Microsoft Renewal Discounts
Introduction – Discounts Aren’t One-and-Done
When it’s time to renew your Microsoft agreement, don’t assume you have less leverage just because it’s a renewal.
In fact, treat your Microsoft EA renewal negotiation like a brand-new deal. Microsoft often expects “easy renewals” where customers quietly accept a price uplift (sometimes called a loyalty tax for sticking around).
But you can negotiate EA renewal savings and even improve your Microsoft renewal discount the second time.
The key is a mindset shift: approach renewal proactively and buyer-first, not as a mere formality. Especially if your Microsoft spend is growing, you have a strong case to demand better pricing or terms.
This guide lays out a practical renewal discount strategy – from reviewing your current deal to negotiation tactics and concessions – so you can maintain or improve your Microsoft renewal discount and avoid any hidden uplift in costs.
Read our ultimate guide to Microsoft Renewal Negotiations: How to Beat Price Uplifts and Secure Discounts.
Review Your Current Discount
Start by pinning down exactly what discount you secured in your last agreement. If you negotiated, say, 20% off list prices in your initial Enterprise Agreement (EA), that percentage is your baseline.
Don’t rely on blended quotes from Microsoft that obscure the true discount – do the math and figure out the effective discount % on your core products. Knowing this number is crucial to protect against erosion of your deal.
Microsoft’s first renewal quote may quietly reduce your prior discount or bake in standard increases, hoping you won’t notice.
For example, if you had 20% off last time, treat that 20% as the floor for your new deal, not the ceiling.
Push to at least maintain that discount and argue for higher if your usage or commitments have expanded. In short, know your number and be prepared to defend it. This ensures any “hidden uplift” in the renewal offer is caught and countered.
Tip: It’s wise to double-check Microsoft’s pricing against their official price lists or benchmarks. If something seems off (like a higher per-user cost than before), call it out. Transparency about your current discount empowers you to challenge any attempt to reduce it.
Increased Volume = Leverage
One of the strongest cards you hold in a renewal is increased volume. If your user count, cloud consumption, or product adoption has grown since your last agreement, this gives you leverage to demand better unit pricing.
The logic is simple: you’re buying more, so you should pay less per unit. Microsoft’s own licensing model traditionally offered volume discounts (bigger organizations got lower prices). Even if they claim standard volume tiers have changed, you can negotiate a custom discount to reflect your scale.
Explain to Microsoft that your company’s growth (more seats, more Azure usage, additional services) justifies a deeper discount this time around. For instance, if you went from 1,000 users to 1,500 users, you’re bringing 50% more business. The per-user price needs to come down accordingly.
Don’t settle for the same rate; explicitly request a percentage off the list price greater than your last deal. It helps to reference how other vendors reward bigger commitments, subtly reminding Microsoft that you expect the same treatment for your loyalty and expansion on their platform.
Leveraging increased volume turns your growth into a bargaining chip: you’re showing Microsoft that with a better price, you’ll continue to grow together – but at the right price point.
Insights into how to manage the price uplifts and how to negotiate a Cap on Microsoft Renewal Price Uplifts.
Upsell Offsets
Renewals are prime time for Microsoft to pitch new products and upgrades. You might hear about Microsoft 365 Copilot, Teams Phone, Dynamics 365 modules, or an E3 to E5 license uplift as “the next step” for your organization.
These upsells can actually work in your favor – but only if you tie them to concessions on your core deal. If Microsoft introduces new products, demand will likely offset any discounts or freebies offered in return.
For example, you could say: “We’re open to adding Copilot licenses, but in exchange, we need an extra 5% discount on our Microsoft 365 E3 pricing.” This way, any new spending is balanced by savings elsewhere, keeping your total cost in check. Microsoft often has sales goals around these new offerings, so use that.
Bundle the upsell with a concession: agree to adopt the new product only if they sweeten the overall deal (either via a bigger discount on existing licenses or maybe free add-on features). This turns Microsoft’s agenda into leverage for you.
The key is to make it a two-way street: if you’re going to invest more in their ecosystem, they need to invest in keeping your costs down.
Don’t be afraid to say, “We’ll consider your new solution, but here’s what we need in return.” It frames you as a partner in growth – one who expects a mutual benefit.
