing agreement. MCA-E licensing strategy: It offers no fixed term (an evergreen agreement) and potentially more flexibility in how you purchase Azure and subscriptions, often in exchange for committing to certain spend levels. If EA no longer guarantees better pricing, some enterprises might save by moving specific workloads or new purchases to CSP or MCA, where you might negotiate incentives or at least avoid a lengthy EA commitment. Compare the pros and cons (e.g., EA gives 3-year price protection on licenses; CSP/MCA-E gives flexibility, but prices can adjust annually). The right mix might involve keeping an EA for some core products and shifting other parts of your portfolio to a different program to optimize cost.
- Trim “shelfware” and right-size now: An upcoming price increase is a perfect motivator to audit your license usage. Before your next renewal (or true-up), identify any unused or underutilized licenses – the so-called “shelfware”. If you have 500 E5 licenses allocated but only 450 really in use, reduce that count now. If certain departments are over-provisioned or users are on more expensive plans (e.g., E5 users who might only need E3), adjust those entitlements accordingly. By cleaning up your licensing inventory, you’ll avoid paying more for slack you don’t need when the new prices kick in. Essentially, right-size your subscriptions to ensure you’re only paying for value-adding seats and services. Every license you drop before renewal is direct savings, especially important when each remaining license will cost more.
- Prepare your EA negotiation strategy: Go into your Microsoft EA negotiation strategy for 2025 with eyes wide open. Microsoft’s playbook will be to present this change as non-negotiable (“everyone pays list now”), but that doesn’t mean you have no leverage. Counterplay: focus the negotiation on overall value and commitments. For example, if you’re expanding into new Microsoft products (Security, Power Platform, or the new AI offerings), use that as a bargaining chip for better pricing or credits elsewhere. Push for multi-year price caps or freeze on key products if possible, even if volume discounts are standardized. Inquire about alternative discounts: while the official volume tiers are gone, Microsoft might offer discounts for larger total spends or growth commitments (especially in Azure). Additionally, consider staging your renewal discussions early and involving executive sponsors if your contract value is substantial. Microsoft may make case-by-case concessions for strategic customers, but only if you request them. Lastly, arm yourself with competitive benchmarks and the knowledge that you could move portions of your spend to other licensing channels (or even competitors in some areas) to strengthen your position. In summary, plan and practice your negotiation approach internally, focusing on the areas where Microsoft might still be flexible (additional services, support, payment terms, etc.).
FAQ – Practical Next Steps
Should we renew early to avoid the increase?
If your EA renewal date falls shortly after November 1, 2025, it’s wise to explore early renewal. Locking in a renewal before Nov 1 means you retain the current discounted pricing for the new term (typically three years). However, Microsoft must agree to it – they sometimes resist early renewals done solely to sidestep price changes. Engage your Microsoft rep as soon as possible to discuss options. If an early renewal isn’t feasible, consider asking about a short-term extension of your existing EA. The bottom line: try to push any contract signing before the deadline to protect your budget from an immediate hike, but have a Plan B in place if Microsoft declines.
How do we update our internal price sheets and forecasts?
Start by identifying every Online Service in your EA and noting its current unit price and level. Remove the applied discount (6%, 9%, or 12%) to recalculate each service at the full Level A price. Update your internal pricing catalog, spreadsheets, or ITFM (IT Financial Management) tools with these new rates, effective in Q4 2025 and beyond. Then, adjust your multi-year budget forecasts by plugging in the higher rates for any period after your EA renewal. Work closely with your finance team to update the IT budget, and clearly label these as Microsoft EA price increase 2025 adjustments so stakeholders understand the change. It’s also prudent to set aside a contingency for Microsoft cloud spend, as other price hikes (for example, new product additions or annual adjustments) could compound the impact. In short, refresh your numbers now to avoid unpleasant surprises later.
Is CSP or MCA-E cheaper than EA?
Not necessarily cheaper per se – Microsoft’s list prices are generally the same across EA, CSP, and MCA-E now. The advantage of CSP (through a partner) or MCA-E (direct with Microsoft) is often in flexibility and possible incentives, not a lower official price tag. A CSP partner might offer you a small discount from the list price or bundle value-added services (such as deployment assistance or support) that effectively enhance the deal. CSP agreements also let you adjust licenses more freely (month-to-month or annually), so you’re not over-buying – that flexibility can save money if your needs fluctuate. MCA-E, on the other hand, is Microsoft’s newer contract model, which has no minimum seat requirements and a fixed 3-year term. It can be easier to manage if you want a more agile, cloud-first purchasing approach. Microsoft may offer custom pricing or credits in exchange for commitments under an MCA-E (for example, commit to a certain Azure spend). So, while the sticker price is the same, the total cost of ownership could be lower outside the EA if you leverage the flexibility or negotiate well. The decision comes down to your organization’s needs: if you value price lock and a unified agreement, a renewed EA still works; if you need agility or are a mid-sized enterprise no longer receiving a built-in discount, evaluating CSP or MCA-E is a smart move. Many organizations are now conducting a side-by-side comparison of Microsoft CSP vs. EA 2025 options to determine which yields better value over the next few years.
What negotiation tactics still work after November 1?
After Nov 1, Microsoft’s sales reps will have a standard line: “Volume discounts are off the table; it’s policy.” However, you can still negotiate – you just shift the conversation. Tactics that can work include: negotiating an overall discount based on commitment (e.g., “if we increase our Azure spend by 20%, can you give us a 5% break on M365 seats?”), asking for extra benefits (like bonus Azure credits, extended support, or free training/licensing workshops) to offset the cost, and seeking price protections (for example, cap increases at a certain rate annually, or lock pricing for additional years beyond the standard term). Leverage any upcoming projects or deployments that Microsoft would value as a win, for instance, adopting Microsoft 365 Copilot or moving more workloads to Azure, as bargaining chips. Also, don’t be afraid to get quotes from CSP partners for comparison; even if you stay on EA, showing that you have alternative channels can pressure Microsoft to be more flexible. In summary, while list prices may be fixed, creative deal-making remains very much alive. Focus on the total package, including term lengths, payment schedules, additional services, and any custom discounts tied to growth or strategic products.
How should we budget for Microsoft licensing costs from 2025 to 2028?
Given these changes, plan for higher baseline costs in your IT budget going forward. Specifically, for any Microsoft cloud product, assume you’ll be paying full list price plus any annual industry-wide increases. Build in an extra 10% (approximately) on top of current spending for the year following your EA renewal to cover the lost volume discount – for some products you know the exact uplift (6%, 9%, or 12%), but also consider Microsoft often implements periodic price rises for things like inflation or new feature value (for example, the announced price increases for certain Microsoft 365 plans or new AI add-ons). Therefore, a prudent approach is to budget conservatively: anticipate the one-time jump at renewal and then consider 3-5% year-over-year growth in costs afterward, unless you plan to reduce usage. Also, factor in any new product additions (if you plan to roll out Teams Phone, Power BI Premium, or Microsoft’s AI offerings, include those at full price). Essentially, your 2025–2028 budget should treat Microsoft cloud services as a growing expense line – mitigate it by trimming unused licenses and negotiating multi-year caps, but don’t count on the automatic savings of the past. Finally, keep a reserve or flexibility in your budget for Microsoft spend; with the rapid evolution of their product line (and licensing tweaks), having some cushion will help you adapt without crisis when something changes.
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