Microsoft EA Negotiation Playbook 2025–2026 – How to Counter Price Hikes with Optimization, CSP Strategy, and Multi-Cloud Leverage
Microsoft’s Enterprise Agreement (EA) customers are facing a new wave of price hikes in 2025–2026. Recent changes to Microsoft’s pricing models and bundles mean that many organizations will see significantly higher renewal costs. Read our ultimate guide to Microsoft EA negotiations.
Nearly every large enterprise is deeply dependent on Microsoft’s software and cloud services, which can make negotiating with Microsoft feel like an uphill battle. If you enter an EA renewal unprepared, you may feel you have little choice but to accept Microsoft’s terms – and that’s exactly what Microsoft is counting on.
However, higher costs and bundling tactics don’t have to be inevitable. With the right strategy, CIOs, CFOs, and IT leaders can regain control over their Microsoft spending.
By understanding the upcoming EA price increases, identifying internal licensing inefficiencies, exploring alternative licensing models such as CSP, and leveraging a multi-cloud approach, you can create genuine negotiating power.
Enterprises can still push back — by optimizing usage, reclaiming wasted licenses, evaluating CSP flexibility, and leveraging multi-cloud strategies to counter Microsoft’s price hikes.
Understanding the 2025–2026 Price Hikes
Microsoft has rolled out price increases for Enterprise Agreements in 2025 that demand attention. One major change is the elimination of volume-based discount tiers for online services. Starting in late 2025, every EA customer will pay the same Level A pricing for Microsoft 365, Azure, and other cloud services – no matter how large the organization.
This move toward “pricing consistency” may sound benign, but in practice, it results in a significant price hike for most medium and large enterprises.
Companies that previously enjoyed volume discounts (Levels B, C, and D) could see their per-user costs increase by 6–12% or more at renewal solely due to this change. In plain terms, Microsoft is raising the baseline price for its biggest customers under the guise of simplification.
Beyond the structural pricing changes, Microsoft continues to promote bundled products and premium suites, which drive costs higher. Flagship bundles like Microsoft 365 E5 include a broad array of security, compliance, and analytics tools – and Microsoft’s sales teams are incentivized to get customers onto these all-inclusive (and expensive) plans.
For 2025, Microsoft also announced targeted increases on certain products (for example, a 25% price jump on a Teams Phone add-on license) and new fees for paying month-to-month instead of annually.
When combined, these price adjustments and bundling pressures can swell an enterprise’s Microsoft bill by millions. The bottom line: if you simply renew your EA “as is” in 2025–2026, you could face a substantially higher IT budget with little to show for it, except for paying more for the same services.
The True Burden of the EA
The Enterprise Agreement model has long been a double-edged sword. On the one hand, it simplifies licensing under a single, comprehensive contract. On the other hand, it can become a budgetary burden if not actively managed. Costs rise predictably – and sometimes steeply – over an EA term.
One reason is that EA pricing often scales with your headcount and usage: as your employee count grows or you adopt more Microsoft tools, your costs increase in lockstep.
Microsoft’s recent pricing structure changes amplify this effect by removing the discounts for growth; a growing organization may actually be penalized with higher unit prices at renewal time.
Another hidden burden of the EA is the “auto-renew” mindset that some enterprises fall into. A passive renewal – simply rolling over the same agreement for another three years – almost guarantees overspending. Without a detailed review, an EA renewal will carry forward any inefficiencies from the previous term and layer on top of Microsoft’s new price increases.
Over time, this becomes a compounding problem: you might be paying for thousands of licenses you don’t need (or premium products your users barely touch), bleeding cash every year. Moreover, the EA’s inflexible terms mean that if your needs shrink mid-term, you generally cannot reduce your license count until the next renewal.
For example, if your company undergoes downsizing or divestiture, you may be required to continue paying for hundreds of unused licenses for the remainder of the contract. This inflexibility is by design – it locks you into spending those benefits on Microsoft even if your organization’s situation changes.
It doesn’t end there. Microsoft often ties other costs to your EA as well. A prime example is Unified Support (Microsoft’s enterprise support program), whose fees are typically calculated as a percentage of your EA total spend. If your EA bill goes up, so does your support bill automatically.
