Microsoft EA Renewal Strategies for Cost Savings

Microsoft EA Renewal Strategies for Cost Savings

Microsoft Enterprise Agreement (EA) renewals in 2025 present challenges and cost savings opportunities. With Microsoft pushing cloud subscriptions and raising prices, CIOs and IT procurement leaders must take a proactive approach.

This guide provides a comprehensive strategy from cleaning up unused licenses to negotiating better discounts and flexible terms to help enterprises reduce spending and maximize value in their EA renewal.

Read Microsoft EA Renewal Strategy: What to Review Before You Sign Again.

Cloud Shift and Pricing Trends Shaping EA Renewals

Microsoft’s licensing strategy has evolved rapidly toward cloud services, impacting EA renewals. Enterprises are being steered from traditional on-premises licensing into Microsoft 365 subscriptions and Azure consumption commitments.

This shift often means higher costs unless carefully managed. Recent years saw double-digit price hikes on key products (for example, Office 365 E3 increased ~15% in 2022, and new AI add-ons can add 30 %+ to license costs).

As a result, many renewal quotes for the same services arrive 20–30% higher than the previous term.

Additionally, Microsoft is introducing new contract models like the Microsoft Customer Agreement for Enterprise (MCA-E), an evergreen subscription model that is replacing some EAs. If volume discounts or legacy pricing are lost, this could lead to 10–30% cost increases.

Key implications:

Enterprises must budget for rising costs and negotiate to offset Microsoft’s pricing trends. Price protection becomes crucial; negotiators should push for multi-year caps or fixed pricing on critical products to guard against anticipated increases.

The vendor’s cloud-first agenda can be leveraged; Microsoft highly values predictable cloud revenue, so committing to new cloud services (on your terms) can be exchanged for better pricing.

Recognize that standard volume discounts may be declining; having a large user count does not yield the same savings as before, making active cost optimization and negotiation more important than ever.

Read How to Right-Size Your Microsoft EA Before Renewal.

Usage Audit: Identify “Shelfware” and Optimize Licenses

Before engaging with Microsoft on renewal, audit your current license usage. An EA renewal is the best chance to realign costs with actual needs.

Many enterprises discover that 10–20% of their licenses are unassigned or underutilized, a form of “shelfware” that silently inflates spending.

For example, a company with 10,000 Office 365 seats might find 1,000 accounts that belong to former employees or duplicate test accounts.

At an average ~$ of $25 per user/month, those unused licenses represent roughly $300,000 in waste per year. You can immediately trim the renewal baseline by identifying and eliminating such excess.

Perform a thorough license position assessment covering all products in the EA:

• User-based services (M365, Office 365, Dynamics, etc.): Remove or reassign licenses not actively used. Align users to the appropriate plan (e.g., downgrade users who don’t need full E5 functionality to E3 or E1 plans).
• Server and cloud subscriptions: Check resource usage for Azure, Power Platform, or server products. Rightsize or eliminate instances that are not providing value.
• Software Assurance benefits: Inventory licenses with Software Assurance or subscriptions, including add-ons. Ensure you are utilizing the benefits (training vouchers, support, upgrades)—if not, consider whether those subscriptions are truly needed.

Document these findings with data. This internal “true-up” process avoids paying for unnecessary licenses at renewal and strengthens your negotiation position.

Microsoft sales teams respond when customers have a data-driven rationale for reducing quantities. Be prepared for pushback. Microsoft may resist volume reductions since they impact their revenue, but solid usage evidence is hard to contest.

In some cases, you can strategically trade. For instance, if you plan to drop 500 unused Visio licenses, you might simultaneously propose adding 500 needed Power BI licenses if Microsoft can meet a target price. This way, you reduce waste while keeping spending flat, which helps Microsoft save face and more willingly agree.

Read Microsoft EA vs. CSP: Which Microsoft Licensing Model Fits Your Organization?.

Negotiation Timing: Early Renewals vs. Last-Minute Leverage

Timing is a critical – and often underappreciated – factor in EA renewal strategy. In the past, some enterprises waited until the eleventh hour (end of the quarter or fiscal year), hoping Microsoft would concede more to get the deal in before the deadline.

