Microsoft EA vs MCA: What’s the Difference and Which Is Better for You?

Microsoft EA vs MCA

Microsoft’s Enterprise Agreement (EA) and Microsoft Customer Agreement (MCA) represent two distinct approaches to purchasing Microsoft software and cloud services.

Choosing between them is crucial for CIOs, CTOs, procurement leaders, and IT asset managers.

The EA has been the traditional choice for large enterprises – a multi-year volume licensing contract that locks in pricing and terms.

In contrast, the newer MCA is a modern, flexible purchasing agreement designed for cloud consumption, featuring a pay-as-you-go model.

This article explains the differences between EA and MCA, covering contract structures, pricing models, commitment lengths, minimum requirements, procurement channels, billing cadence, and negotiation flexibility.

We’ll also compare ideal use cases for each (e.g, large enterprise vs. agile or cost-conscious organizations), include a side-by-side comparison table, share real-world scenarios from 2024–2025, and provide recommendations to help you decide which is better for your organization.

Contract Structure and Term Length

Enterprise Agreement (EA):

The EA is a formal volume licensing contract that typically spans a fixed three-year term. It involves a master agreement and enrollment paperwork that must be negotiated and signed, often totaling dozens of pages.

The EA must be renewed or renegotiated at the end of the 3-year term, which can be a complex project. All software licenses and cloud services under an EA are tied to this term; they co-terminate at the same end date.

This provides a predictable cycle: enterprises know when their agreement expires and can plan true-ups and renewals accordingly. However, it also means less flexibility in the long term; generally, you cannot easily shorten or escape the commitment until the term ends (except by paying penalties).

Microsoft Customer Agreement (MCA):

The MCA is designed as an evergreen agreement (with no fixed term). It is a fully digital contract (often just 8–10 pages to start) that does not expire – once you sign up, it remains in effect unless terminated.

Under the MCA, you have no end date for driving all services. Instead, cloud services and subscriptions can be purchased on a rolling basis and have their term lengths (for example, you might have some Azure services on a month-to-month basis, and certain Microsoft 365 licenses on annual subscriptions). The agreement auto-renews continuously, removing the traditional big renewal event.

This streamlined structure means less paperwork upfront and eliminates the need for large contract renewal negotiations every few years.

On the other hand, the lack of a fixed end date shifts the responsibility onto the customer to regularly manage and optimize their usage. There isn’t a natural “reset point” like an EA renewal to prompt evaluation of your licenses.

Commitment Length and Minimum Requirements

EA Commitments:

Enterprise Agreements require a substantial commitment. Traditionally, an EA requires an organization to make a company-wide purchase commitment for key products (e.g., Office 365 for all users, if included) and meet a minimum size threshold.

The minimum to qualify for an EA has been around 500 users or devices, which Microsoft refers to as “Level A” in its discount tiering.

Microsoft has been raising these thresholds. Rumors in 2024 suggest the 500-user Level A tier may be phased out, potentially increasing the minimum to 2,400 users for new EAs. In practice, this means EAs have been targeted at large enterprises.

Additionally, EAs often require upfront annual spending commitments.

For example, if you include Azure in an EA, you might commit to spending a certain amount each year on Azure. The benefit is that you lock in pricing and discounts in exchange for a big commitment (discussed below).

But it also means less flexibility if your needs shrink, you generally cannot drop below your initial committed quantities until the next anniversary or contract end.

Read How to Manage Costs Under the Microsoft Customer Agreement (MCA).

MCA Flexibility:

The Microsoft Customer Agreement has no minimum user or spend requirement. It is available to organizations of any size, even with just a handful of users or a single subscription. You can start an MCA easily via Microsoft’s website or with a partner and purchase only the services you need.

Without including every user or device, there is no concept of an organization-wide coverage requirement – you can mix and match exactly which subscriptions or licenses to buy. The MCA’s pay-as-you-go nature means no long-term volume commitment: you pay for cloud services month-to-month (or for the duration you select), and you can reduce or cancel subscriptions as those needs change.

This makes the MCA ideal for agile or growing companies that want to avoid being locked into high headcount or multi-year spending commitments.

The trade-off is that, without a commitment, you may not automatically receive the steep volume discounts that an EA could offer for a very large purchase, and you assume more responsibility to monitor usage to avoid overspending (more on cost management later).

