Negotiating with Microsoft Resellers (LSPs): Strategies for 2025

Negotiating with Microsoft Resellers (LSPs)

Introduction – Why LSP Negotiation Matters in 2025

Microsoft is increasingly routing enterprise sales through Licensing Solution Providers (LSPs), making resellers a central part of software deals.

This shift means CIOs and procurement leads must negotiate effectively with LSPs to protect their interests.

Resellers can simplify licensing logistics, but their goals don’t always align with yours.

In 2025’s landscape of tight budgets and new high-cost add-ons (hello, AI and Copilot), having a negotiation strategy is more critical than ever to ensure you get value—not just a bigger bill.

How Microsoft Resellers (LSPs) Operate

A Microsoft LSP is an authorized reseller that handles large licensing agreements (like Enterprise Agreements) on Microsoft’s behalf.

If you’re signing a major Microsoft contract, you’ll likely work with an LSP to process paperwork, manage renewals, and keep track of your licenses.

They’re essentially the gatekeepers to volume licensing and often double as cloud subscription providers.

While they make your life easier administratively, remember that an LSP is not a neutral advisor. Their primary relationship is with Microsoft, and that influences how they deal with you.

LSP incentives align with Microsoft, not the customer. Microsoft rewards LSPs through rebates and commissions based on how much you spend and what you buy.

LSPs have sales quotas and partner status tiers to maintain, so they’re motivated to drive Microsoft’s revenue – not necessarily to minimize your costs.

They won’t usually fight Microsoft’s pricing on your behalf. Understanding this dynamic helps you stay in control.

Typical LSP revenue drivers include:

• License Volume and Enterprise Deals: On big contracts, LSPs often get a small cut or fee. The more you spend, the closer they get to their targets. Don’t be surprised if they encourage “ just in case” extra licenses.
• Azure Commitments: Cloud spend is a huge focus for Microsoft. LSPs may push you to commit to a hefty Azure consumption level. These commitments help them hit Microsoft’s targets (and sometimes earn bonuses), but you need to ensure the usage justifies the cost.
• Upselling Premium Bundles: Resellers love to recommend higher-margin products like Microsoft 365 E5 suites or new add-ons (think security packages or Copilot AI features). These upsells boost their commission. Always ask yourself if you truly need those top-tier bundles or if a lower plan suffices.
• Services and Support Add-ons: Many LSPs offer their own services – training, consulting, managed support – often at extra cost. They might bundle these with your licensing deal. Some services are valuable, but others pad their profits. Evaluate each add-on critically.

Bottom line: LSPs earn more when you spend more. They’re invaluable for navigating Microsoft’s licensing maze, but keep in mind who pays them.

Stay politely skeptical about “recommendations” that increase your spend, and dig into any fees or services they propose.

Preparation Before Engaging an LSP

Preparation is your best defense. Before you even start conversations with an LSP, do your homework:

• Audit Your Needs First: Take stock of what licenses and cloud services you currently have and how much you’re actually using. Identify unused licenses, underutilized subscriptions, and real needs for the next term. This way, you set the scope, not the reseller. Don’t let the LSP tell you what you need – come to the table informed so they can’t upsell you on shelfware.
• Align Internal Stakeholders: Get IT, procurement, finance, and other key folks on the same page. Know your budget limits, technical requirements, and business priorities upfront. When your team speaks with one voice, you won’t be easily swayed by reseller tactics that try to “divide and conquer” different departments.
• Gather Benchmarks and Insights: Knowledge is power in negotiation. Try to find out what discounts other companies of your size are getting on similar Microsoft deals, or what services LSPs typically include. If you have access to independent licensing advisors or peer networks, use them. Walking in with benchmark figures (e.g. typical discount percentages, common free services) lets you challenge an LSP’s first offer.
• Plan Your LSP Approach: Decide if you’ll engage multiple LSPs (recommended for competitive pricing) or stick with an incumbent. Prepare an RFP or at least a clear list of requirements to give each reseller. And set a realistic timeline – rushing at the last minute plays into the reseller’s hands. Build in time for back-and-forth negotiation and internal approvals.

Being well-prepared sets the tone that you are in control. LSP reps are less likely to try pulling tricks when they see you’ve done your legwork.