That approach can backfire in 2025. Microsoft has incentivized its sales teams to close renewals on time or early.

Account managers and resellers face penalties for late renewals, and they operate under targets to increase each EA’s value by ~15–20%. Microsoft may offer better terms a month or two before the quarter-end rush, rather than in a last-minute scramble.

Understand Microsoft’s sales rhythm to maximize leverage: a large share of EA renewals bunch up in Microsoft’s Q4 (April–June), creating backlogs.

Negotiating earlier in the cycle or off-peak quarters makes you more likely to get Microsoft’s full attention and flexibility. Some strategies to consider:

• Start early: Begin internal planning 6–12 months before your EA expiration. Engage Microsoft at least 3–6 months ahead with your intentions. Early discussions can unlock incentives. For example, Microsoft sometimes offers price holds or extra discounts if you commit to renew a couple of quarters in advance, helping them secure revenue forecasts.
• Avoid the bottleneck crunch: Close the deal a few weeks before Microsoft’s fiscal year-end (June 30) if your renewal is mid-year. Their licensing desks get overwhelmed as that date nears, limiting their ability to process special terms. By coming in slightly early, you might negotiate concessions that wouldn’t be available in a last-minute pile-up.
• Align with Microsoft’s goals: If you know Microsoft has a new product quota or cloud growth goal, time your negotiations when they need wins. For instance, if Azure sales are lagging mid-year, proposing an Azure commitment near that time could yield a better deal (weigh this against your needs). Conversely, if you don’t need anything extra, sometimes waiting out a quarter where Microsoft has already hit numbers can reduce pressure on you to buy add-ons.

Pro tip: Never let your EA expire without a signed renewal or extension. While leveraging deadlines is useful, missing a renewal puts you in non-compliant territory with no cover – a position you want to avoid at all costs.

Always have a contingency: if negotiations are truly gridlocked, seek a short-term extension from Microsoft rather than letting the agreement lapse.

Read Key Microsoft EA Renewal Contract Terms You Should Always Negotiate.

Discount Benchmarks and Volume Licensing Levels

Microsoft’s first renewal quote is rarely its best offer. Volume licensing programs like the EA have built-in discount tiers, but savvy customers routinely negotiate beyond those. Benchmarking your deal against similar organizations and pushing for equitable (or better) discounts is important. Microsoft’s published EA structure defines Level A through D pricing based on the number of users/devices:

(*) Exact discount percentages vary by product segment and region. Microsoft claims an EA can save 15–45% off list prices overall, with larger enrollments getting toward the higher end.

If you’re a Level C or D customer, you likely already get significant base discounts – but don’t assume they’re “best in class.” One enterprise’s “34% off” can still be worse than another similar-sized enterprise’s 40% off.

Microsoft’s initial offer might be a 15% discount on a certain license when market benchmarks show 20–25% is achievable.

Procurement teams should be armed with data: price benchmarks from peers or third-party advisors and an understanding of Microsoft’s pricing floors.

If you lack direct benchmarks, consider engaging a specialized licensing consultant or using any available industry data on EA deals. In negotiations, knowing that “Customer X of similar size got a better unit price on SQL Server cores” is powerful.

Tactics to maximize discounts and savings:

• Consolidate and commit: Microsoft rewards larger consolidated deals. If you have multiple agreements (subsidiaries, or separate enrollments for different product sets), explore co-terming them into one negotiation. A bigger overall EA transaction value can justify deeper discounts.
• Ask for promotional pricing: Microsoft often runs promotions, such as 15% off a new E5 upgrade if adopted this quarter or special Azure credits for new Azure commitments. Don’t hesitate to inquire which promotions might apply to you—sometimes, they won’t volunteer these unless asked.
• Multi-year and payment flexibility: While the EA standard term is 3 years, if you are open to a longer term (or conversely, considering a shorter term), use that as a lever. Agreeing to a four or 5-year EA could persuade Microsoft to lock pricing and extend higher discounts, since it guarantees them longer revenue. On the flip side, if you want a shorter term for flexibility, you might pay more, but you could negotiate an opt-out clause or price review at year 2. Always weigh the cost vs flexibility trade-off.
• Scrutinize unit prices and metrics: Microsoft licensing has various metrics (per user, per app, per core, etc.). Ensure you’re getting the best model for each product. For example, if you’re licensing Windows Server or SQL Server, evaluate whether per-core licensing or alternative bundles (like SQL in Azure vs. on-prem) are cheaper. Optimize the license metric to your advantage—Microsoft won’t do this for you by default.