Pricing and Discount Models

EA Pricing:

One of the biggest advantages of an EA has been the volume discount pricing.

Microsoft traditionally offers tiered discount levels (commonly labeled A, B, C, D) based on the quantity of licenses or devices in an EA.

The larger the enterprise (and the more licensed software), the higher the discount tier, leading to lower unit prices.

In an EA negotiation, enterprises often negotiate additional discounts on top of standard tiers, especially if they commit to higher spending or bundle more products.

Price protection is another key EA feature; license prices are generally locked for a 3-year term.

This protects the customer from Microsoft’s list price increases during the term.

For Azure cloud services under an EA, companies might negotiate an upfront discount (or consume Azure via a prepaid monetary commitment, often at a discount to pay-as-you-go rates).

Overall, EA customers benefit from predictable pricing: they know their baseline costs for the term and can budget accordingly.

However, the savings are realized only if the company fully utilizes its commitment; overcommitting can lead to paying for unused capacity.

MCA Pricing:

The Microsoft Customer Agreement uses a pay-as-you-go pricing model for Azure and other services. There are no built-in volume tiers published – in general, customers under MCA pay the prevailing list prices for cloud services or subscription licenses.

If you purchase Azure services through the MCA, you pay the standard Azure retail rates unless you have separately negotiated a different rate with Microsoft. You pay per license for Microsoft 365 or other subscriptions, typically at standard pricing (monthly or annual rates per user). There are still ways to get cost benefits under an MCA.

First, work with a Cloud Solution Provider (CSP) partner on an MCA. The partner may offer you a slight discount or promotional pricing since CSPs can set their margins (Microsoft sells to the partner at a discount, and the partner resells to you).

Second, Microsoft has introduced Azure Savings Plans and Reserved Instances, optional commitment-based offers that complement the pay-as-you-go model.

For example, you can commit to a certain level of Azure compute usage for 1 or 3 years to get up to 65% lower rates, even though you’re not in an EA.

Microsoft may also provide custom discounts in return for growth commitments. Suppose your cloud usage is forecast to grow significantly.

In that case, you might negotiate a discount or rebate with your Microsoft account team under the MCA (this tends to be informal compared to the structured EA discounts). It’s important to note that price protection under MCA is limited.

Because the MCA has no fixed term, Microsoft can change service pricing or software subscription prices, and these changes will take effect once your current subscription period ends.

For example, if Microsoft announces a 10% price increase on a product, EA customers would typically be protected until their next renewal. In contrast, MCA customers may see that increase when their month-to-month or annual subscriptions renew.

In short, MCA offers flexibility but usually at catalog prices, unless you actively optimize or negotiate specific deals.

Procurement Channels and Billing Cadence

EA Procurement and Billing:

Enterprise Agreements are traditionally sold through Microsoft’s large account resellers, known as Licensing Solution Providers (LSPs). You work with an LSP (and Microsoft’s account representatives) to sign the EA.

Procurement is centralized, and a single agreement covers your entire organization. Billing under EA is infrequent, as customers typically receive an invoice annually.

At the start of the EA (or each year), you are billed for the agreed products and quantities (for software licenses, Software Assurance, and any Azure pre-commit).

If you added extra licenses beyond your initial count during the year, you report those at the anniversary as a “true-up” and get billed for the prorated addition.

All Azure consumption beyond the prepaid amount is also reconciled, typically on a yearly or quarterly basis. Thus, the EA billing is consolidated, providing you with a single invoice that covers all your Microsoft usage, making it straightforward for accounts payable.

However, it’s rigid: Microsoft sets the invoice timing and format, and you have limited flexibility to change the billing frequency. Many enterprises appreciate the EA’s single invoice and net payment terms, though paying at once can be a large lump sum.

MCA Procurement and Billing:

The MCA allows more flexible procurement channels. Customers can sign an MCA directly with Microsoft online or via a Microsoft sales rep (especially for the “MCA for Enterprise” if you are a larger account), or you can procure through a partner under the Cloud Solution Provider program (in which case the partner facilitates the MCA process).

In either case, the agreement is simplified and digital, and accepting the terms online is often all that’s needed. Billing under MCA is typically paid on a monthly, pay-as-you-go basis. For Azure services, you receive monthly bills based on actual consumption in the past month.