Negotiation Strategies with LSPs

When it’s time to negotiate, use tactics that leverage your position as the customer.

Here are key strategies to get a better deal and more value:

• Insist on Price Transparency: Don’t accept muddy quotes. Ask the LSP to break down costs clearly – what’s the Microsoft licensing cost and what, if anything, is their added fee or margin? Often, the base price is set by Microsoft, but resellers may add a small markup or include additional services in the cost. By demanding an itemized view, you shine light on any hidden padding. It also signals to the LSP that you’re watching the details, which encourages fairer pricing.
• Scrutinize Service Bundles: LSPs often bundle services like “premier support” or “ adoption training” with your license purchase. Evaluate these critically. Are they things you actually need or would use? Sometimes a “free” planning workshop is actually baked into the price. Don’t hesitate to unbundle offerings and ask the cost of each component. If a service is valuable to you, see if they’ll include it at no charge to win your business. If not, consider declining extra services to focus on the license discount.
• Leverage Azure Commitments Wisely: Committing to a certain Azure spend can be a powerful bargaining chip. Microsoft and its resellers highly value cloud revenue. You can use this to your advantage: for example, offer a higher Azure commitment only if you receive something in return (like a bigger discount on other products or added flexibility in contract terms). Conversely, if you’re unsure about your cloud usage, don’t let the LSP pressure you into overcommitting. A right-sized commitment with room to grow is better than overpaying for unused Azure credits.
• Get Multiple Quotes (Play the Field): Even if you have a favorite LSP or a long-time incumbent, it pays to talk to a few resellers when negotiating a big deal or renewal. Let them know you’re shopping around. Competitive pressure encourages each LSP to put their best foot forward – whether that’s an extra discount, a service add-on, or a concession on terms. When they realize they’re not the only game in town, you’ll see who truly wants your business. Just be sure to compare apples to apples and use the competing quotes as leverage in discussions.

Using these strategies, you shift the balance of power. The LSP will see you’re an informed customer determined to get a fair deal, not just a passive buyer.

Be friendly but firm: you can have a positive relationship with the reseller while still advocating for your organization’s best interests.

Common Tactics Used by LSPs — And How to Counter Them

Seasoned LSP sales reps have a playbook of tactics to upsell or speed up your agreement.

Be on the lookout for these common moves, and counter them with a savvy response:

• “Microsoft Standards” That Aren’t: You might hear phrases like “This is the standard Microsoft price/term; we can’t change it.” LSPs often imply their hands are tied. In reality, many terms are negotiable, especially for significant deals. Counter: Politely question blanket statements. Ask if there’s an exception process or if they can check with Microsoft for a special approval. Often, pushing back (and showing that you know others have received better terms) will prompt the reseller to explore options instead of stonewalling you.
• Upselling to Premium Bundles: Your LSP will eagerly propose upgrades like moving from E3 to E5 licenses, adding advanced security, or tacking on Microsoft 365 Copilot. These higher-tier packages inflate your costs and their commission. Counter: Stay grounded in your actual needs. If they pitch a bundle, ask them to justify it: “What problem does this solve for us?” Weigh the features versus the price. It’s perfectly fine to stick to a lower plan that covers your requirements. You can also negotiate pilot programs or phased adoption for new products rather than buying enterprise-wide on day one.
• Artificial Urgency (“This Deal Expires Friday!”): Many resellers will cite quarter-end deadlines or “one-time” promotions to rush you into signing. Certainly, Microsoft runs fiscal-year promos, but there’s often another deal around the corner. Counter: Manage your own timeline. Start negotiations early so you’re not up against a wall. If an LSP says you must sign now for a discount, weigh how real it is. You can respond with, “We aren’t ready to commit by that date – what can you do for us next quarter?” This challenges them to keep courting you. Real discounts tied to deadlines do exist, but don’t let a false countdown clock push you into a premature or bad deal.
• The “We’re Your Best Friends at Microsoft” Angle: Some LSPs boast about their special relationship with Microsoft – implying they can get you a uniquely good deal or faster support thanks to insider status. Counter: Remember that all LSPs have to work within Microsoft’s program rules. A top-tier LSP might have a bit more pull for exceptions, but no one can magically slash prices beyond what Microsoft allows. Treat grand claims with healthy skepticism. Focus on tangible differences between resellers (support quality, small pricing perks, etc.). If an LSP touts their Microsoft connection, you might say, “That’s great – prove it by advocating for us on this request.” The onus is on them to show how it benefits you.