Competitive Alternatives
Even if you have no immediate plans to leave Microsoft, make Microsoft earn your renewal by invoking the competition.
Smart procurement teams run an RFP or at least gather pricing from alternatives before renewing. Why? Because showing Microsoft that you have other options on the table is one of the few things that truly gets their attention in pricing.
You might compare Microsoft 365 vs. Google Workspace, or Azure vs. AWS, or demonstrate how another SaaS vendor could replace a piece of your stack.
When Microsoft knows you’re considering viable alternatives, you create leverage.
You can say, for instance, “Google offered us a very competitive deal for similar services” or “We have a quote from AWS that undercuts Azure on our workloads.”
You don’t have to outright threaten to switch everything, but presenting credible benchmarks or quotes puts pressure on Microsoft to match or beat those deals with better discounts or terms.
Even a hint that your CFO is looking at reducing Microsoft spend in favor of another vendor can push Microsoft to offer concessions to secure your business.
The reality i,s Microsoft knows switching core platforms is tough, but they also know big enterprises have done it (or at least shifted portions of spend).
Use that to your advantage. In negotiations, position your asks as necessary to “stay with Microsoft.” For example: “If you can improve our discount to 25%, it will help us justify choosing Microsoft over moving workload X to a competitor.”
This way, you’re not saying you will leave – but you’re making it clear Microsoft has to compete for your renewal, not just assume it.
Service Credits & Freebies
Not all savings come in the form of a direct price cut. Microsoft has other ways to deliver value, and you should absolutely ask for them. If you hit resistance on getting the per-unit price down, shift the conversation to service credits and freebies.
These are often easier for Microsoft’s reps to approve and can meaningfully reduce your total cost.
Consider negotiating for things like Azure credits (e.g,. “cloud spend credits” that effectively give you free Azure consumption up to a certain amount), additional support or consulting hours, training vouchers/seats, or free licenses for a period (perhaps a few extra months of a new product at no charge).
For instance, if Microsoft won’t budge on the discount percentage, ask if they can throw in $100K in Azure credits annually, or include Microsoft Premier/Unified Support at a reduced rate.
These perks have real monetary value. They might not lower the line-item price of a license, but they offset costs you’d otherwise incur or enhance the value you’re getting for the same spend.
Always evaluate if a proposed credit/freebie is useful to you – it should be something your organization will actually use. Service credits and free licenses are only valuable if redeemed.
But when used well, they sweeten the deal and can sometimes bridge a gap in negotiations. Microsoft may prefer to give “soft” dollars (credits/services) when “hard” discounts hit internal limits, so be ready to propose creative freebies as an alternative way to save money.
Multi-Year Savings Argument
During your Microsoft contract renewal, zoom out and talk big picture. Remind Microsoft how much you’re poised to spend over the full term of the renewal – this is the multi-year savings argument.
For example, “We’ll be investing $5 million in Microsoft over the next three years under this EA. Given that commitment, we’re asking for a 25% discount to continue this partnership.” Framing the discussion in terms of the total 3-year (or 5-year) spend is powerful: it anchors your request against a large number, making your ask seem reasonable by comparison.
This strategy appeals to Microsoft’s desire for long-term revenue.
You’re effectively saying: We’re committed to spending a lot with you; meet us halfway with a better rate. It also underscores that you view Microsoft as a strategic partner, but with that status comes an expectation of preferred pricing. Emphasize that by giving you a better deal now, Microsoft secures your loyalty (and budget) for the long haul.
Sometimes we phrase it as, “Help us sell this internally as a worthwhile investment.”
A strong discount or price lock can be positioned as Microsoft’s way of co-investing in the relationship. Microsoft’s reps often respond to this approach because it aligns with their closing a big renewal and perhaps even upselling new things (which you’re more likely to adopt if the core is affordable).
Just be sure to be specific in your argument: cite that total figure and the percentage you expect. It shows you’ve done the math and you know what you’re asking for in concrete terms.