For subscription licenses (such as Microsoft 365), if you choose a monthly term, you pay monthly. If you choose an annual term (often to receive a better rate), you may be billed monthly or upfront annually, depending on your setup. The key difference is that you pay for what is used or what subscriptions are active each billing cycle.

This can result in multiple invoices or charges being issued. For example, Microsoft might issue separate invoices for different billing accounts or profiles you have under the MCA (some enterprises using MCA set up multiple billing profiles to align with departments or projects, each getting its own invoice).

The MCA billing system is more granular, and customers must adapt to managing potentially dozens of line items across various subscriptions. On the positive side, it allows departmental chargebacks and fine-grained tracking more easily, and each team can pay for its own Azure subscription if desired.

The billing cadence is more frequent (monthly), which improves cash flow and avoids large upfront payments. However, it means that finance teams must be prepared for continuous invoice processing.

Additionally, if you are transitioning from EA to MCA, be aware that the billing and invoice structure changes. For instance, you won’t have an annual true-up process; instead, usage is accounted for in real-time. Companies should establish internal processes to manage this steady stream of bills and ensure that nothing falls through the cracks.

Flexibility, Changes, and Cancellation

EA Flexibility:

The Enterprise Agreement is somewhat inflexible during its term. You are generally locked into the quantities and products you initially ordered, with limited ability to reduce them.

The EA does allow some adjustments: at each anniversary, you can usually decrease license counts for certain products (often, you must maintain at least your company-wide coverage if that was a condition, but you might reduce licenses for optional products or unused services at the anniversary checkpoint).

However, you cannot completely exit an EA early without penalty; you’re expected to maintain the agreement for the full 3 years.

If your organization undergoes downsizing or shifts away from a product mid-term, you may still be paying for it until the next renewal. On the Azure side, if you commit to spend (say $1M over 3 years), you must pay for that commitment even if you don’t consume all of it by the end of the term.

One flexibility of EA is the ability to add new products or services during the term; you can often amend the agreement to include a new product line (with Microsoft’s approval and additional cost) or take advantage of new offerings. Still, those additions remain in effect through the EA term.

Changes are typically negotiated with your reseller and Microsoft rep, not self-service.

MCA Flexibility:

Flexibility is where the MCA shines. Under the Microsoft Customer Agreement, you have greater flexibility to adjust your usage.

Need to add 100 new users to Microsoft 365 for a project? You can procure those licenses immediately in the portal and pay for them without any contractual amendment.

Conversely, if you no longer need certain resources, you can cancel or drop them after their billing period has ended. For example, Azure virtual machines can be shut down, and you can stop paying for them on the same day; service subscriptions can be canceled at the end of their monthly term (or not renewed at the next term).

You are not bound to a fixed company-wide product selection – you can try new Microsoft services as they come out, without formal amendments, simply by provisioning them under the MCA.

This agility is ideal for organizations that experience fluctuations in staff or workload. Seasonal businesses can scale licenses up and down to match demand, and development teams can spin up and down cloud resources without waiting for a lengthy procurement cycle.

Essentially, the MCA brings a cloud-era flexibility to procurement, aligning costs directly with usage. The only caution is that with this freedom comes the need for governance: it’s easy to over-provision if not monitored (since there’s no hard contract limit forcing restraint). Additionally, certain cancellations may still require you to fulfill a short-term commitment.

For instance, if you purchased a 1-year reserved instance for Azure to save money, you cannot cancel it without incurring a penalty until the end of that year.

However, compared to EA, the MCA imposes far fewer long-term obligations. It also auto-renews subscriptions by default (to avoid interruption), but you can turn services off as needed. MCA offers more flexible “on-demand” licensing, whereas EA is about “lock-in and plan.”

Negotiation and Customization

Negotiation Leverage in EA:

Under an Enterprise Agreement, customers have a defined renewal and negotiation cycle every three years. This provides a natural point to negotiate with Microsoft for better pricing, concessions, or new terms. Microsoft knows you could decide not to renew or to reduce your purchase, so they are motivated to offer incentives at that point.