In short, every dollar of unnecessary spending in your EA not only wastes budget on licenses, but it can also raise your support costs and other related fees.
The true burden of the EA is felt in these cascading cost increases and the lack of freedom to adjust when business conditions shift. This is why a complacent approach to renewal is so dangerous – it effectively hands Microsoft a blank check from your IT budget.
Uncovering Hidden Waste: 15–30% Unused Licenses
One of the most effective ways to counter rising EA costs is to identify and eliminate hidden waste within your current license usage. It’s common for enterprises to discover that between 15% and 30% of the licenses they’re paying for are not actively used.
These could be unassigned seats, accounts belonging to former employees, or licenses assigned to users who rarely actually use the product. This level of underutilization represents pure overspend that delivers zero value to the business.
Consider a fictional example: a 10,000-employee firm that purchases Microsoft 365 E5 licenses for all employees. Upon review, they find that approximately 2,000 of those E5 seats are completely unused – employees who have left, duplicate accounts, or users who never required the E5 capabilities.
If an E5 license costs approximately $100 per user per month (list price), the 2,000 unused licenses equate to roughly $ 200,000 in annual waste.
That’s $2.4M paid to Microsoft annually for nothing in return. Now, imagine scaling that waste across a three-year EA term – it would be a $7.2 million mistake if not corrected.
Another scenario: a global enterprise with 25,000 users opted for a bundle like E5 or added a suite of advanced security, voice, and analytics tools for every employee.
In reality, only a small fraction of employees use the most advanced features (for example, maybe only the IT and security teams actively use the advanced threat protection tools, and a sales pilot group uses the Power BI Pro analytics).
The company might be overspending an estimated $7 million per year on these seldom-used bundled tools across the organization. This is essentially money left on the table, year after year.
These examples underscore a crucial point: license waste is rampant unless it is proactively addressed. Microsoft isn’t going to tell you about your unused licenses; it’s up to the customer to find and eliminate this shelfware.
Every unused seat or underutilized add-on is a negotiable point. It’s leverage you can use – or simply a cost you can cut outright. However, first, you must uncover it through a thorough usage analysis.
Run a Usage Audit Before Renewal
To tackle the waste and prepare for negotiation, a usage audit is your first essential step. Before you enter any renewal talks with Microsoft, invest time in a detailed audit of your current Microsoft deployments and license usage.
The goal is to align what you’re paying for with what your organization actually uses. This means examining usage metrics for Office 365 apps, Teams, SharePoint, OneDrive, Power BI, Dynamics, Azure services – every major component in your EA.
Look at user login reports, active user counts, and feature adoption statistics.
How many users are actively using Teams Meetings or the Phone System add-on? What percentage of your purchased Power BI Pro licenses have created or viewed a dashboard in the last 90 days?
Are there entire groups of employees who only use email and basic Office apps (and nothing from the advanced E5 feature set)? This data-driven approach will quickly highlight the gaps between what you’re buying and the actual value you’re getting.
Armed with the audit results, you can quantify the exact size of your unused license pool and underutilized services. Many organizations find that by trimming this fat, they can reduce their Microsoft 365 license count or downgrade a portion of users from E5 to E3 without impacting productivity.
For instance, if your audit reveals that 20% of your subscriptions are going unused or underutilized, you have an opportunity to either eliminate or reallocate those licenses.
Over a typical three-year EA, eliminating 20% of waste could easily save $5 million or more. Those savings might come from reducing redundant licenses, canceling unnecessary add-on subscriptions, or rightsizing users to the appropriate license tier.
Equally important, the audit provides hard evidence to bring into negotiations. You can approach Microsoft with confidence, backed by actual usage data: “Here’s the proof of what we use versus what we pay for.”
This lets you push for an EA renewal that reflects reality – not an overinflated package based on Microsoft’s aspirations. In short, don’t negotiate in the dark. Conduct a thorough usage audit well before your renewal date, and use those findings as the foundation for your cost-cutting and negotiation strategy.
Optimize Licensing Before (or As You) Negotiate
With the insights from your usage audit, the next step is to optimize your licenses.