By recognizing these tactics, you won’t be easily fooled.

Stay calm and ask questions. Every time you counter a pressure tactic or upsell with a thoughtful response, you remind the LSP that you’re steering this ship based on value and facts.

Negotiation Timeline Playbook

Negotiating a Microsoft deal via an LSP is a multi-stage process.

Here’s a playbook in phases, so you can time your actions and keep leverage at each step:

Using this timeline, you’ll avoid last-minute scrambles. It gives you a structured path from preparation to signing, keeping the pressure on the reseller rather than on you.

Pitfalls to Avoid

Even seasoned negotiators can stumble if they’re not careful.

Watch out for these common pitfalls when dealing with Microsoft resellers:

• Accepting the First Offer: An LSP’s initial proposal almost always leaves room for negotiation. If you take it at face value, you’re likely overpaying or missing out on better terms. Always compare with independent benchmarks or a second quote. The first offer is just a starting point – treat it as such.
• Overcommitting to Azure or New Products: It’s exciting (and maybe flattering) when a reseller proposes a big Azure commitment or the latest AI add-on for your business. But overcommitting to cloud spend or pricey tools like Copilot without a clear usage plan is dangerous. You could end up paying for capacity you don’t use. Commit to what you genuinely need and can forecast. You can always increase later if needed – it’s much harder to get money back once you’ve signed a high commitment.
• Chasing the Lowest Price Only: Everyone wants a good deal, but the cheapest quote isn’t always the best choice. An LSP offering rock-bottom prices might skimp on support or have less experience with complex needs. If they can’t support you properly during the contract (e.g., slow responses, poor guidance on Microsoft changes), those “savings” evaporate in headaches and risks. Balance price with the reseller’s track record and service commitments.
• Not Getting Promises in Writing: During negotiations, you might hear things like “We’ll throw in some free training” or “We’ll be flexible on that true-up.” Verbal assurances mean nothing once the contract is signed. If an LSP promises something, kindly ask them to add it to the agreement or an email at a minimum. Never assume it will happen just because it was mentioned in conversation. A well-documented contract is your safety net.

Staying vigilant against these pitfalls will save you grief and money. In essence: negotiate with your eyes open, and don’t let excitement or pressure lure you into a subpar deal.

Checklists

Use these quick checklists to stay on track before and after you negotiate your LSP deal.

Pre-Negotiation Audit Checklist

• License Inventory & Usage: List all current Microsoft licenses, subscriptions, and actual usage levels. Identify underused licenses to trim.
• Needs Assessment: Define what your organization truly needs for the next term (users, features, cloud resources) – no more, no less.
• Stakeholder Alignment: Ensure IT, procurement, finance, and leadership agree on goals, budget limits, and “must-haves” vs. “nice-to-haves.”
• Market Benchmarking: Gather any available info on typical discounts, incentives, and pricing that similar companies are getting. Set target figures to aim for in the negotiation.
• Potential LSP List: If possible, pick a few LSPs to engage for quotes. Check their reputations and service offerings in advance.
• Timeline & Roles: Set a negotiation timeline with key dates (like desired final decision date). Assign who on your team will handle which parts of the process. Early planning avoids last-minute panic.

Contract Close-Out Checklist

• All Terms Documented: Verify the final contract includes every discount, special term, and free service that was agreed upon. Nothing should be left to “trust.”
• Pricing Details Locked: Double-check unit prices, extended totals, and that any future price protections (for adding more licenses later) are clearly stated.
• Service Deliverables: For any value-added services the LSP is providing (support hours, training, reports), make sure the scope and frequency are written down. Know what you’re entitled to.
• True-Up and Renewal Clauses: Understand how annual adjustments are handled and when the contract renews or expires. Note any notice periods if you want to switch LSPs at the end.
• Post-Signing Contacts: Get an introduction to the LSP account manager and support team who will handle your account. Know how to escalate issues if they arise.
• Internal Handover: Brief your internal IT and procurement teams on the final deal. Ensure those who will manage the licenses day-to-day know the key terms (like usage limits or support entitlements). Being internally prepared means you’ll fully benefit from what you negotiated.