Remember that any “best offer” from Microsoft can often be improved if you demonstrate knowledge and willingness to walk away or reduce scope. It’s not about squeezing for an unrealistically low price, but about not leaving money on the table.

Even a small percentage improvement has a big dollar impact at enterprise scale for instance, 5,000 users on Microsoft 365 E3 at roughly $34 per user/month is about $2 million/year; securing just an extra 5% discount saves ~$100,000 annually (nearly $300K over the term). Those savings justify the effort spent on benchmarking and tough negotiation conversations.

Read Enterprise Agreement Renewal Negotiation: Proven Tactics That Work.

Handling Product Upgrades and Add-On Services Wisely

Microsoft will almost certainly introduce new products or upsell opportunities during your renewal. Two common ones are the push to adopt Microsoft 365 E5 (the top-tier suite) and various security or compliance add-on modules (Defender, Sentinel, Viva, etc.).

While these technologies can add value, if adopted wholesale, they can also inflate costs. A strategic approach is needed to avoid cost overruns while meeting your organization’s needs.

E5 Upsell: Microsoft 365 E5 (or Office 365 E5) includes advanced capabilities (enhanced security, analytics, telephony/Teams Phone, and so on) but comes at a premium price.

The list price per user can be 50–70% higher than E3. (For illustration, Office 365 E3 is ~$23 user/month vs. E5 at ~$38; Microsoft 365 E3 vs. E5 is roughly $34 vs. $57.) Indiscriminately upgrading all users to E5 could blow up your budget.

Negotiate E5 on your terms:

• Mix-and-match: An EA allows you to assign different licenses to users as needed. Don’t feel pressured into an all-or-nothing upgrade. Identify user segments that genuinely need E5 (perhaps employees requiring advanced security, compliance, or voice features) and keep the rest on more economical plans. Ensure your EA enrollment is structured to permit a hybrid licensing approach. Microsoft’s rules require at least one “enterprise product” company-wide. Still, it can be a mix of E3/E5 if everyone has one of the qualifying plans.
• Trial and evaluate: If unsure about E5, request a pilot or trial period. Microsoft might extend a short-term E5 promo (sometimes 3–6 months free or at a discount for a subset of users) to prove its value. This avoids a costly commitment to features you aren’t ready to use.
• Promotional discounts and phase-in: If you go to E5, leverage any transition offers. Microsoft has been known to give 15 %+ off E5 for the first year or two to encourage adoption. Negotiate a graduated price if possible, for example, a lower price in year 1 that increases in year 2 or 3 once you’ve deployed the E5 features. And importantly, clarify what happens after any promo period (ensure the year-3 price isn’t an unacceptable jump).

Add-On Services:

Beyond the core suites, Microsoft now sells many add-ons (Defender for Endpoint, E5 Compliance, Power BI Pro, Teams Phone, Microsoft Viva modules, and more).

These are often pitched as ways to enhance security or productivity, and reps are often incentivized on these sales. To control costs:

• Prioritize needs: Determine which add-ons deliver value or fill a gap. Maybe you need advanced security for a subset of users, or a cloud PBX solution via Teams Phone. But you might not need everything bundled in E5. Pick and choose critical add-ons à la carte if that’s more cost-effective.
• Bundle deals: If you need multiple add-ons, negotiate bundle pricing. For instance, if you plan to adopt Defender and Sentinel, ask for a combined discount or a flat rate for a package of security products. Microsoft often hides “suite” pricing in the background; if you express interest in several products, they can be flexible on the aggregate price.
• Flexibility and exit options: Consider asking for swap or drop rights on new services. If you’re unsure if a certain add-on will prove useful, negotiate the ability to exchange it for another product of similar value or discontinue it after a year without penalty. For example, “We’ll take 500 seats of Azure Purview now, but if it doesn’t meet our needs in 12 months, we can switch those to 500 seats of another product like Power BI without a price increase.” Microsoft may not always agree, but even a written assurance of flexibility can save money if a product is under-deliverable.