Think of this as cleaning house and strategically reconfiguring your Microsoft agreement before you sign a new one. It’s far better to enter negotiations with a lean, efficient licensing profile than to try to fix it afterward. Microsoft’s sales reps will, of course, aim to keep (or increase) your licensing footprint, so you must drive any optimization.
Start by reviewing your license tiers and editions. Do all users truly need the top-tier Microsoft 365 E5 license, or could a significant portion do their jobs with E3 licenses (or even more basic plans plus a couple of add-ons)?
Microsoft 365 E5 can cost approximately 50–60% more per user than Microsoft 365 E3. That premium includes advanced analytics, phone system capabilities, enhanced security, and compliance tools. In practice, many companies find that only a subset of their workforce takes advantage of those extras.
By downgrading the others to E3, you save a significant amount per user while still meeting their needs. The same goes for any other bundled licenses: analyze whether you can “right-size” your mix of licenses.
Perhaps your information workers need Office 365 E3, front-line workers could use an F3 license, and only your admins and power users need the full E5 suite. Microsoft won’t suggest this to you – it’s something you have to proactively plan.
Next, scrutinize all the add-ons and ancillary products in your agreement. Are you still paying for the Audio Conferencing add-on for every user, even though you’ve since switched to a different conference solution? Did you buy a Microsoft Power Platform or Dynamics module that only a handful of employees actually use?
This is the time to decide what stays, what can be cut, and where a cheaper alternative might suffice. Remember, any services or features you drop now become cost avoidance for the next term – you won’t be paying for them for three more years.
Optimizing licensing also creates a powerful negotiation lever.
When you approach Microsoft with a clearly rationalized license plan, you send a message that you’re not going to blindly renew everything at the status quo. You might say, “We intend to remove these 500 unused licenses and downgrade these 5,000 E5 users to E3 because our analysis shows they don’t need the higher tier.”
One of two things will happen: either Microsoft accepts that and your renewal quote naturally goes down, or Microsoft fights to keep that business – perhaps by offering a better discount or some incentive to retain those licenses. It puts you in the driver’s seat of the conversation.
In effect, you’re telling Microsoft that you will only pay for genuine value, and nothing more. This flips the script from Microsoft dictating your spending to you dictating your needs.
CSP vs EA: Flexibility vs Lock-In
Many enterprises assume they must renew an EA because “that’s how we’ve always done it.” But the landscape of Microsoft licensing has evolved. The Cloud Solution Provider (CSP) program offers a distinct approach: purchasing Microsoft subscriptions through a reseller on a more flexible, pay-as-you-go basis.
It’s worth evaluating CSP versus EA as part of your negotiation strategy, because both models have their pros and cons. In some cases, the CSP route (or a mix of CSP and EA) can yield cost savings and agility that a traditional EA lacks.
The chief advantage of CSP is flexibility. Under CSP, you typically aren’t locked into a three-year contract or a fixed number of licenses. You can add or remove licenses every month as your needs change. If you hire new employees, you can increase licenses that month; if you have a round of layoffs or a project ends, you can reduce licenses and stop paying for them almost immediately.
This elasticity means you pay only for what you actually use, which can eliminate the shelfware problem.
CSP is also attractive for scenarios where usage is volatile or unpredictable – for example, seasonal workforce fluctuations or trialing a service for a limited period. You’re not making a long commitment, so you have the agility to scale down as well as up.
In contrast, an EA is a classic lock-in: a large upfront commitment for a defined term. Historically, Enterprise Agreements offered better volume pricing (lower unit costs) in exchange for that commitment.
But with Microsoft’s recent move to flatten pricing, the cost gap between EA and CSP has narrowed for many products. In other words, you might not lose as much of a discount by going CSP as you would have in the past.
If your organization is, say, shrinking or holding steady in size, a CSP model could actually cost you less than an EA where you over-committed to more licenses than you need.
There are scenarios where CSP can outperform EA financially and operationally.
For instance, consider a company that expects significant changes in its workforce or IT needs. Locking into a rigid EA could mean paying for growth that never materializes (or paying through the nose for unforeseen needs because you didn’t initially commit to them).