By ticking off these items, you ensure there are no loose ends. A well-closed deal sets you up for a smoother experience throughout the life of the contract.

Related articles

• Choosing an LSP: How Your Reseller Impacts the Deal
• LSP Margins and Incentives for Microsoft Licensing
• Microsoft EA: When to Go Direct vs. Through LSP
• Getting Maximum Discounts via Resellers: 2025 Strategies for IT Buyers
• Microsoft LSP Agreement Pitfalls: Hidden Fees and Contract Clause Risks

FAQ – Negotiating with Microsoft Resellers

Q1: Do LSPs control pricing or just resell Microsoft’s rates?
For the most part, LSPs simply pass through Microsoft’s pricing with a tiny margin or rebate for themselves. They don’t have full control to slash base license prices independently. Any big discounts usually come from Microsoft’s approval, not the reseller. That said, an LSP can sometimes adjust its own fees or offer a slight cut of its margin, and it might bundle in free services to sweeten a deal. Always ask for transparent pricing to see if there’s any reseller-added cost. In short, treat Microsoft’s price as the baseline and negotiate on the edges where the LSP has flexibility.

Q2: How do I create leverage against a single reseller?
The best leverage is competition, but if you truly are stuck with one LSP (for example, mid-contract, you can’t switch), you still have options. Use your knowledge and preparation as leverage – make it clear you’re aware of standard discounts and won’t settle for less. You can involve your Microsoft account representative to validate what the LSP is telling you; this helps ensure the reseller is being honest. Also, time can be leveraged: if the LSP knows you might delay or escalate the deal, they’ll work to keep you happy. And remember, even if you can’t change LSP now, there’s always the next renewal – subtly reminding them that poor performance or a bad deal now could cost them your business later.

Q3: What extras should I push for in an LSP deal?
Aside from the best price, ask for value-adds that improve your overall experience. Common “extras” include: training credits or workshops (for example, user training on Teams or security features), advisory hours with their experts for things like cloud optimization, regular usage, and cost reports to help you manage licenses, and enhanced support (maybe a named support engineer or faster response SLAs). You could also request flexible billing (quarterly true-ups instead of annually, or extended payment terms if that helps cash flow). If Microsoft is promoting a product (say, an Azure migration or a new app), sometimes the LSP can access funding or free services to assist – ask about that too. Essentially, think about what would make the license deployment and management easier for you, and see if the reseller can include it at little or no cost.

Q4: Should I always use multiple resellers for quotes?
When the stakes are high (major renewal or big purchase), yes, absolutely, getting quotes from multiple LSPs is one of the few ways to introduce competition in a market where Microsoft largely sets pricing. Even if you expect the numbers to come out similar, different resellers might offer different perks – one might bundle in consulting hours, another might have a slightly better discount on Azure, etc. The effort to compare quotes is worth the insight and leverage it gives you. In cases of very small purchases or if you’re mid-term on an EA (where switching isn’t feasible until renewal), you might not go through a full multi-reseller bid. But as a general practice, engaging at least two LSPs keeps everyone honest. It also sends a message to your incumbent that they should not take your business for granted.

Q5: Can I negotiate Azure commitments through an LSP?
Yes, you can and should. Azure spending commitments (often set in enterprise agreements or separate cloud contracts) are negotiable items, and the LSP will facilitate those discussions with Microsoft. If you’re planning a big Azure ramp-up, negotiate on things like the discount rate for that committed volume, or even contingency clauses (for instance, the ability to adjust the commitment if your cloud strategy changes next year). Microsoft highly values Azure growth, so it uses a potential commitment as leverage to get better terms. Just be careful: only commit to what you realistically expect to use, because these are typically “use it or lose it” deals. A good LSP can help model your expected Azure consumption, but it’s up to you to ensure the commitment is prudent. When negotiated well, an Azure commitment can secure you significant savings – but if done poorly, it can become an expensive albatross. Always tie commitments to clear, agreed benefits in your contract.

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