Microsoft Customer Agreement vs Enterprise Agreement

Microsoft Customer Agreement vs Enterprise Agreement: Which Is Right for Your Organization?

Why This Comparison Matters

Microsoft has been steadily shifting customers from the long-standing Enterprise Agreement (EA) to the newer Microsoft Customer Agreement (MCA).

This push is framed as part of a cloud-centric modernization, but it comes with significant trade-offs. CIOs, CFOs, procurement executives, and IT licensing managers need to carefully evaluate these two licensing models before making a switch.

The choice between an EA and an MCA has major budget, flexibility, and compliance implications for your organization:

• Budget Impact: Licensing commitments can run into millions of dollars. The wrong choice could result in overspending on unused licenses or missing out on volume discounts.
• Compliance and Risk: Each model handles license compliance differently. A misstep can lead to either audit penalties or paying for more than you need.
• Strategic Control: Your ability to negotiate with Microsoft and plan long-term is directly tied to the contract model. Switching to the “latest” agreement without due diligence might weaken your leverage.

In short, Microsoft’s sales narrative around the MCA emphasizes flexibility and simplicity, but a skeptical lens is needed. Read our complete guide to Microsoft MCA.

Understanding the real differences between the MCA and EA will empower you to choose the model that best aligns with your organization’s size, consumption patterns, and long-term IT strategy.

What Is the Microsoft Customer Agreement (MCA)?

The Microsoft Customer Agreement (MCA) is Microsoft’s modern, cloud-first licensing contract. It’s designed to simplify purchasing and offer more flexibility than traditional volume licenses.

Key characteristics of the MCA include:

• Evergreen Structure: The MCA has no fixed end date. It’s an open-ended agreement that remains in effect until terminated. You don’t renegotiate every 3 years as with an EA; instead, you accept a digital agreement that automatically updates with any new services you add. This evergreen nature is meant to streamline the purchasing process.
• Pay-As-You-Go Model: Under an MCA, you typically pay for services and subscriptions as you consume them. There’s no big upfront commitment. For example, suppose you add 100 Microsoft 365 user licenses. In that case, you’ll be billed monthly (or annually, if you choose that billing cycle) for those 100 licenses, and you can usually increase or decrease that count as needed at the next billing period. Similarly, Azure usage is billed per month based on actual consumption. This model was initially targeted at small and mid-sized businesses due to its affordability, and has since expanded to larger enterprises seeking agility.
• Cloud-Centric Offerings: The MCA was introduced in the cloud era and initially focused on cloud services. Through an MCA, organizations can procure Azure services, Microsoft 365 (Office 365) subscriptions, Dynamics 365, Power Platform, and other cloud products. Microsoft has been expanding the MCA’s scope; as of 2025, it increasingly covers most Microsoft offerings, potentially even some on-premises licenses via cloud solution providers (though those typically come without Software Assurance).
• Streamlined Signing and Billing: Accepting an MCA is usually a quick digital process — often just a few clicks online, no lengthy paperwork. Billing is consolidated and simplified, with a single invoice covering all your Microsoft cloud usage (across Azure, M365, etc.) under the MCA. You can often set up billing profiles, receive one combined bill, and pay by credit card or invoice monthly.
• Target Audience and Use Cases: The MCA is popular among SMBs and mid-market companies that may not meet EA minimums or that value flexibility. However, Microsoft is also positioning it for larger enterprises that prefer an agile, consumption-based approach. It’s ideal for organizations with fluctuating or unpredictable needs—for example, a company with seasonal staff or project-based cloud workloads that ramp up and down. In such cases, the MCA’s month-to-month flexibility means you’re not locked into paying for capacity you don’t use year-round.

In essence, the MCA embodies Microsoft’s cloud-era mantra of “simplify and be flexible.” It strips out many of the complexities of older agreements in exchange for a transactional, on-demand approach. However, as we’ll see, this simplicity can come at the cost of negotiation leverage and pricing predictability.

For information on how MCA works, read Microsoft Customer Agreement Explained: Structure, Benefits, and Key Considerations.

What Is the Microsoft Enterprise Agreement (EA)?

The Enterprise Agreement (EA) is Microsoft’s traditional flagship licensing program for large organizations. It has been around for decades as the go-to option for enterprises to license Microsoft software and cloud services on a large scale.

Core features of the EA include:

• Three-Year Fixed Term: An EA is a three-year contractual commitment (with an option to extend or renew at the end of the term). When you sign an EA, you’re locking in to use Microsoft products under that agreement for a full term. This long duration offers stability — you know your pricing and terms for three years — but it also means you’re committed even if your needs change in year two or three.
• Volume-Based, Predictable Spend: The EA is built on the idea of standardizing and pre-committing. Typically, an enterprise enrolls all its “qualified” users or devices for certain products (like Windows, Office, or Microsoft 365) and, in return, gets volume pricing discounts. Microsoft uses tiered pricing levels (often referred to as Level A, B, C, and D pricing), where larger license quantities yield greater discounts. With an EA, you often negotiate pricing upfront and then pay annually for the agreed quantities. For cloud services like Azure, many EAs involve an upfront monetary commitment (e.g., committing to spend a certain amount on Azure over a three-year period). This results in highly predictable budgets — you have a known annual cost (aside from any additional growth you may incur).
• Enterprise-Wide Coverage: True to its name, an Enterprise Agreement often requires you to cover the entire organization (enterprise-wide) for core products. For example, if you include Microsoft 365 E3 in your EA, you typically need to purchase a license for each qualified user in your organization. This all-inclusive coverage ensures standardized software across the company. It simplifies license management, but it can also mean you’re paying for some users who use less or could do without it.
• Structured Administration and True-Ups: The EA is supported by a structured program governance framework. You typically manage your licenses through Microsoft’s Volume Licensing Service Center (VLSC) or a similar portal, and you have an annual “true-up” process. True-up is essentially a yearly reconciliation: if you have added more users, devices, or consumed more software than initially contracted, you report those additions and pay for them retroactively at the agreed EA prices. This ensures compliance (you’re trueing-up any under-licensing) and locks those increases into your new baseline. The EA’s structure thus enforces a regular check-in on license usage.
• Long History and Perks: The EA has a long history and has been refined over the years. Historically, EAs have bundled Software Assurance (SA) with perpetual licenses, which provide benefits such as version upgrades, training vouchers, and support resources. Many large enterprises also get dedicated Microsoft account management and support attention due to their EA status. While some of those SA benefits have been reduced over time, an EA is still generally the only way to get certain perks (like perpetual license upgrades or complex transition rights for on-prem software).
• Target Audience: The Enterprise Agreement is designed for large, established enterprises. Microsoft traditionally sets a minimum requirement (e.g., around 500 seats/users, although this threshold has varied or been lower for public sector/academic deals at times). It’s most cost-effective for organizations with thousands of employees or devices that plan to use Microsoft’s products extensively. In such environments, the EA’s bulk discounts and predictable pricing over multiple years make it a favored option.

In summary, the EA offers predictability, negotiated discounts, and a structured relationship with Microsoft. It is the classic choice for organizations that prefer to lock in pricing and terms and are willing to make big upfront commitments in exchange for better pricing and support.

However, its rigidity and all-or-nothing nature can be a drawback for those who require more flexibility or have rapidly changing needs.

How to save money – Microsoft Customer Agreement Cost Optimization Strategies.

MCA vs EA – Key Differences at a Glance

Both the MCA and EA serve the same ultimate purpose — allowing organizations to consume Microsoft products — but they do so with very different philosophies.

Below is a quick comparison of key differences between the Microsoft Customer Agreement and the Enterprise Agreement:

As the table shows, the MCA emphasizes flexibility and simplicity, whereas the EA emphasizes predictability and negotiated control.

Neither is “better” in absolute terms — it depends on your organization’s needs and how you weigh agility versus commitment.

Cost Implications of MCA vs EA

Cost is often the deciding factor when evaluating MCA vs EA.

Each model manages costs very differently:

• EA – Predictable but Upfront: With an Enterprise Agreement, you get predictable budgeting for the term. Your costs are largely locked in — you’ll pay a known amount each year for the next three years (aside from any growth you add). This can be a boon for CFOs who want stability and no surprises. Additionally, thanks to volume discounts, the per-unit cost under an EA can be significantly lower than pay-as-you-go pricing if you have a large volume of licenses. However, the trade-off is the upfront commitment. You often must commit to a substantial quantity of licenses or a monetary spend from day one. If your organization downsizes or doesn’t end up using all those licenses, you’re still paying for them. In other words, you risk overpaying for unused capacity. Another cost consideration: EA customers often have to purchase Software Assurance and maintain it for the term, which is an added cost (albeit with benefits in return).
• MCA – Flexible but Potentially Variable Cost: The Microsoft Customer Agreement offers pay-as-you-go flexibility, which can prevent unnecessary costs. For example, if you only need 300 licenses this month instead of 500, you can scale down, and your next bill will be lower. This elasticity means you’re less likely to be stuck with shelfware (unneeded licenses). It’s also easier to start using a service under an MCA without a large upfront expense, which can be good for cash flow. However, the downside is variability and potentially higher rates. Without an EA’s locked pricing, your costs may fluctuate month to month as usage changes. Budgeting can become more challenging, as there’s no fixed annual bill — a spike in Azure usage or adding users mid-year will immediately appear as a higher invoice. Moreover, MCA pricing is generally at Microsoft’s list price (web direct price) for services, which is typically higher than what an EA customer might negotiate. Unless you negotiate a special deal or commit to a certain spend to receive a discount, you may end up paying more per unit on an MCA. Additionally, any price increases Microsoft makes to cloud services could hit you immediately under MCA, whereas EA customers often have price protection for the term.

Which model provides better cost control? It really depends on your organization’s size and usage stability:

• For large, stable enterprises with predictable needs, an EA often yields better cost control, characterized by lower unit prices and guaranteed spending over the years. You can lock in pricing before any Microsoft price hikes, and you can leverage your volume to get discounts that an MCA wouldn’t automatically provide.
• For smaller or rapidly changing organizations, the MCA can provide better cost control by preventing the payment of unused licenses. If you’re unsure about your growth or have volatile usage, not being tied to a fixed commit can save money. MCA also allows you to closely align spending with actual consumption, which can be efficient if managed effectively.
• It’s worth noting that without strong governance, the MCA’s flexibility can turn into overspending. Many organizations have found that pay-as-you-go cloud consumption can lead to unexpectedly high bills if not carefully monitored (e.g., developers spinning up expensive Azure resources and forgetting to shut them off). In contrast, an EA’s fixed commitment might enforce some internal discipline simply because you know what you’re paying regardless.