Ensure that any new product you add has a clear business case. It’s easy to be swept up by the “bundle” pitch (E5’s promise of all-in-one capabilities, etc.), but every component has a cost.

Do a cost-benefit analysis: If E5’s advanced analytics eliminates a third-party tool you’re paying for, that can justify the spending. But if not, it might be cheaper to stick with E3 plus a few select add-ons.

Microsoft’s goal is to expand your footprint; your goal is to empower your business at the lowest effective cost. Meet in the middle by carefully vetting each upsell against real requirements.

Read Microsoft EA Licensing Optimization: 7 Questions to Ask Before Renewing.

Managing Azure Consumption Commitments

Azure cloud spending has become a major part of many EA renewals. Microsoft often uses the renewal as an opportunity to lock in a multi-year Azure commitment.

Essentially, you agree to spend a certain dollar amount on Azure over the EA term (for example, $2 million per year for three years), instead of purely pay-as-you-go consumption.

You might receive discounted Azure pricing, credits, or other incentives in exchange. This can be a win-win if you truly plan to use that capacity, but it introduces risk if not handled carefully.

If Azure is part of your IT strategy, you should address it in the EA negotiation, but keep these cost-saving tips in mind:

• Commit conservatively: Negotiate the smallest practical commit that still gets you a worthwhile discount. Forecast your Azure usage based on projects in the pipeline – and be realistic. It’s often wise to commit a bit below your expected usage. Remember, if you exceed the commitment, you can always pay the overage at regular rates (or negotiate an amendment later), but if you underutilize, you’re essentially paying for unused cloud. For example, if you commit to $1M/year but only consume $800k, that $200k is lost budget. It’s safer to commit maybe $800k, then overrun slightly if needed.
• Secure discounts and terms in writing: Microsoft might offer a 5-10% discount on Azure services in exchange for your three-year commitment. Push for specifics: which services get discounts? Are they off the consumption rate or via credit? Get any special pricing documented in the EA or an attached Azure plan contract. Also negotiate flexibility clauses – e.g., the ability to carry over unused commitment from year to year, or to reallocate commitment funds between Azure services. If you commit to certain Azure products (like VMs or databases), ensure you can swap to new services if your architecture changes.
• Consider ramp-up structures: If you anticipate growing Azure usage, you don’t need a flat yearly commitment. Try to structure a ramp (e.g., $500k in year 1, $1M in year 2, $1.5M in year 3) so your spending commitment aligns with deployment plans. This prevents overcommitting early on and paying for capacity you haven’t migrated yet. Microsoft is often amenable to this since it reflects a growth story, just be sure the total still meets any discount thresholds.
• Maintain leverage with multi-cloud: Even if you intend to stick mostly with Azure, it helps negotiation to remind Microsoft that you have options (AWS, Google). They are keenly aware of cloud competition. If Microsoft knows you could shift a workload elsewhere, they may improve the Azure deal to secure your commitment. (Of course, only use this argument if it’s credible.)

Once the Azure commit is in place, manage it closely. Establish internal governance to track Azure consumption vs. commitment month by month.

The goal is to avoid surprises. If you see you’re falling behind the pace, you might spin up planned projects sooner or negotiate an amendment in the next year.

Azure costs can spiral, so treating your commit like a budget line item you actively optimize will ensure the upfront discount translates to savings, not waste.

Read Microsoft EA Spend Justification and Renewal Pitfalls for Enterprise IT Leaders.

Contract Terms and Flexibility Considerations

Beyond price points and product mix, the contractual terms of your EA renewal can significantly affect cost over the term.