Table: Key Tactics to Improve Your Renewal Discount
| Negotiation Tactic | How to Use It |
|---|---|
| Increased Volume | Leverage growth in users or usage to demand lower per-unit costs. More volume = deserve better rate. |
| Upsell Offsets | If adopting new Microsoft products, tie it to discounts on your current licenses. “We’ll buy X if you discount Y.” |
| Competitive Alternatives | Present quotes or RFP info from competitors to push Microsoft to match or beat their pricing. Create credible threat of switching. |
| Service Credits/Freebies | Ask for Azure credits, training days, or extra support if list price discounts hit a wall. Offsets costs indirectly. |
| Multi-Year Commitment | Highlight total spend over the term to justify a bigger discount. “We’re spending $X million, we need Y% off for this commitment.” |
What Concessions to Request at Renewal
Negotiation isn’t just about price points – it’s also about contract concessions that can add value or protect you from future costs.
Here are some realistic Microsoft contract renewal concessions you should consider asking for:
- Better discount % on existing licenses. (Increase the percentage off the list you already have.)
- Price holds for 3 years. (No annual price increases – lock current rates for the full term.)
- Flexible payment schedules. (Negotiate payment terms that align with your budget cycles, e.g., annual payments or a deferred schedule.)
- True-down rights. (Ability to reduce license counts if your usage drops, so you’re not stuck overpaying for unused licenses.)
- Extra licenses/features at no cost. (Get several free licenses for a new product, or add-on features thrown in as a courtesy.)
These concessions address both cost and flexibility. For example, a price hold ensures you won’t get surprise increases in years 2 or 3. True-down rights give you agility if your headcount changes or you overestimated needs.
Always document these concessions explicitly in the contract or an addendum, so there’s no ambiguity later.
Microsoft won’t volunteer these; you have to put them on the table. Often, the Microsoft sales team can agree to such terms if it means closing the renewal – but only if you ask.
Example Negotiation Success Story
To see these strategies in action, consider this anonymized success story. A mid-sized tech company was facing a renewal, where Microsoft’s initial proposal included an 8% price increase over their last term.
The Microsoft rep framed it as a normal adjustment for “new features” and inflation. Instead of accepting it, the customer’s negotiation team pushed back hard.
First, they reviewed their usage and showed Microsoft that their headcount had grown 15% – meaning Microsoft would actually be getting more money even without a price hike. That strengthened their case that an uplift was unnecessary.
Next, the team came armed with competitive information: they had spoken to a cloud vendor who provided a ballpark quote for migrating some workloads off Microsoft, and they informed the Microsoft representative that they were exploring this option.
They also expressed interest in Microsoft’s upsell (in this case, adding Teams Phone licenses), but only if the core Office 365 pricing stayed flat.
Faced with a savvy customer, Microsoft relented. The final deal eliminated the 8% increase, keeping costs flat, and Microsoft included additional Azure credit funds, as well as a promise of no price increases for three years.
The customer effectively improved their discount by turning a would-be price hike into a price hold and getting extra value on top.
The key takeaway: By showing leverage (through volume growth and competitor options) and being willing to negotiate every facet (price and terms), the customer turned a rough opening offer into a win-win renewal.
They renewed with Microsoft at a more effective rate than initially offered, without increasing their budget – a huge success internally.
Renewal Negotiation Checklist
Before you sign on the dotted line, run through this quick checklist to make sure you haven’t left money on the table:
✓ Identify the last EA discount baseline. (Know your previous discount % as the minimum to beat.)
✓ Audit usage, cut shelfware. (Remove or downgrade unused licenses so you only pay for what you need.)
✓ Benchmark with alternative vendors. (Gather pricing from other providers to use as leverage.)
✓ Bundle upsell with offsetting discounts. (Agree to new products only if they lower the cost of your core licenses.)
✓ Ask for credits/freebies if discount stalls. (Push for Azure credits, support, or training if you can’t get more % off.)
✓ Document all concessions in the contract. (Ensure every agreed discount, right, and credit is written into the final agreement.)
This checklist encapsulates the critical steps in a renewal discount strategy. It helps you stay organized and firm during what can be a fast-moving negotiation process.
FAQs
Can renewal discounts improve, or only stay flat?