In summary, the EA focuses on cost predictability and potential savings through bulk buying, whereas the MCA emphasizes cost agility and paying only for what is needed. Each controls costs differently.

The best choice hinges on whether your bigger worry is “Will we use everything we’re paying for?” (favoring MCA) or “Will costs spike unexpectedly?” (favoring EA).

Flexibility and Scalability Considerations

One of the most significant differences between MCA and EA lies in their flexibility and scalability.

This is often the make-or-break factor for organizations evaluating a move to the MCA.

• MCA – Maximum Flexibility: The MCA shines in environments where change is constant. Because it allows month-to-month adjustments, you can scale your Microsoft services up or down with relative ease. If you hire a new team of 50 contractors for a project, you can add 50 Microsoft 365 subscriptions for as long as the project runs, then remove them when it’s done. Suppose an application in Azure needs to scale out to handle a surge in workload. In that case, you can ramp up resources on demand — and you’re not bound by a predetermined monetary commitment (beyond any optional Azure budget you set). Organizations with seasonal fluctuations, project-based usage, or high growth uncertainty will appreciate this elasticity. The MCA model essentially lets you treat Microsoft like a utility: dial usage up and down as needed. Flexibility isn’t only about scaling down; it’s also about trying new things easily. Under an MCA, if your development team wants to experiment with a new Azure service or spin up a test environment, they can do so without needing a contract amendment or waiting for a true-up. This can accelerate innovation since procurement isn’t a bottleneck.
• EA – Stability Over Agility: The Enterprise Agreement, by design, is less flexible in the short term. You commit to certain products and quantities for three years, which implies you’ve locked in your usage assumptions. Suppose you suddenly need to reduce your licenses by 20% due to a reorganization. In that case, the EA won’t let you decrease that commitment until the next renewal (you generally have to maintain at least the initially agreed-upon quantity through the term). Likewise, if you want to introduce a new product mid-term (for example, adding Dynamics 365 licenses that were not in your original EA), it can be done. Still, it likely means amending the agreement or enrolling separately — more paperwork and possibly a lower discount, since it’s done after the initial negotiation. That said, the EA does allow some flexibility within its structure: you can always add more licenses or consume more Azure than you committed (Microsoft will happily charge you for overages at the same discounted rate in your agreement). The catch is that you true-up those additions annually, which is essentially a delayed billing. But you cannot easily scale down mid-term if you have over-provisioned. For very stable, steadily growing organizations, this is fine — they rarely need to reduce licenses and can plan for growth in advance. In fact, some companies prefer the discipline of an EA: it forces them to plan their IT needs on a multi-year timeline and reduces the day-to-day micromanagement of license counts.
• Hybrid Approaches: Some large enterprises are exploring a hybrid licensing strategy to strike a balance between flexibility and stability. For example, an organization might keep an EA for its “core” predictable needs (say, 5,000 Microsoft 365 E5 licenses for full-time staff and a chunk of Azure for baseline workloads) to benefit from volume discounts and locked pricing. At the same time, they might use an MCA (perhaps through a Cloud Solution Provider partner) for overflow or niche needs — like an extra 500 temporary workers, a new pilot project on Azure, or a subsidiary that operates semi-autonomously. This approach can provide agility at the margins while retaining the cost advantages for the core. It introduces some complexity (managing two agreement types), but it can serve as a transitional strategy for enterprises not yet ready to abandon the EA entirely.

In short, the MCA is ideal for organizations that value agility, rapid scaling, or have uncertain forecasts. In contrast, the EA is suited for organizations with steady-state or only slowly evolving needs.

Think of the MCA as a pay-per-use cell phone plan, versus the EA as an all-you-can-eat long-term contract — one gives you the freedom to change month to month, while the other provides predictable service for a fixed period. The best choice depends on the level of dynamism in your requirements.

Compliance and Governance

Managing license compliance and governance differs significantly between the EA and MCA models. Each comes with its own risks and responsibilities:

• EA – Structured Compliance via True-Ups: The Enterprise Agreement’s built-in processes actually enforce a level of discipline. Each year, you are required to perform a true-up, which means taking inventory of any additional usage beyond your initial purchase. For example, if you initially licensed 1,000 users for Office 365 but by year-end had 1,100 users, the EA requires you to report the extra 100 users and pay for them retroactively. This ensures that any under-licensing gets corrected on a regular schedule. In essence, the true-up acts as an annual compliance checkpoint. It doesn’t mean you can’t be out of compliance (you might be out of compliance during the year until you true-up), but it limits the duration of non-compliance to at most a year. Additionally, because EAs usually cover all qualified users for certain products, there’s less chance of accidental under-licensing in core areas — you’ve intentionally blanket-covered the organization (which might conversely mean intentional over-licensing for some light users, but that’s a planned decision). Microsoft and its partners also provide tools, such as the Microsoft License Statement (MLS), for EA customers, which offer a comprehensive view of all licenses purchased. All these factors mean that governance under an EA is highly structured: you have dedicated licensing specialists (either in-house or at your LSP) keeping tabs on things, and Microsoft has well-established audit rights on EA customers if needed.
• MCA – Self-Managed Compliance: With an MCA, the customer bears a significantly greater responsibility for managing their usage. There is no formal true-up process, as you reconcile your usage annually; instead, you pay in real-time for what you use. On the surface, that sounds like compliance is automatically covered — after all, if you spun up a service or assigned a license, you get billed for it, so how could you be out of compliance? In the cloud subscription world, that largely holds (you generally can’t consume more cloud service than you pay for, because Microsoft won’t provision above your paid quantity for seat-based services). However, there are still compliance considerations:
  • If you’re acquiring any on-premises software through the MCA (via partners), it may not include Software Assurance or certain usage rights. You need to track those use rights carefully. For instance, using a Windows Server license purchased without SA might restrict you from upgrading to a new version or using certain cloud benefits. Ensuring compliance with such limitations is your responsibility.
  • License sprawl and governance: Because it’s easy to start new subscriptions under an MCA, companies might find different departments or teams spinning up trials, subscriptions, or Azure resources independently. Without the framework of an EA, you could end up with fragmented purchases and even duplicate subscriptions if IT governance isn’t tight. It’s critical to have internal controls (via an IT asset management team or a cloud governance policy) to monitor what’s being purchased and to make sure, for example, that when an employee leaves and their cloud services are no longer needed, those subscriptions are canceled. Otherwise, you might over-license (pay for things not in use) simply due to oversight.
  • Audits: Microsoft retains the right to audit customers under any agreement, including MCA. Under an EA, an audit might reveal unlicensed use if a customer is not properly tracking usage between true-ups (though true-ups usually mitigate this issue). Under an MCA, although less likely for cloud services, an audit could potentially uncover issues such as the use of a service outside the scope of your agreement or the misuse of a product in violation of the terms. The difference is, in an MCA world, you may not have a dedicated licensing specialist guiding you, so preparation for compliance has to be more proactive on your side.
• Risks of Over- or Under-Licensing: In an EA, over-licensing (buying more than you need) can happen because of the all-in coverage requirement — you might pay for 100% of employees to have a product when only 90% actively use it, simply because the EA mandated full coverage for standardization. This kind of over-licensing is by design and can be considered waste if not managed (though some argue the standardization has its own value). Under-licensing in an EA scenario typically occurs when software is deployed outside of the EA without proper authorization or when licensed counts are exceeded without timely reporting (which is a serious compliance issue). The structured true-up is intended to identify and regularize these issues (at a cost). In an MCA, over-licensing waste can occur if you are not monitoring usage — e.g., leaving resources running in Azure that aren’t needed, or keeping subscriptions active for users who don’t use them. Since there’s no true-up, the money continues to flow out monthly until you take action. Under-licensing in the traditional sense is less of a concept with pure cloud subscriptions (since you can’t really use a SaaS seat you didn’t acquire). But one could argue that if you’re not careful with your configurations, you might violate terms (for instance, allowing access to a service by more users than you have licenses for by sharing credentials, which would be a compliance breach). So, governance in MCA is about ongoing vigilance: ensuring that each month, you’re only paying for what you actually need and use, and that no one is inadvertently using services outside of policy.

In summary, the EA provides a formal framework for compliance with Microsoft’s oversight through the true-up and audit processes, which can be reassuring but also requires adhering to a regimented schedule.

The MCA gives you freedom but also responsibility — you need strong internal license management practices to avoid waste or risk, as Microsoft won’t be holding your hand with true-up forms.

Enterprises moving to an MCA should invest in good IT asset management and cloud cost management tools to govern usage in the absence of the EA’s safety nets.

Negotiation Leverage Under MCA vs EA

When it comes to negotiating with Microsoft, the Enterprise Agreement vs the Customer Agreement presents very different playing fields.

Your leverage to obtain discounts or special terms can shift significantly depending on the model:

• Negotiation in an EA – Leverage Through Size and Renewal: Enterprise Agreements are traditionally where enterprises flex their bargaining power. Because an EA represents a large, multi-year commitment (often a big chunk of Microsoft’s business from that customer), Microsoft’s sales teams are highly motivated to win or renew those deals. This gives customers leverage to negotiate discounts and concessions. Typical negotiation wins in an EA might include:
  • Discounted Pricing: Based on your volume and strategic value, you might secure pricing well below the standard list price. Large EAs can see double-digit percentage discounts on certain products.Incentive Funds or Credits: Microsoft might provide funding for deployment projects, training, or promotional Azure credits as part of the deal.Customized Terms: Enterprises frequently negotiate amendments to the standard EA terms — e.g., special flexibility on transitioning to newer products, extended support for older products, or clauses addressing unique regulatory needs. If a customer has a specific concern (such as data residency, liability caps, or merger & acquisition scenarios), the EA negotiation is the time to address those concerns.Executive Attention: The renewal event (every 3 years) often escalates to high levels; Microsoft knows a big EA customer could potentially walk away or reduce commitment at renewal. As a result, customers sometimes use competitive pressure (e.g., evaluating Google Workspace or AWS, or saying they might drop certain Microsoft products) to extract a better deal at renewal. The looming deadline of an expiring contract concentrates minds on both sides.
  In short, the EA offers a structured negotiation event. Even mid-term, if your company plans a big expansion (like adding thousands of new licenses), you can negotiate that as an “additional purchase” for maybe a better price or some perks, because it’s all within the EA framework.
• Negotiation in an MCA – A Different Dynamic: The Microsoft Customer Agreement is designed to be a streamlined, click-through agreement, with pricing often set at published rates. There’s no explicit renewal cycle, so one might wonder: how do we get Microsoft to give us a deal under an MCA? It is more challenging, but not impossible:
  • Less Automatic Discounting: Under an MCA, you generally start at the baseline price. Microsoft does not automatically apply volume discounts as your usage grows (unlike an EA, which has built-in volume price levels). However, if your consumption becomes very large, you can gain some informal leverage. For example, a company spending millions per year on Azure via MCA will have a Microsoft account rep assigned (even if no EA) who doesn’t want to see that spend migrate to Amazon or Google. At that point, you can open conversations about getting better rates or credits.
  • Azure Consumption Commitments: One way to negotiate under an MCA is to offer a commitment in exchange for discounts, almost emulating an EA. Microsoft offers programs for large customers, where you may commit to spending $X on Azure in a year (even under an MCA) and, in return, receive a percentage discount or some complimentary services. These are often case-by-case and require engaging Microsoft’s sales team rather than just the self-service portal.
  • Product Bundling & Timing: Enterprises can create “negotiation events” for an MCA by strategically timing big purchases or expansions. For instance, if you plan to roll out Microsoft 365 to a new division of 5,000 users under your MCA, don’t just add them quietly over the course of one month. Engage Microsoft or your partner beforehand – let them know you’re considering this expansion (or considering alternatives). Because there’s no contract renewal to prompt a discussion, you have to initiate it. You might say, “We’re looking to deploy Power Platform to 1,000 new users, but the cost is a concern. What can Microsoft do to help make this viable for us under our MCA?” Microsoft may come back with a promotional offer or a discounted quote for that specific ad.
  • Partner Leverage: If you purchase through a Cloud Solution Provider (CSP) under the MCA framework, the CSP partner may offer better pricing or additional services. For example, a large CSP might give you a slightly lower rate on Azure consumption than Microsoft’s MSRP, because they have margin to play with. They might also bundle in free support hours, migration services, or licensing advisory at no extra cost — effectively giving you more value for the same spend. Using a partner introduces another party who can negotiate on your behalf.
  • No Renewal Deadline = No Pressure: One downside of the MCA from a negotiation standpoint is the lack of a hard renewal deadline. With an EA, if Microsoft doesn’t make you happy by the expiration date, you can threaten not to renew (or to renew for fewer products), which is a major loss for them. With an MCA, since it’s ongoing, the threat to “quit MCA” is more nebulous — you could gradually reduce usage or theoretically switch to another vendor at any time. Still, there’s no single date that forces Microsoft to come to the table. This means you must create your own leverage by signaling your willingness to move workloads to competitors or by aligning requests with Microsoft’s fiscal year-end, when sales teams are eager to meet targets.

Overall, large enterprises will always have some negotiation power by virtue of their spending. But the EA channels that power into a formal negotiation cycle with clear opportunities to win concessions. The MCA diffuses it, requiring you to be proactive and strategic.

Procurement leaders operating under an MCA model should be prepared to continuously manage the relationship: don’t wait for Microsoft to offer a discount—ask for it when you have a case (e.g., “We’re about to onboard 500 new Azure VMs; what can you do on pricing if we commit to that?”).

And always keep an eye on competitive options, because showing that you have choices is key to maintaining leverage when there’s no contract end date forcing the issue.

When MCA Makes Sense

The Microsoft Customer Agreement can be a great fit in many scenarios.

Here are situations where choosing an MCA is likely the right call for your organization:

• Organizations Below EA Thresholds: If your company is too small to qualify for an EA or only marginally above the cutoff, the MCA is often the default choice. Microsoft’s typical EA minimum is around 500 users/devices. If you have, say, 200 employees, you simply won’t be offered an EA — the MCA (or purchases via a Cloud Solution Provider) is the way to go. Even if you have around 500-600 seats, you might find the EA’s requirements (like enterprise-wide coverage) too heavy-handed for your lean operation.
• Need for Agility Over Predictability: If your organization values agility, flexibility, and the ability to pivot quickly, the MCA is an attractive option. This could be a high-growth startup, a company in an industry with seasonal demand swings, or any business that cannot accurately forecast its IT needs years in advance. For example, imagine a retail company that hires thousands of seasonal workers for the holiday periods. Under an MCA, they could ramp up Microsoft 365 licenses for a few months and then drop them afterward, only paying for those months. Under an EA, they would likely have had to license a higher baseline all year long. If agility is more important than absolute cost predictability, MCA wins.
• Enterprises Seeking Cloud-First Simplicity: Some larger enterprises have made a strategic decision to be cloud-first and lean in their operations. They might say, “We don’t want complicated long-term vendor contracts; we want to operate as much as possible on on-demand services.” For such a company, the MCA aligns with their philosophy. It allows them to acquire services in a streamlined way, and they accept that they’ll manage costs through good governance rather than contractual locks. Additionally, suppose an enterprise primarily uses cloud services and has minimal reliance on on-premises software. In that case, the benefits of an EA (which often lie in mixing on-prem and cloud licensing or getting SA benefits) diminish. A pure-cloud company might find an MCA covers everything they need, with no legacy baggage.
• SMBs and Mid-Market by Design: As noted, Microsoft designed the MCA with smaller and mid-sized customers in mind. These customers often don’t have dedicated license managers or complex procurement departments. The simplicity of digitally accepting an agreement and just paying monthly bills is a better experience for them than negotiating a large contract. If that describes your organization’s profile — limited procurement staff and a desire for simplicity — MCA is a natural fit.
• Pilot and Testing Scenarios: Even within a bigger enterprise, an MCA can make sense for trial runs or new initiatives. Let’s say you want to test Microsoft’s Power BI with a small team before committing enterprise-wide. Doing that under your rigid EA might require waiting for a true-up or pre-negotiating a special EA amendment. Doing it under an MCA (perhaps through a partner) could be a faster option. So any scenario where you want to “try before you buy (big)”, MCA is useful. It doesn’t lock you in if the pilot doesn’t pan out.

In summary, the MCA is a viable option when flexibility, ease of use, and scalability are top priorities, and when the organization either doesn’t qualify for an EA or strategically chooses not to impose the constraints of one.

It’s often the best choice for smaller organizations, rapidly changing environments, or cloud-centric businesses that value monthly adaptability over multi-year predictability.

When EA Still Works Best

Despite Microsoft’s push towards the MCA, the Enterprise Agreement remains the gold standard for many large organizations.

Here are scenarios where sticking with (or adopting) an EA is the wiser move:

• Very Large, Stable Enterprises: If your company is a large enterprise with thousands (or tens of thousands) of users and fairly stable IT needs, the EA is almost tailor-made for you. These organizations benefit significantly from the economies of scale inherent in an EA. For instance, a corporation with 10,000 employees rolling out Microsoft 365 E5 licenses enterprise-wide will get much better pricing per seat under an EA than the list price. The savings from volume discounts alone justify the expense of the EA. Moreover, if your user count or usage is not expected to drop significantly in the next 3 years (and may only grow modestly), there’s little risk in committing upfront. The EA then gives you cost certainty and likely a lower total cost of ownership over that term compared to pay-as-you-go.
• Organizations with Long-Term IT Roadmaps: Enterprises that plan 3–5 years out and have a clear long-term licensing roadmap often prefer the EA. For example, if you know that over the next three years you’ll be standardizing on Windows 11, upgrading everyone to Office 365 E3, and maintaining a consistent fleet of on-prem servers with Software Assurance, an EA lets you lock all that in. You can budget today for the next several years and shield your project ROI from any unforeseen price hikes. The EA’s structure aligns well with capital budgeting processes and multi-year IT projects where costs and resources are determined well in advance.
• Those Needing Software Assurance and Hybrid Benefits: If your strategy involves a mix of cloud and on-premises or you rely on benefits that come only with Software Assurance, the EA is still your friend. For example, suppose you run SQL Server or Windows Server on-premises and need the rights to upgrade to new versions or to run secondary instances for disaster recovery (features granted by SA). In that case, you’ll typically obtain these through an EA (or a similar volume license). The MCA, as of now, doesn’t incorporate SA in the same way. Therefore, any enterprise with significant on-premises investments or that anticipates needing to bridge a hybrid cloud/on-premises environment will find the EA better suited to cover all bases.
• Enterprises Wanting Strong Negotiation Leverage: As discussed earlier, negotiation leverage is a big advantage of the EA. If your company prides itself on hard-nosed vendor management and squeezing out the best deals, the EA gives you the arena to do that. You might not get the same level of special treatment or discount if you move to an MCA. For example, a Fortune 500 firm might be able to negotiate not just great pricing, but also strategic perks (like Microsoft advisory services hours, or executive business reviews with Microsoft’s senior leadership) as part of an EA deal. Those are intangibles that come with being a significant-size EA customer. If that kind of leverage and attention is important to your organization, an EA is the way to keep it.
• Complex Environments and Custom Terms: Some organizations have unique legal, regulatory, or business requirements. Perhaps you operate in a sector with data residency rules, or you have an internal policy requiring certain contract clauses (like specific liability limits or termination for convenience). The EA’s negotiability means you can often get those terms written into your contract. The MCA’s standard form won’t allow that. So if your legal team needs custom provisions, an EA (or staying on one) is likely non-negotiable (pun intended) for you.
• Internal Approval Workflows: This is a minor point, but some large companies have internal bureaucracies that actually align more closely with an EA. Obtaining a one-time approval for a 3-year deal may be easier than securing approval for monthly bills that fluctuate. Suppose your finance/procurement processes prefer large, planned capital expenditures or long-term contracts. In that case, the EA might actually be simpler internally, whereas an MCA’s continuous OpEx spend might raise more tracking headaches in some companies.