CSP allows you to adjust in real time. Another case: a firm might decide to keep core stable services under an EA, but move more variable workloads (such as some Azure services or a subset of Office 365 seats for a temporary project or subsidiary) to a CSP. This hybrid approach can blend the best of both worlds: you receive volume pricing on the stable portion and flexibility on the variable portion.
From a negotiation standpoint, having CSP as a credible alternative gives you leverage. Microsoft would rather keep you in an EA (which guarantees them revenue and lock-in) than see you go to a month-to-month model. If you demonstrate that you are evaluating CSP quotes or pilot-testing a move to a CSP partner, Microsoft will take note.
We’ve seen enterprises use this tactic effectively: by signaling willingness to shift even part of their spend to CSP, they pressure Microsoft to offer more favorable EA terms.
The key is to do the homework – get comparative pricing from a Microsoft CSP provider, understand how a transition would work, and be ready to execute if Microsoft doesn’t come to the table.
At the very least, you may find a better fit for some of your licensing outside the EA. At best, you’ll either save money by switching or gain bargaining power to improve your EA deal. Flexibility is the antithesis of Microsoft’s lock-in – use it to your advantage.
Leverage Multi-Cloud as Negotiation Power
Microsoft might be a giant, but it’s not the only game in town. Many enterprises are increasingly multi-cloud, using a mix of Microsoft Azure, Amazon Web Services (AWS), Google Cloud, and other platforms.
This diversity can be turned into a negotiation asset when dealing with Microsoft. The idea is straightforward: if Microsoft knows (or believes) that you could move workloads away from their ecosystem, it provides an incentive for them to be more flexible on pricing and terms to keep your business.
Leverage your multi-cloud strategy thoughtfully. You don’t need to threaten to leave Microsoft entirely – that wouldn’t be credible for most large organizations that run on Office, Windows, and Azure services.
Instead, identify a portion of your IT portfolio that could be shifted or is already being managed elsewhere. For example, maybe 15% of your cloud infrastructure is currently on AWS, or you’re considering Google’s productivity tools for a specific region or business unit. By allocating even a small percentage of workloads away from Azure or Microsoft 365, you send a clear message: Microsoft has to earn your full business, not assume it.
One fictional example: A large enterprise migrated about 15% of its Azure workloads to a competitor’s cloud ahead of EA renewal. This might include some data storage, certain applications, or development/test environments moved to AWS to diversify.
When Microsoft’s account team caught wind of this shift, it created urgency on their side to prevent further loss.
In the ensuing EA renewal negotiations, Microsoft offered an aggressive discount and concessions – effectively yielding a 12% reduction in the proposed renewal price – to entice the company to keep the remaining 85% of workloads on Azure and potentially bring back those that had moved.
The customer, by demonstrating they had options, compelled Microsoft to respond with a better deal.
Even if you haven’t moved anything yet, you can develop a Plan B. Solicit bids from AWS or Google for certain services, or run a pilot on an alternative platform. When Microsoft tries to increase your costs, you can then say, “We have other places to go.”
In some cases, Microsoft may counter with incentives such as Azure credits, deeper discounts, or flexible terms if it knows you’re considering a multi-cloud approach.
Also, remember that multi-cloud leverage isn’t limited to Azure vs. AWS – it can also apply to Microsoft 365 vs. Google Workspace, or Dynamics 365 vs. Salesforce, and so on. The key is showing that you’re not 100% dependent on Microsoft for every solution. Competition works: even the perception that Microsoft could lose a portion of your spend can soften their stance.
In summary, avoid becoming a Microsoft monoculture by default.
Even a strategic partial adoption of other clouds or tools can give you bargaining chips. Use 2025 as the year you cultivate options, so when you negotiate, Microsoft knows you have alternatives and will price the EA more competitively to retain your business.
Cross-Functional Teams Win Agreements
Negotiating a Microsoft EA is not just an IT exercise or a procurement checkbox – it’s a major commercial undertaking that benefits from broad internal alignment.
The companies that achieve the best outcomes in EA negotiations almost always have a cross-functional team leading the charge.
This means IT, Procurement, and Finance (and often input from Security, Legal, and business unit leaders) working together with a common strategy and clear communication. Why is this so important? Microsoft’s own sales approach will attempt to exploit any internal disconnects on your side.