A well-negotiated contract will give your organization flexibility to adapt and avoid penalties, ultimately saving money.

Key areas to focus on include agreement length, terms around changing license quantities, and related services like support:

• Term length and renewal alignment: The default EA term is 3 years, but you have some wiggle room. A longer term (if you’re comfortable with Microsoft’s stack long-term) can lock prices and discounts – just ensure a price cap clause exists so Microsoft can’t raise rates mid-term on newly added licenses. You might prefer a shorter or non-standard term if you foresee major changes (mergers, divestitures, strategy shifts). Microsoft occasionally allows 2-year or 4-year terms in special cases. Also, consider aligning all your Microsoft agreements to co-terminate or staggering them intentionally. Aligning can simplify negotiations and give you a bigger single renewal (more leverage); staggering might avoid having all your Microsoft spend up for renewal at once (which can be risky budget-wise). Choose an approach that fits your procurement strategy.
• True-down and flexibility options: One common pain point is the lack of ability to reduce license counts during an EA term, except at renewal. However, if flexibility is crucial (e.g., you expect significant workforce reduction or moving some services off Microsoft), you might explore the Enterprise Subscription Agreement (EAS) instead of a standard EA. Under an EAS (subscription-based EA), you can decrease licenses at each anniversary to match your user count. This can be a huge cost saver if you need that downsizing ability, though you forego owning perpetual rights. If you stick with a standard EA (perpetual + SA), negotiate any possible clauses for flexibility – perhaps the ability to buy out and terminate certain subscriptions early or to replace on-prem licenses with cloud services mid-term if it results in cost savings. Microsoft has introduced some bridging mechanisms (from SA to cloud transitions) – leverage those to avoid double paying.
• Price protections: Insist on clear price hold or caps during the term. Your EA should state that the unit prices for all SKUs in your initial order are fixed for the 3-year term (this is standard, but verify it’s in the paperwork). Additionally, negotiate caps on any prices that are not fixed. For example, if you plan to add users or new products later, try for a clause like “any additional licenses for Product X during the term will be at the same % discount off the current list price as the initial order” or a flat ceiling. This prevents nasty surprises if Microsoft’s list prices jump. It also ensures you benefit proportionally from any discount you achieved, even for future growth.
• Unified Support and other services: Microsoft often ties support contracts (like Unified Support) to your EA spend – the more you spend on licensing, the more support costs. One cost-saving move is to decouple support from the EA renewal. You don’t have to renew your support contract on the same schedule as the EA. Negotiating them separately can yield savings – you can shop around for third-party support or push Microsoft for a lower support price without the pressure of the entire EA on the line. Consider renewing your EA first, then addressing support later (or vice versa), so each is negotiated on its merits. This separation prevents Microsoft from using one as a bargaining chip against the other (“We’ll give a discount on licenses if you renew support at full price,” etc.).
• Audit and compliance clauses: Software audits are another angle – while Microsoft has somewhat reduced formal audits in favor of softer “Software Asset Management” engagements, the risk remains. A proactive step is to include a clarified audit process in your renewal (e.g., reasonable notice, defined scope, etc.) or negotiate a brief post-renewal audit grace period. Some enterprises get an audit relief clause for a certain period if they agree to specific licensing initiatives. Minimizing audit risk saves cost (and hassle) in the long run, because even a minor compliance gap can cost you heavily if found. At minimum, be aware that if you negotiated a big discount or reduced your spend, Microsoft’s teams might scrutinize your deployment more closely. Stay compliant and use the renewal as an opportunity to clean up any grey areas in licensing (which overlaps with the internal audit step you performed).

Finally, document everything in the contract. Any special arrangement, such as a pricing concession, flexible term, or service credit, should be captured in writing in the EA Amendment or a Customer Price Sheet.

Verbal assurances from sales reps don’t count once you’re locked in. A well-documented EA with customer-favorable terms is an asset for cost management: it ensures you won’t pay more than intended and can adapt if your needs change, keeping your IT spend efficient throughout the agreement lifecycle.

Read Microsoft EA Renewal Pitfalls: Hidden Costs and Terms You Might Miss.