Enterprises often leverage the EA renewal to negotiate custom contract terms via amendments (for example, special use rights or deviations from standard terms to meet their specific legal needs) and to secure discounts or credits (such as a larger Azure consumption discount if they commit to increasing usage).

Additionally, EAs historically include features such as a price cap on increases and often come with Software Assurance benefits bundled, which can be viewed as a negotiated value.

The EA also enables multi-year spending planning, which some organizations utilize to negotiate budget-friendly deals over multiple years (e.g., front-loading some costs or securing a larger discount for year 1 compared to year 3).

However, between renewals, your ability to negotiate changes is limited—you’ve signed the contract, and aside from minor additions or strategic adjustments, the terms are set.

Large enterprises with EAs may still negotiate mid-term for adding significant new business (Microsoft might extend a special price if you suddenly add 5,000 new users mid-term, for instance). However, generally, the big negotiations occur at signing and renewal.

Negotiation in MCA:

With the MCA’s continuous model, there is no major renewal event to trigger periodic renegotiation. The terms of the MCA itself are standardized – Microsoft provides the agreement and, especially for smaller customers, it’s largely non-negotiable boilerplate (you accept it online).

For larger enterprises signing an MCA-E (MCA for Enterprise) directly with Microsoft, there may be room to negotiate customer-specific terms or a separate terms supplement. Still, it is far less customizable than an EA with bespoke amendments. Organizations requiring special contract terms (such as compliance and data residency) might find MCA limiting.

Negotiating pricing under the MCA typically occurs continuously: if your usage grows significantly or you plan a large project, you may approach Microsoft for a discount or an incentive. Instead of a pre-negotiated discount schedule, Microsoft may handle it via consumption-based incentives, for example, “if you spend $X million in Azure this year under MCA, we’ll give you Y% rebate or extra credits.”

The lack of a defined endpoint also reduces the customer’s leverage: Microsoft isn’t facing a contract expiration that risks losing your business, so the urgency to cut a deal is lower.

As a result, procurement leaders need new strategies under MCA, such as benchmarking their ongoing costs, tracking Microsoft’s pricing updates, and potentially considering switching partners or Microsoft’s competitors if needed to keep pressure on pricing. Some organizations engage third-party licensing advisors to continually optimize costs in the absence of an EA renewal milestone.

In short, while the MCA simplifies buying, it shifts the relationship to an ongoing management mode rather than a big periodic negotiation.

The recommendation is to treat cost optimization as a continuous process under MCA – utilize Microsoft’s programs for cost savings (like those Azure savings plans, promotions, or multi-year subscription discounts) and maintain flexibility to negotiate when opportunities arise (for instance, when Microsoft launches a new product you’re interested in, or during end-of-quarter when sales reps might be more flexible).

Customization of Terms:

EAs allow a degree of customization through negotiated amendments. Large enterprises often have riders for specific use cases (e.g., extended rights for a merger scenario, or grandfathering of old product terms).

The MCA, in its current form, is mostly standardized. Microsoft has indicated that many of the same product terms from EA will apply (the Product Terms document defines use rights regardless of EA or MCA). Still, you won’t get unique contract wording just for you in an MCA unless you’re a very large customer, and even then, it’s limited.

This is a consideration for organizations with complex requirements. If you rely on a very tailored agreement, sticking with EA might be preferable until Microsoft enhances MCA’s flexibility for custom terms.

Side-by-Side Comparison: EA vs MCA

To summarize the key differences between Microsoft’s Enterprise Agreement and Microsoft Customer Agreement, the table below compares them across major attributes:

EA vs MCA Comparison Matrix:

The Enterprise Agreement and Microsoft Customer Agreement serve different needs in terms of scale and flexibility.

The illustration above summarizes the key differences across contract length, commitments, billing, and other aspects.

By comparing these attributes, stakeholders can quickly identify which model aligns better with their organization’s requirements.