Without coordination, you might encounter scenarios like this: the IT department is primarily concerned with ensuring they have all the necessary tools and features.
At the same time, Procurement focuses on obtaining the lowest price, and Finance is concerned about staying within budget. If Microsoft’s rep talks to IT alone, they might sell the vision of “you need these new E5 security features and Copilot AI tools,” which makes IT push for budget approval.
Separately, the sales team might tell Procurement, “This is our best and final offer; other companies are paying more,” to pressure a quick deal. If these internal teams aren’t aligned, Microsoft can divide and conquer, nudging you into a suboptimal agreement because one hand isn’t fully aware of what the other is prioritizing.
Bringing a cross-functional negotiation team to the table prevents that. It ensures that before anyone says “yes” to Microsoft, the organization has agreed on its non-negotiables, nice-to-haves, and walk-away points.
IT provides data on actual usage and identifies areas that can be cut or substituted; Procurement brings negotiation expertise and market benchmarks; Finance sets the guardrails for what the company can afford and how different options impact the budget.
When this unified team presents a cohesive front, Microsoft will recognize that they are dealing with a well-prepared customer. You can ask tough questions with the right people in the room, such as: “Do we really need this upsell product, and if so, what value does it drive and can we get it cheaper?” or “What happens if we don’t sign now – can we extend for a few months?” – and you’ll already have internal consensus on those answers.
Another benefit is full visibility. By sharing information internally, you avoid mistakes such as overestimating needs (IT might reveal lower usage that Finance was unaware of) or agreeing to terms that pose risks (Legal and Security may need to review privacy or compliance terms).
A cross-functional team can also strategize creative solutions – for example, Finance can allocate a capital expense budget to pre-pay some licenses for a larger discount, or IT can fast-track the removal of a legacy system so its licenses can be dropped.
In practice, successful EA negotiations often have an executive sponsor (say, the CIO or CFO) and a core working group that meets regularly in the months leading up to the renewal.
They conduct internal audits, develop negotiation plans, and may engage external experts or consultants as needed. When negotiation time comes, this team speaks with one voice. The message to Microsoft is that the customer knows exactly what they need and what they’re willing to pay, and sales tactics won’t easily sway them.
This level of preparation and unity is one of the strongest counters to Microsoft’s playbook. It turns the negotiation from a one-sided pitch into a balanced discussion where the customer sets the agenda.
Broaden the Negotiation Scope
When facing a renewal with rising costs, it’s easy to focus only on headline prices and discounts. However, truly savvy customers know that negotiating an EA is not just about the price per license – it’s also about the terms of the deal.
Broadening the scope of your negotiation means looking beyond the dollar figures and into the contract clauses and flexibility that can save you money (and headaches) in the long run.
Start with the ability to adjust during the term. Standard EAs are inflexible, but you can attempt to negotiate a downgrade or reduction of rights.
For example, you might request a clause that allows you to reduce the quantity of certain licenses or swap a portion of high-tier licenses (such as E5) to lower tiers (like E3) at a midpoint in the agreement if your usage changes.
Microsoft won’t volunteer this, but depending on your deal size and leverage, they have granted some customers this flexibility. Such provisions can be a lifesaver if your company’s circumstances change.
Imagine negotiating a mid-term “true-down” right for up to 15% of your licenses – if your user count drops or you find you’ve over-provisioned, you can shed those licenses instead of incurring the cost for years.
In one instance, a company that secured mid-term downgrade rights ended up saving an estimated $9 million versus what they would have paid for being locked into higher-cost licenses they no longer needed. That’s a massive win derived purely from a contractual term, not just a discount.
Another area to broaden is audit and compliance safeguards. Microsoft can audit your license compliance, and if you’re found to be short, they will charge back the payment and penalties.
Negotiating terms around audits – such as reasonable notice periods, defined resolution windows, or even a cap on true-up penalties – can protect you from nasty surprises. While Microsoft may not always agree to altering audit rights, raising the topic shows that you’re thinking ahead and could lead to a more accommodating stance if any compliance issues arise.