Recommendations

• Start planning early: Begin your EA renewal process 6–12 months in advance. This provides time for internal cleanup, strategy development, and multiple negotiation rounds, avoiding last-minute compromises.
• “Clean house” before renewing: Conduct a detailed license usage audit. Remove or reallocate any dormant, duplicate, or underused licenses so you only renew what’s truly needed. Use this data-driven approach to set your renewal scope.
• Leverage Microsoft’s timeline: Use timing to your advantage. Engage Microsoft well before the EA expiration and aim to negotiate outside their end-of-quarter chaos. Consider early renewal incentives if a price hike is on the horizon, but always get credit for any overlapping term.
• Benchmark and negotiate discounts: Do not accept Microsoft’s first quote. Benchmark pricing and discount levels against industry peers. Push for improved discounts on major cost items and ensure you receive at least the market-standard concessions for an organization of your size.
• Optimize your product mix: Evaluate which Microsoft products and editions you need. Be selective about upgrades like M365 E5, and deploy them only where they deliver clear value. License lower-cost editions (E3/E1 or add-ons) for users who don’t need premium features.
• Consider Azure commitments carefully: If adding an Azure spending commitment, align it with realistic usage forecasts. Negotiate for discounted rates and flexibility (carryover, service swapping) in exchange for your commitment, and avoid over-committing to prevent wasted budget.
• Secure price protections: Lock in pricing for the full term and negotiate caps on any future increases. Every product in your EA should have a fixed price or a guaranteed discount level to shield you from Microsoft’s list price inflation.
• Use contractual flexibility: Where possible, build options that allow you to adjust if needed. This might include the ability to true-down annually under a subscription EA, shorter renewal terms, or the right to terminate specific cloud services with notice. Tailor the contract to your business’s agility needs.
• Decouple support and licenses: Treat your Microsoft Unified Support (and similar services) as a separate negotiation. By renewing support independently of the EA, you can seek competitive alternatives or push Microsoft for a better support deal without affecting your license discounts.
• Engage expertise and stay informed: Consider using third-party licensing advisors or SAM experts who know Microsoft’s playbook in complex EA negotiations. Also, educate your team on Microsoft’s latest product and policy changes (like MCA-E, new product bundles, etc.) so you aren’t caught off-guard by “new” items at the negotiating table.

FAQ

Q1: What’s the biggest mistake enterprises make in Microsoft EA renewals?
A: The most common mistake is waiting too long and rushing the renewal without a thorough plan. This often leads to “status quo” deals where companies simply renew all existing licenses (including unused ones) and accept Microsoft’s first offer. Not optimizing usage beforehand or benchmarking pricing can result in paying far more than necessary. Start early, clean up your license inventory, and approach the renewal as a strategic sourcing event, not just an administrative task.

Q2: How far in advance should we begin preparing for an EA renewal?
A: Give yourself at least six months, ideally up to a year, before the EA expiration. In the first few months, perform internal audits and define your needs. About 3–4 months before expiry, you should be in active discussions with Microsoft (or your reseller), sharing requirements and negotiating. Complex negotiations (involving multiple rounds or approvals) can easily take a couple of months. Starting early also lets you explore alternatives (like adjusting product mix or considering a subscription EA) without the pressure of a looming deadline. In short, early preparation is key to cost savings.

Q3: How can we identify cost savings opportunities before renewing?
A: Begin with a detailed usage analysis of your current EA. Look for obvious overspend indicators: licenses assigned to ex-employees, duplicate accounts, or products purchased but never fully deployed. Check utilization of cloud services (Azure, Power BI, etc.) to see if you’re over-provisioned. Engage your Software Asset Management (SAM) team or tools to produce a report of what you have versus what’s used. From this, create a list of candidates to eliminate or reduce. You may also uncover chances to switch license types, for example, if 500 users only use email and Office apps, they may use a cheaper SKU than the rest of the organization. Every license trimmed or downgraded translates directly into savings on the renewal proposal.