Ideal Use Cases and Scenarios

Choosing between EA and MCA depends on your organization’s profile and priorities. Below are some ideal use-case scenarios for each model:

• When an EA Makes Sense: Large enterprises (typically thousands of employees) that deploy a broad range of Microsoft products enterprise-wide are classic EA candidates. If you value cost predictability and volume discounts over flexibility, an EA is attractive. For example, a global bank with 10,000 users on Microsoft 365, Windows, and Azure might opt for an EA to secure the best pricing and lock in a 3-year budget. Companies that require Software Assurance benefits, such as rights to new versions of Windows or Office, training vouchers, or 24/7 support, will lean toward EA since SA is bundled. Additionally, suppose your procurement and legal teams require a highly customized contract with specific terms (such as data privacy amendments or liability tweaks). In that case, the EA provides a framework for negotiating those. An EA is also useful if you prefer an annual true-up cycle to true-down/up licenses, which can simplify internal accounting (some finance teams like having one true-up event rather than continuous changes). Finally, organizations not ready to constantly monitor cloud spend might prefer the “buy once and watch it for three years” approach of an EA.
• When an MCA Makes Sense: Midsize and smaller enterprises, as well as any organization seeking maximum flexibility, benefit from the MCA. If your user count or cloud consumption fluctuates or grows unpredictably, an MCA allows you to scale up or down without being locked into a contract that overshoots your needs. Consider a fast-growing tech startup or a company with seasonal workforce changes – the MCA allows them to add 500 Azure VM instances one month and reduce to 100 the next, paying only for what is used. Cost-conscious organizations also appreciate that the MCA has no upfront cost commitment – you don’t need to pay for a year of licenses in advance. This pay-go model can simplify cash flow by treating IT costs as operating expenses and directly tracking usage. Another use case is organizations adopting a cloud-first strategy who only need Microsoft’s cloud services (Azure, Microsoft 365, Dynamics 365, etc.) and have no on-premises software footprint – they lose nothing by dropping the EA, and gain the simpler purchasing of MCA. In 2024–2025, Microsoft nudges many companies in the 500–2,000 employee range toward MCA as Microsoft raises EA thresholds. These customers often find that with MCA (especially via a good CSP partner) they can still get reasonable pricing while gaining flexibility. For example, a regional hospital network with 800 users might move to an MCA to avoid the EA’s 500-user minimum (if that minimum were to increase, they’d be forced off EA anyway). Under MCA, they only pay for the 800. If one hospital is sold, licenses are reduced accordingly without waiting years.
• Hybrid Approach: Notably, some large enterprises employ a hybrid licensing approach. They might maintain an EA for certain core licenses (or regions) but use MCA for specific new cloud projects or subsidiaries. For instance, a multinational company could retain an EA for its primary corporate users (ensuring discount levels and SA benefits), but allow a newly acquired startup subsidiary to operate under an MCA to provide it with agility. Microsoft’s licensing landscape now allows co-existence: you can have an EA and sign an MCA for other purchases (though you’d want to avoid overlap/confusion in such cases). Over time, Microsoft’s strategy (as seen by 2025) is moving more spend to the MCA/CSP model, so even EA customers are likely to interact with MCA programs at some level (for example, new Azure services might only be available via MCA). Being open to a hybrid model can ease transition pains.

Real-World Trends (2024–2025)

In the past two years, we’ve observed significant shifts in how enterprises approach EA vs MCA:

• Microsoft Raising EA Thresholds: As mentioned, Microsoft appears to be phasing out smaller EAs. In 2024, reports indicated that customers in the 500–2,399 user range (formerly EA Level A) would eventually no longer be eligible for an EA. These midsize enterprises are being directed to MCA-based licensing (either directly with Microsoft for larger ones or via CSP partners for smaller ones). Practically, if your company has fewer than 2,400 seats, Microsoft might not even offer an EA at your next renewal, forcing a move to MCA. This trend drives many organizations to proactively evaluate the pros and cons of MCA.
• Cost Outcomes: Organizations that have switched from EA to MCA have seen mixed outcomes in terms of cost. If well-managed, an MCA can save money by avoiding over-purchasing. For example, one company that downsized in 2024 could immediately drop 15% of its Microsoft 365 licenses under MCA. In contrast, under an EA, they would have had to keep paying for those until the contract ended. This directly cuts costs.
  Additionally, the ability to buy month-to-month under MCA means companies can avoid paying for unused months (such as not renewing certain project-based licenses after a project ends). On the other hand, some customers have found costs increased after leaving an EA: they lost their volume discount, so per-unit prices went up. Any Software Assurance benefits they utilized