Yes, renewal discounts can improve – they’re not limited to staying flat. Microsoft might not offer a better discount upfront (and in fact may try to lower it), but with a strong negotiation, you absolutely can push for a bigger discount than you had initially. Especially if your spend has grown or you’ve done your homework on market pricing, you can make the case that Microsoft needs to sharpen its pencil to keep your business. We’ve seen plenty of cases where a renewal ended up with a better % off than the original deal. The key is to ask and back up your ask with a rationale.
What’s the typical Microsoft renewal discount range?
It varies widely depending on your size and the effectiveness of your negotiation. As a rough range, smaller organizations (with a few thousand seats) might see renewal discounts in the single digits to low teens percentage off the list price. Larger enterprises (tens of thousands of seats or multi-million dollar spends) often secure 15–25% off or more. Initial EA deals to win new customers might be very aggressive (even higher discounts for huge deals), but the “typical” renewal might be, for example, 10-15% for mid-sized and 20%+ for very large customers. The main point: there is no fixed number – always attempt to get to the high end of what’s possible for your cohort, and remember Microsoft’s first offer is usually on the low end of the range.
How do upsells affect renewal negotiations?
Upsells (like adding new Microsoft products or upgrading license tiers at renewal) can be turned into an advantage for you. Rather than simply accepting an upsell and paying more, use it as a bargaining chip. You can tell Microsoft that for you to consider the upsell, you’ll need a concession – for example, a bigger discount on your existing licenses or a bundle deal that makes the overall spend palatable. Upsells give Microsoft additional revenue, so you should get additional value. In practice, if you agree to add a new product, insist on revisiting the pricing of your current products as part of the same deal. Done right, an upsell can come with a net neutral impact on your budget because you gained savings elsewhere.
Are service credits as valuable as discounts?
Service credits (and similar freebies) can be very valuable – sometimes almost as good as a discount – if you actually use them. They effectively lower your costs by giving you something you would otherwise pay for. For example, $50,000 in Azure credits is $50,000 you don’t have to spend out of pocket on Azure consumption. That said, credits and freebies are usually one-time or term-limited, whereas a discount reduces the unit price and compounds over time. Think of credits as a nice sweetener: they may not reduce the per-license price on paper, but they do provide real savings to your organization. Just make sure the credits align with the services you need; a training voucher has value only if you plan to train your staff, for instance. In summary, while a discount is cleaner, credits/freebies are absolutely worth negotiating for – they can significantly offset costs and are often easier for Microsoft to grant.
Should smaller customers still negotiate discounts?
Absolutely. No customer is too small to ask for a better deal. While it’s true that very large enterprises have more leverage (due to sheer spend), smaller companies can still negotiate meaningful concessions. Microsoft’s sales reps often have some flexibility or promotional funds even for smaller accounts, but they won’t give it if you don’t ask. Even a 5% discount or a few free licenses for a 200-seat company is money saved. Additionally, ask for favorable terms, such as price protections or payment flexibility – sometimes smaller customers can win on terms, even
Five Expert Recommendations
To wrap up, here are five expert-negotiator tips to remember when approaching a Microsoft renewal:
- Treat renewal as a new negotiation, not a rollover. Never just “rubber-stamp” a renewal – reset your strategy as if you were shopping fresh, and be willing to shake things up.
- Protect your prior discount as the floor, not the ceiling. Don’t let Microsoft chip away at the % off you already achieved. Aim higher, but refuse to go lower than your last deal’s discount.
- Trade upsells for better pricing on existing products. If you agree to expand your Microsoft footprint, make sure you’re getting something back in the form of lower costs on what you’re already buying.
- Always demand contract protections: caps, holds, true-downs. These terms (price caps, multi-year price holds, the right to reduce quantities, etc.) shield you from future surprises and lock in your negotiated value.
- Use competitive benchmarks to unlock hidden concessions. Research and reference what others are paying or what alternatives charge – it’s often the key to get Microsoft to reveal additional discounts or incentives they otherwise wouldn’t offer.
By following these recommendations, you’ll approach your Microsoft renewal with a confident, strategic stance.
Remember, the renewal is your opportunity to refine the deal, eliminate waste, and secure a partnership with Microsoft that truly reflects the value of your business.
With preparation and a bit of bold negotiation, you can turn that renewal into a win: a better deal the second time around.
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