Q4: Microsoft’s renewal quote was ~25% higher than our last EA—what can we do to reduce it?
A: First, understand why it’s 25% higher. Is it due to price increases on the products, additional licenses being included, or the addition of new premium products (like an E5 suite or more Azure)? Break down the quote line by line. Then, tackle each factor: for list price increases, negotiate a discount to neutralize that hike (for instance, if Office 365 went up 10%, seek an extra 10% discount so your net stays flat). If new products were added that you didn’t explicitly ask for (common tactic), challenge their necessity – you can remove or reduce them. If your user count grew, and that’s part of it, ensure you get credit for the larger volume via higher volume discounts. Use market benchmarks to argue that a 25% increase is not tenable and prepare a counter-proposal that shaves it down through reduced quantities, better discounts, or substituting a lower-cost alternative for something. You have the most leverage at renewal – be willing to push back and, if needed, escalate within Microsoft that the budget can’t accommodate such a jump. Often, they have some wiggle room, especially if it risks losing your entire renewal.

Q5: Can switching from an EA to Microsoft’s CSP program save us money?
A: For large enterprises (500+ seats), an EA is usually the most cost-effective due to volume discounts and pricing protections. The Cloud Solution Provider (CSP) program offers more flexibility (month-to-month licensing, no minimum seat count), but its discounts are generally lower or non-existent for enterprise-scale quantities. CSP might make sense if your organization downsizes below EA minimums or needs a very agile add/remove licenses monthly, but you’d likely pay higher unit prices. Another consideration is the MCA-E (Microsoft Customer Agreement for Enterprise), which Microsoft is gradually pushing; it’s direct with Microsoft and more flexible, but may remove some legacy discounts. Before switching, compare side-by-side: price out your current licenses under CSP pricing vs. EA. In most cases, enterprises find EA still cheaper when usage is steady and high. CSP can complement certain scenarios (e.g., handle a small subsidiary or a pilot project), but dropping EA entirely is rarely a cost-saving move for a large customer – it often costs more in the long run if you need similar services.

Q6: How can we negotiate a better discount beyond Microsoft’s standard pricing?
A: Preparation and leverage are your friends here. Go into the negotiation armed with data: know the going rate (discount %) that companies of your size and industry achieve. You can gather this via industry contacts, consultants, or research. Communicate to Microsoft that you are considering all options, implying that if the deal isn’t acceptable, you have alternatives (delaying certain deployments, exploring third-party products, or even considering a competitor for some workloads). Microsoft sellers are often motivated to maintain their accounts and will find creative ways to improve the deal if they sense it’s at risk. Tactics include: bundling more products for an overall discount (e.g., “if we also add Dynamics 365, we expect a bigger cross-product discount”), leveraging timing (as mentioned, maybe pushing the deal into their fiscal end when they need the number), and simply asking straightforwardly for better pricing based on loyalty or strategic partnership. Also, don’t underestimate the value of involving your executive sponsors – for instance, a CFO-to-Microsoft VP conversation about the importance of a fair renewal can sometimes unlock concessions that your day-to-day account rep couldn’t grant. In summary, show Microsoft you’ve done your homework and maintain a polite but firm stance that you need more value; they often have hidden discount bandwidth, especially for committed, long-term customers.

Q7: Microsoft encourages us to upgrade all users to E5 and buy new security add-ons. Do we need to?
A: Not necessarily, it depends on your organization’s requirements. Microsoft E5 and the host of add-ons indeed deliver advanced features (threat protection, analytics, telephony, etc.), but not every company or every user will use those features fully. Adopting them universally would raise costs significantly (E5 licenses cost considerably more per user). The cost-saving approach is to take a targeted approach: implement E5 or specific add-ons only for the user groups that will benefit. For example, your IT security team and high-risk departments may get E5 for the advanced security, while most users stay on E3. Or you might choose E3 for all, but then separately license an add-on like Defender for those who need it. Microsoft often bundles things to simplify selling, but you have the right to mix license types under EA. It’s also wise to pilot these advanced features first, to prove the value to your IT team and business stakeholders. If, after a pilot, you find that the E5 security tools significantly enhance your posture, then adopt more broadly (and use the pilot success to negotiate a better price for rollout). In short, don’t buy into the narrative that you “must” upgrade everything to get a good deal; a good deal is one where you’re paying for what you need and use. Microsoft will push new offerings – evaluate each on merit and cost/benefit, and only include what makes sense in your renewal.