  (like discounted training or free server upgrades) Either disappeared or had to be paid for separately, adding new costs. There’s also the phenomenon of “sprawl”. Without the cap of an EA, various departments might start purchasing extra services under the MCA, and suddenly, the total spend exceeds expectations. A strong IT Asset Management discipline is necessary to prevent this.
• Procurement and Vendor Management Adjustments: Enterprises that moved to MCA often had to adjust their internal processes. For example, one Fortune 1000 firm that transitioned to MCA in 2025 reported that its accounts payable team had to adapt to new monthly invoice workflows and set up alerts for missed payments, as the old EA annual billing was no longer in place. They also had to invest in tooling for continuous license compliance checks – under EA, true-ups provided a structured annual compliance check. However, under MCA, it’s easy for a business unit to spin up costly VMs without central oversight. As a result, many companies are bolstering their FinOps (Financial Operations) and SAM (Software Asset Management) practices to monitor ongoing usage when on MCA.
• Microsoft’s Perspective: Microsoft positions the MCA as a simplified and customer-friendly model. Microsoft’s marketing highlights the streamlined digital agreement, flexibility in buying from Microsoft or partners, a single integrated portal for all purchases, and automatic incorporation of new services. Microsoft also notes that the MCA’s shorter contract (no lengthy paperwork) speeds up procurement. Indeed, signing an MCA can often be completed in a day through the portal, as opposed to an EA, which may take months of negotiations. However, Microsoft also benefits financially from the MCA model: it can adjust pricing more frequently and doesn’t have to lock in discounts for three years, potentially increasing revenue per customer (unless the customer actively manages costs). From a customer standpoint, the MCA is part of a broader industry shift toward subscription cloud services and away from traditional perpetual licensing contracts.

The real-world data from 2024–2025 shows that EA vs MCA is not a one-size-fits-all answer. It depends on company size, the importance of flexibility vs. predictability, and how well the company can manage ongoing cloud costs.

Below, we provide recommendations to help you decide and ensure success under whichever model you choose.

Recommendations

Choosing between an EA and an MCA involves balancing cost, flexibility, and administrative overhead.

Here are some expert recommendations and next steps for enterprise IT and procurement leaders:

• Evaluate Your Size and Growth: If your organization is well above the typical EA minimum (e.g., thousands of users) and you foresee stable or growing usage, an EA might yield better discounts and predictable budgeting. Suppose you’re below the threshold or expect fluctuating usage, lean towards MCA for its agility. Also, consider Microsoft’s direction – if you’re borderline, be prepared to know that Microsoft might push you to MCA at renewal anyway.
• Inventory Your Needs: Create a detailed list of all Microsoft products and services you currently use (and plan to use). An EA or a separate volume license program may still be needed if you have a significant on-premises software footprint that relies on Software Assurance (e.g., Windows Server licenses with SA for upgrade rights). An MCA can likely cover everything in one agreement without unused on-prem extras if you’re almost entirely cloud (Azure, M365, etc.).
• Compare 3-Year Total Costs: Do a scenario analysis of costs under each model. Engage with Microsoft or a licensing partner to get an EA pricing quote vs. an MCA pricing estimate for the same set of services. Include any discount tiers you’d hit in EA, and include likely usage patterns in MCA (plus any CSP partner quotes). This will show you the break-even point. Often, large enterprises find EA’s discounts make it cheaper over 3 years, but those savings vanish if you have many unused licenses in an EA. Ensure that the SA benefits’ value is factored in (e.g., if under MCA, you’d have to pay for upgrade licenses or support free under EA).
• Consider Partner Value: Under an EA, your LSP and Microsoft account team help manage the contract (and can provide advice, licensing help, etc.). Under an MCA, especially when implemented through a CSP, the partner’s role is crucial for support and guidance, as there’s no built-in true-up process or Microsoft true-up assistance. Choose a partner with strong Microsoft licensing expertise if you go the MCA route. A good partner can help you continuously optimize costs and ensure you don’t over-license yourself.
• Plan Governance for MCA: If you’re moving to an MCA, establish governance before making the switch. Establish who in your organization can provision new services (to avoid uncontrolled cloud spend), set up Azure Cost Management dashboards (more on that in the next article), and define processes for regular license reviews. You’ll replace the once-every-3-year EA audit with a continuous monthly operational process. This prevents bill shock and compliance issues.
• Leverage Hybrid for Transition: If you are mid-EA and considering not renewing, you don’t have to wait. To gain familiarity, you can pilot an MCA for a specific workload (say a new Azure project). Additionally, consider negotiating with Microsoft – they may offer transition incentives, such as converting the remaining EA monetary commitment to Azure credits in MCA or providing price matching for a specified period. Ensure any move is timed to avoid overlap costs (don’t double-pay licenses in both EA and MCA).
• Negotiation Strategy: For EA holders, use your renewals while you still have them. Push for the best terms, but also include flexibility clauses if possible (for example, some organizations have negotiated an early termination option for cloud services in later years – a rare but possible option). If moving to MCA, consider negotiating terms such as price holds for a year or a pool of free Azure credits, especially if you’re a significant account. You might be surprised to find that Microsoft can still offer a deal even under an MCA if they want to retain your business. Just because MCA is transactional doesn’t mean you lose all bargaining power; it just moves to a different model (often tied to growth commitments or partner deals).
• Keep an Eye on Changes: Microsoft licensing programs evolve frequently. Stay informed via Microsoft’s announcements or licensing advisory services. For instance, if Microsoft officially raises the EA minimum to 2,400 users or discontinues certain programs, you’ll want to know well beforehand. Similarly, new cost-saving offerings (like Azure savings plans introduced recently) can tilt the equation. Being proactive ensures you’re not caught off guard at renewal time.
• Involve Stakeholders: Include IT and Finance teams in this decision. The EA vs MCA choice has technology management implications (IT will manage subscriptions differently) and financial implications (how costs are recognized and controlled). Procurement should facilitate a cross-functional discussion to ensure the chosen model aligns with the company’s culture and capabilities. For example, if your finance team is extremely averse to variability and prefers fixed annual budgets, they might lean toward EA; if they’re okay with variable cloud bills as long as IT manages them, MCA is fine. Align on those expectations up front.