In essence, the EA works best for organizations that are large enough to benefit from volume discounts, confident enough in their Microsoft usage to make a multi-year commitment, and savvy enough to leverage the negotiation opportunities.

It remains the preferred route for many Fortune 1000 companies and others who view it as a means to optimize costs and control with Microsoft.

Until Microsoft completely changes its model (if it ever does), the EA will not be going away for these customers and will still provide significant advantages in the right scenarios.

Strategic Recommendations for CIOs & Procurement Leaders

Choosing between MCA and EA isn’t just a licensing decision—it’s a strategic one.

Here are some key recommendations for technology and procurement executives to ensure you make an informed choice and get the best outcome for your organization:

• Map Your Workloads and User Profiles: Start by assessing your current and projected Microsoft usage. Break it into categories: stable/core vs. variable/experimental. For example, core productivity for full-time staff might be stable (ideal for EA), whereas a new AI project on Azure might be very experimental (ideal for MCA/CSP). Understanding these patterns will guide you toward the right mix. Forecast your needs 1 year, 2 years, 3 years out. If forecasting feels like dart-throwing due to uncertainty, that suggests a need for flexibility (MCA); if you have high confidence in the forecast, an EA could secure a cost advantage.
• Don’t Accept Microsoft’s Push at Face Value: Microsoft account reps may strongly encourage moving to the MCA (they often tout “simplification” or “this is the future of licensing”). While their points have merit, insist on a concrete business case. Ask: What do we gain and lose by switching? Have Microsoft show you a cost comparison of staying on EA vs moving to MCA over the next 3 years. In some cases, Microsoft might offer a transition incentive (like a discount on Azure or free consulting hours) to move to an MCA—get those offers in writing. If the case doesn’t clearly benefit your organization, it’s okay to push back on the timing of a switch.
• Evaluate a Hybrid Approach: It’s not always an all-or-nothing decision. Consider using both models side by side if that optimizes your scenario. Perhaps consider renewing an EA for your known stable needs (ensuring you negotiate the best price on that smaller EA) and moving more unpredictable workloads to MCA to avoid overcommitting. Microsoft’s licensing programs allow for multiple agreements; just ensure you have clarity on which purchases are associated with each agreement to avoid overlap or confusion.
• Use Timing and Alternatives as Levers: If you are on an EA and it’s coming up for renewal, that is your golden moment to negotiate. Get competitive quotes or demonstrate alternative strategies (like “We might move a portion of our workload to Google Cloud” or “We’re considering Open Source alternatives to some Microsoft products”). Even if you have no intention of fully leaving Microsoft, creating the option value can improve Microsoft’s offer. On the other hand, if you’re on MCA and want better terms, consider timing your requests with Microsoft’s fiscal year-end (June 30th) or major product launches. Sales teams have quotas and are more likely to give concessions when it helps them hit a target. And always keep an eye on other providers (Amazon, Google, etc.) — letting Microsoft know you’re being courted or that you’re multi-cloud can mysteriously open their wallet to ensure your Azure spend continues to grow.
• Invest in Governance and Cost Management: Regardless of the chosen model, strong internal governance is crucial. If you opt for the MCA route, consider implementing cloud cost management tools, setting up spending alerts, and designating a team responsible for license oversight. If you stick with EA, maintain a process for tracking license deployment so your true-ups don’t catch you by surprise. In both cases, periodically audit your own usage: are there licenses allocated to users who have left? Are there Azure resources that run 24/7 and could be optimized? The best negotiation is the one you don’t need because you eliminated wasteful spending upfront.
• Plan for the Future, Not Just the Present: Consider where your organization is headed. If you anticipate a major shift (like a merger, a divestiture, or adopting a whole new Microsoft technology) that could change your license needs, factor that in. For instance, a merger might temporarily spike user counts (maybe MCA is better until things stabilize). Or, if you plan to standardize globally on a single Microsoft 365 tenant within two years, consider signing a shorter EA or one that aligns with that timeline, allowing you to adjust accordingly.
• Keep Communication Open with Microsoft and Partners: Don’t be a stranger to your Microsoft reps or your licensing partner. Share your strategy (at least in broad strokes) and see how they can help. Sometimes Microsoft has promotions or programs (like funding for pilot projects or special pricing for nonprofits/industries) that you won’t know about unless you ask. By communicating your needs and concerns, you might get tailored advice or offers that aren’t publicly advertised.

By taking these steps, CIOs and procurement leaders can ensure they’re not just reacting to Microsoft’s moves but proactively choosing the licensing path that supports their organization’s goals.

Remember, you are the customer with the budget — it’s okay to drive the conversation and make Microsoft’s model work for you, not the other way around.