Q8: What’s the best way to handle Azure in our EA renewal?
A: First, assess how important Azure is to your IT roadmap. If you have substantial Azure usage (or plans for it), the EA renewal can integrate an Azure plan or monetary commitment, potentially lowering your Azure unit costs. The best practice is forecasting your Azure consumption for the next 3 years. If you’re confident in a baseline spend level, negotiate an Azure commitment for that amount in exchange for discounted pricing or credits. Ensure the terms are flexible; for example, you’d want the ability to apply the commitment to any Azure services (not just specific ones) and possibly carry over unused funds to the next year. If you’re unsure about cloud projects, you might keep Azure on a pay-as-you-go basis (outside the EA commitment) to retain flexibility; however, you’d miss out on certain discounts. Also, consider Azure Hybrid Benefit and other license grants (for Windows/SQL Server), and utilize those if you have eligible on-prem licenses, as they can drastically cut Azure VM costs. In summary, with two goals, include Azure in the conversation: get cost predictability (no surprise bills) and better-than-public-cloud pricing for committing to Microsoft. But never commit beyond your comfort – it’s better to slightly under-commit and pay a bit extra if you exceed, than to over-commit and pay for cloud resources you never use.

Q9: Can we reduce the number of licenses if our user count drops mid-term?
A: Unfortunately, no reductions are allowed mid-term under a standard EA. You can increase it via true-ups, but not true-downs, until the agreement ends. This is why aligning license quantity with real needs at renewal is so critical; once you lock in an EA, you’re generally paying for those quantities for the next 3 years even if your usage decreases. However, there are a couple of approaches to handle potential downsizing: One, as mentioned earlier, you could opt for an Enterprise Subscription Agreement (EAS), which does allow annual adjustments downward. If you foresee a likely drop (for instance, a business unit sale or layoffs), the subscription route may save you from overpaying for unused licenses. Second, you might negotiate a shorter-term agreement or a mid-term checkpoint. For example, an 18-month term with an option to renew/extend, which is not typical but possible with Microsoft’s approval, could align with an expected reorg or divestiture timeline. Suppose neither is feasible, and you’re in a standard EA with an unexpected downturn. In that case, your best bet is to see if Microsoft will allow some flexibility (they might not reduce your annual bill, but occasionally they’ll let you repurpose licenses for other affiliated companies or swap to different products to use the value you paid for). The bottom line is to plan conservatively at renewal if there’s any uncertainty in user count. It’s better to slightly under-buy and add a few true-up licenses later (which you can always do) than to over-buy and have licenses sitting idle for years with no refund.

Q10: Should we involve a third-party advisor, or can our procurement team handle the EA renewal alone?
A: This depends on your team’s experience and the complexity of your deployment. Many enterprises successfully negotiate EAs in-house, especially if they have a dedicated IT procurement or asset management team that deals with Microsoft regularly. Microsoft licensing is notoriously complex, with high stakes (millions of dollars over the years). Engaging a third-party licensing expert or negotiation consultant can bring specialized benchmark data and tactics that an internal team might not have. They can identify non-obvious savings (e.g., licensing program tweaks, unused benefits, contractual loopholes) and know the latest vendor behavior patterns. Another advantage is that a consultant can play the “bad cop” in negotiations, pushing Microsoft harder on price and terms, while your company maintains a positive relationship. If you do go solo, ensure you’ve done the research – attend Microsoft licensing briefings, read up on recent changes (product terms, new licensing programs like MCA-E), and perhaps get legal review of the terms. If your EA is straightforward and relatively small, you might not need outside help. But an advisor could save more money than their fee if it’s a large, complicated agreement, or you lack insight into how far Microsoft can flex. In either case, the key is knowledge: make sure whoever is leading the negotiation is fully informed and prepared to dive into the details.

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