You should also negotiate on aspects such as payment terms (can you structure payments annually instead of upfront, or obtain extended payment timelines without fees?), as well as the inclusion of new products. If Microsoft is touting the next big thing (say, an AI add-on or security suite) that’s not yet in your EA, you might negotiate future entitlements now – for example, locking in a price cap or a free trial for those tools when they launch.
Ensure that any price escalation clauses are reasonable as well: some customers push for caps on how much certain fees can increase upon the next renewal. For instance, you might include language that limits annual price increases (for any new products you add mid-term) to a single-digit percentage.
Remember that Microsoft’s initial contract is written in their favor, but nearly everything is on the table if your deal is significant and you push for it. Don’t hesitate to propose changes to legal terms, usage rights, or flexibility provisions.
Even if you don’t get everything, you often can get concessions that make a big difference. For example, securing the right to an additional 6 months of transition at the end of the EA (at the same rates) could be beneficial if you plan to evaluate other options later. Or adding a “merge/divest” clause can ensure you aren’t penalized if you spin off a division (i.e., you can reduce licenses proportionally). These may sound like fine print, but they all translate to dollars saved or risks mitigated in the long run.
Ultimately, a successful negotiation looks at the total value and risk of the deal, not just the upfront price.
By broadening the scope, you ensure that you’re not only getting a good price in year one, but also the flexibility to keep it a good deal through year three. That strategic approach will protect you against Microsoft’s tendency to lock customers into ever-expanding spend.
Five Strategic Recommendations
To wrap up, here are five key strategies every enterprise should employ when approaching a Microsoft EA negotiation in 2025–2026:
- Start Optimization First: Begin by auditing and cleaning up your license usage well before you sit down at the negotiation table. Reclaim and eliminate all unused licenses, and right-size users to appropriate license tiers. By entering talks with a leaner, optimized license profile, you both cut immediate costs and strengthen your bargaining position. Optimization is the groundwork for any cost-effective renewal – do it early and thoroughly.
- Consider CSP as a Strategic Option: Don’t assume a traditional EA is your only path. Evaluate the Cloud Solution Provider model for its flexibility and pay-as-you-go benefits. Run the numbers for a CSP vs. EA scenario for your organization. In some cases, using a CSP (even if only for a portion of your licenses or cloud services) can lower your total cost and prevent paying for shelfware. At the very least, having a viable CSP quote or plan gives you leverage – Microsoft will think twice about heavy-handed price increases if they know you are ready to switch some spend to a different channel.
- Use Multi-Cloud Leverage Thoughtfully: Leverage your investments in other cloud platforms or software alternatives as a negotiation tool. If you have a multi-cloud approach, ensure Microsoft is aware of it. Even a partial shift of workloads (or the consideration of one) to providers like AWS or Google can put pressure on Microsoft to offer better terms. Be strategic – you don’t need to move massive parts of your environment if a smaller, symbolic move will send the message. The goal is to show Microsoft that it’s competing for your business, which can lead to concessions and discounts to secure your commitment.
- Empower a Cross-Functional Negotiation Team: Assemble a team that includes IT, Procurement, Finance, and other key stakeholders to plan and execute your negotiation. This team should share data, align on goals, and present a united front to Microsoft. An empowered, cross-functional team will ensure all angles are covered – technical requirements, cost objectives, and contractual protections. It also prevents internal miscommunication that Microsoft could exploit. With everyone from the CIO to the sourcing manager on the same page, you’ll negotiate with clarity and strength.
- Negotiate Terms, Not Just Price: When negotiations begin, remember that the fine print can be just as important as the price tag. Push for contract terms that give you flexibility and protect your interests. For example, negotiate options to reduce or adjust licenses mid-term if needed, insist on fair audit processes, and seek to cap future price increases. Don’t accept a boilerplate agreement if you have the clout to improve it. By securing favorable terms (not just a lower initial price), you create lasting value and cost control throughout the EA term.
By following this playbook – anticipating Microsoft’s moves, shoring up your own usage efficiency, and approaching the deal as a strategic business negotiation – you can turn a potentially painful EA renewal into an opportunity. Microsoft may be raising prices, but with these tactics, you are equipped to counter those hikes, optimize your investment, and emerge with a stronger, more cost-effective agreement for 2025–2026.
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