FAQ – MCA vs EA

Q: What is the minimum size requirement for an EA versus using an MCA?
A: Microsoft’s Enterprise Agreement is intended for medium to large organizations. Generally, 500 users or devices is the classic minimum for a commercial EA. However, Microsoft has at times adjusted this threshold (and certain sectors, such as government/education, may have different rules). If your organization is below that, you likely won’t qualify for an EA and should use the MCA or other licensing channels. The MCA has no minimum seat requirement – you could have just five users and still use an MCA. In fact, many small businesses use the MCA via partners to buy a handful of licenses. For large enterprises with over 500 seats, an EA becomes worth considering for the discounts, but it’s not mandatory – even a 5,000-seat organization could choose MCA if it wants more flexibility (though it might pay more per license doing so).

Q: Can enterprises still negotiate discounts under an MCA, or is it strictly “pay the sticker price”?
A: While the MCA starts as a standardized, non-negotiated agreement (you accept Microsoft’s published terms and pricing), enterprises with significant spending can still negotiate somewhat, but it’s a different game than the EA. There aren’t built-in volume discount tiers with MCA, so any discount is custom and discretionary. In practice, if you’re spending a lot on Azure or Microsoft 365 under an MCA, you should engage Microsoft (or your cloud provider partner) in discussion. Microsoft may offer incentives such as Azure credits, rebates, or customized discounts if you commit to specific usage levels or as a way to deter you from considering competitors. Also, if you work with a reseller or CSP, they might offer you a slight discount off Microsoft’s rates (since they have some margin flexibility). The key is that you, as the customer, have to initiate these conversations. Without asking, you’ll simply pay the standard “web direct” rates. In short, yes, discounts are possible under MCA for large deals, but they’re not guaranteed or as straightforward as under an EA.

Q: Is the Microsoft Customer Agreement going to replace the Enterprise Agreement entirely?
A: Microsoft’s long-term strategy seems to be moving in a cloud-first direction, and the MCA is a big part of that. They have already phased out some older agreements (like the Microsoft Product & Services Agreement) in favor of the MCA. That said, the Enterprise Agreement remains very much alive for now, especially for large enterprises. Microsoft is encouraging many customers to transition to MCA, particularly those who are primarily cloud-focused or on the smaller end of the enterprise scale. We may see over the next few years that new features or licensing programs are introduced only under MCA as a way to entice movement. However, for the largest customers or those with complex needs, EA is not yet gone. It remains Microsoft’s primary offering for big deals. In summary, MCA is gradually replacing EA for many scenarios, but it’s not an overnight switch. There will be a lengthy period of coexistence. Keep an eye on Microsoft’s announcements – if they ever restrict certain products or perks to MCA-only, that will signal a faster phase-out of EAs. However, many expect EAs will remain (at least for large accounts) in the near term.

Q: Can an organization have both an EA and an MCA at the same time?
A: Yes, coexistence is possible and actually not uncommon. An enterprise might maintain an EA for part of its portfolio and use an MCA for other purchases. For example, you might have an EA that covers all your Office 365/M365 licenses company-wide. Still, you use an MCA (via a CSP partner) to buy Azure services for a new development team, or to license a smaller subsidiary you acquired recently without merging them into your EA. Microsoft’s systems will track these as separate agreements, and you’ll have separate billing, but there’s no rule against it. The primary consideration is management complexity: you’ll need to monitor two sets of agreements and ensure that you optimize both. However, some organizations intentionally use this approach as a strategy — for example, letting an EA run its course (covering existing content) while undertaking all new incremental cloud projects on MCA, and then deciding at the EA renewal whether to consolidate everything into one model or continue the split. Always communicate with Microsoft or your partner so they understand why you’re doing this; sometimes they can offer guidance on how to structure it best (and they’ll definitely be interested to know your long-term intentions for planning).

Q: Which model provides better long-term cost control: MCA or EA?
A: It depends on what you mean by “cost control” and on your usage pattern:

• If by cost control you mean predictability and insulation from price increases, the EA is superior in the long term. With an EA, you lock in pricing for up to three years. You are aware of your costs and can budget accurately. Even if Microsoft raises prices generally, your EA prices are capped during the term. This is great for long-term projects and financial planning.
• If by cost control you mean the ability to avoid waste and only pay for what you need, the MCA offers better control. Over a multi-year period, an organization might go through changes (downsizing, tech shifts). MCA lets you adjust spending downward in those cases, so you’re not stuck paying for unused licenses in year 3 that you thought you’d need in year 1. You can also more closely tie expenditures to the actual value delivered, adjusting as needed.
• In practice, large stable environments tend to achieve lower unit costs with EAs (so their long-term spending might be lower than if they were on MCA, assuming they utilized everything). But they accept some risk of overcommitting. Meanwhile, dynamic environments might spend less in the long run on MCA because they can shed costs when not needed, even if the unit prices are a bit higher.

A wise approach is to simulate your 3- to 5-year costs under each model given your best estimates. Include potential scenarios such as growth, shrinkage, and price hikes. This will reveal which model is likely to offer more control for your situation.

Some companies even find that starting with one model and then switching (e.g., using MCA for a couple of years while in flux, then moving to EA once things stabilize) yields the best long-term cost control. The answer truly comes down to your organization’s ability to forecast and manage usage.

Read about our Microsoft Negotiation Services.

Do you want to know more about our Microsoft Negotiation Services?

Please enable JavaScript in your browser to complete this form.

Name *

Email *

Company

Message *

Submit