In summary, Enterprise Agreement vs. Microsoft Customer Agreement is about control vs. flexibility. A well-negotiated EA can offer cost efficiency and simplicity for a stable environment, whereas an MCA offers agility and potentially lower spend if you actively optimize.

Many enterprises in 2025 are rethinking longstanding EAs in favor of the nimbleness of MCA, but it requires internal maturity to execute well. Use the guidelines above to determine which path is better for you, and be prepared to adapt as Microsoft’s licensing landscape evolves.

FAQ

1. Q: What is the difference between a Microsoft EA and an MCA?
   A: The Enterprise Agreement is a fixed-term (3-year) volume licensing contract with upfront commitments and locked-in pricing, while the Microsoft Customer Agreement is an open-ended pay-as-you-go arrangement with no term. It offers the flexibility to buy cloud services on demand without long-term commitments.
2. Q: Which agreement offers better discounts on Microsoft products – EA or MCA?
   A: Generally, the EA offers better volume discounts for large purchases – pricing is tiered and often negotiated lower for big enterprises. The MCA typically charges standard pay-as-you-go prices (list prices). However, working with a partner or committing to usage (via Azure reservations or savings plans) can result in some discounts. Large organizations with steady needs often find that the EA’s discounts make it more cost-effective over a multi-year period.
3. Q: Can smaller companies (under 500 users) sign an Enterprise Agreement?
   A: Traditionally, the minimum for an EA was about 500 users, so very small organizations didn’t qualify. Microsoft is now pushing that minimum higher (possibly 2,400 users shortly). Therefore, a company with fewer than 500 seats would likely be directed to the MCA (possibly through a CSP partner) instead of an EA. In short, small and midsize companies are usually better suited to MCA, as the EA is designed for large enterprises.
4. Q: How does billing differ between EA and MCA in practice?
   A: Under an EA, you typically get one consolidated bill per year (covering all licenses and any over-use at true-up). Under an MCA, you get monthly bills for each subscription or consumption charge. For example, with EA, you might pay once a year for 1,000 Office 365 licenses; with MCA, you’d be charged monthly for those 1,000 licenses (and you could reduce or add to that number month by month). MCA billing is more continuous and granular, whereas EA billing is periodic and aggregated.
5. Q: What happens if we over-use or under-use licenses in each model?
   A: In an EA, if you deploy more licenses than initially contracted, you aren’t billed immediately; instead, you report and pay for those additions at the annual true-up (so you have a grace period). If you under-use (fewer licenses needed), you generally cannot reduce your count until the anniversary or contract end. In an MCA, if you over-use (say you spin up new VMs or add users), you’ll see the cost in the next monthly bill – there’s no built-in grace period, though you can often turn off resources to stop costs in the future. If you under-use or no longer need something, you can simply remove it, and you won’t be billed in the next cycle (assuming any required notice period or subscription term is honored). So, MCA is a real-time adjustment, and EA is a contractual commitment with periodic reconciliation.
6. Q: Are Software Assurance benefits available under the MCA?
   A: Not directly. The MCA itself doesn’t include Software Assurance (SA) because SA is tied to traditional perpetual licensing programs. Under an EA, SA benefits (like upgrade rights, training vouchers, home use, etc.) are included for the products you license. Move to MCA and still need those benefits for on-premises software. You’d need to maintain an EA for that portion or utilize other licensing programs (e.g., Open Value or CSP offers for perpetual licenses, which may not offer the same benefits). Cloud subscriptions under MCA often inherently include some benefits (for example, a Microsoft 365 subscription includes ongoing updates by nature), but the classic SA extras are mostly absent in MCA.
7. Q: Can we mix and match – having an EA for some products and an MCA for others?
   A: Yes, it’s possible. You might maintain an EA for certain licenses and sign an MCA for other services. For instance, you could keep an EA for Windows and Office for all users, but use an MCA to purchase Azure services for a new project. There isn’t a contractual restriction against having both. However, you’ll be managing two agreements, and the goal should be to avoid paying twice for the same thing or overlapping coverage. Over time, Microsoft might prefer you consolidate. Still, during the transition, it’s common to have both (and Microsoft allows Azure to be on MCA even while other services are on EA).
8. Q: How does termination or cancellation differ between EA and MCA?
   A: An EA is a binding 3-year contract – if you choose to terminate early, there are penalties (typically, you owe the remaining contract balance). It’s rare to terminate an EA early; most simply run the term and then choose not to renew if they want to exit. With MCA, since there’s no term, you can terminate at any time by stopping new purchases and letting any current subscriptions run out. There’s no overarching termination fee for the MCA itself. However, you may have certain subscriptions under MCA that have term commitments (e.g., a 12-month software subscription); if you cancel those mid-term, you might still be liable for the remainder. In general, though, MCA is easier to exit – you just stop using it. The agreement will auto-renew indefinitely, but with no minimum spend, it incurs no cost if you’re not using the services.
9. Q: Which is better for budgeting and cost predictability?
   A: The EA tends to be better for predictable budgeting because you lock in prices and make a known commitment for 3 years. Planning your IT spend is easier when you know “we have X licenses at Y price for the next 36 months.” The MCA, being usage-based, can result in variable month-to-month costs, which may spike if you have a large project or an increase in users. That said, you can still budget under MCA by using Azure cost management tools and setting budgets for subscriptions (see the next article on cost management). Some organizations appreciate MCA’s monthly billing because it aligns costs to actual usage (operational expense style), but it requires diligent monitoring. EA is usually more comforting if your leadership prefers fixed costs and hates surprises. MCA can work if they prefer flexibility and pay-for-what-you-use, but you’ll need to actively manage it to avoid overruns.
10. Q: Will Microsoft eventually phase out Enterprise Agreements completely?
    A: Microsoft’s strategy is shifting toward more agile purchasing models like MCA and cloud subscriptions. For smaller enterprises, Microsoft is already steering them away from EAs. However, for very large customers, the EA (or a variant of it) is likely to persist for a while because it remains a convenient vehicle for big deals. We might see Microsoft adjusting the EA program (for instance, only huge customers get it) or transforming it into something more consumption-based. As of 2025, EAs are still available for large organizations; however, all indications suggest that new features and best pricing may increasingly be found through the MCA/CSP channel. Enterprises should stay aware of Microsoft’s announcements – it’s wise to prepare for a future where even big deals could be done under an MCA framework (perhaps with custom terms for those large accounts). So, while the EA isn’t gone, its role changes, and companies should be ready to adapt.