Microsoft Renewal Pitfalls: 5 Gotchas to Watch Before You Sign

Microsoft Renewal Pitfalls

Introduction – Read Before You Sign

Renewing your Microsoft Enterprise Agreement (EA) might feel like a routine task, but it’s actually a high-stakes moment.

Many organizations stumble into costly mistakes at renewal time—surprise cost spikes, unnecessary licenses rolling over, or unfavorable contract language—because these gotchas slip in quietly. A tiny wording change or a missed deadline before you sign can translate into big regrets (and big bills) over the next term.

This guide is a practical, last-mile checklist to help you avoid those pitfalls.

We’ll cover five major “gotchas” to watch for in a Microsoft renewal, how to spot them fast, and what to do about each before you put pen to paper. Read this first so you can sign with eyes open and no surprises.

Read our ultimate guide to Microsoft Renewal Negotiations: How to Beat Price Uplifts and Secure Discounts.

Pitfall #1: Unreviewed Contract Changes

Microsoft often updates its agreement language at renewal time.

If you assume the new contract is identical to your old one, think again. The Online Services Terms (OST), product terms, and other appendices may have changed since your last signing. New clauses can quietly slip in that alter your rights or obligations.

For example, Microsoft might introduce an expanded audit clause (perhaps allowing them to leverage usage telemetry to verify compliance), tweak privacy or data handling language, or modify service-level commitments.

If these changes go unnoticed, you could agree to stricter conditions or lose protections you previously had, all without realizing it.

Fix: Don’t sign anything blindly. Have your legal or contract team do a side-by-side comparison of the previous agreement and the new renewal documents.

Better yet, request a redlined version from Microsoft or your partner that clearly highlights all changes.

Pay extra attention to sections on compliance audits, data privacy, termination rights, and service changes. If you find any new term that introduces risk or removes a protection (for instance, a shorter audit notice period or a limitation on data portability), push back.

You can negotiate to remove or alter problematic clauses. Insist that critical safeguards from your last contract remain in place in the new one.

Contract Cue: Include a clause like “No terms shall be less favorable to the customer than those in the prior agreement (especially regarding privacy, audit, and data portability).” This ensures you don’t inadvertently give up important protections you had previously.

Pitfall #2: Missing a Notice Deadline

Certain rights and options around renewal come with a ticking clock. If you miss a notice deadline set in your contract, you may lose the chance to adjust or exit on your terms.

For example, many Microsoft agreements require you to give 30, 60, or even 90 days’ notice if you intend to reduce license counts at renewal or if you plan not to renew at all.

If you fail to formally notify Microsoft in time, you could be automatically renewed (sometimes on a costly month-to-month basis) or locked into paying for the same quantities for another term.

In short, silence can be costly: Microsoft isn’t likely to remind you, because a missed deadline usually works in its favor.

Fix: Proactively calendar all notice requirements far in advance. The moment you sign an EA, note any clauses about notice for reductions, cancellations, or program changes. Set reminders for 180, 90, 60, and 30 days before those deadlines.

When the window opens, send a formal written notice (typically an email or letter to your Microsoft account rep and/or through the required portal) stating your intent—whether that’s to not renew, to drop certain products, or to switch programs.

Do this even if you’re still negotiating; you can always rescind or adjust the notice if a new deal is reached, but you want to preserve your rights. Always obtain confirmation of receipt.

A simple “we got your notice” email from Microsoft is worth its weight in gold if there’s a dispute later. By managing these dates, you’ll avoid falling into an auto-renewal or being stuck with licenses you meant to drop.

Read about your options, Renewal vs. Recompete: Should You Renew Your Microsoft EA or Switch Licensing Programs?.

Pitfall #3: Shelfware Renewal

“Shelfware” refers to licenses you’re paying for but not actually using—and an EA renewal is the perfect time for shelfware to sneak through unchecked.

Over the years, companies accumulate extra licenses for products like Visio, Project, or Power BI, or they upgrade users to higher-cost bundles like E5 “just in case.”

If you simply renew the same quantities without scrutiny, all that unused or underused capacity will roll forward into the new term, and you’ll keep paying for it. Microsoft’s default proposal will often mirror your existing entitlements (or even increase them), and they’re not going to voluntarily point out what you’re not using.

The result? You end up spending money on another 3-year cycle on zero-value licenses. It’s common to find that 15–30% of EA licenses in a large organization are effectively shelfware. That represents a huge savings opportunity if you catch it before renewal, or a huge waste if you don’t.

Fix: Perform a ruthless license audit before signing the renewal. Go line by line through the renewal quote and check each item against actual usage data. Use Microsoft 365 admin reports, Azure usage analytics, or third-party tools to see the real adoption of each product. Identify the obvious culprits: e.g., did only 50 people use Visio last year when you’re paying for 500 licenses?

Do all users assigned a Power BI Pro license actually log into Power BI? Are there Exchange Online mailboxes assigned to ex-employees? Also, look at license tiers: if you gave everyone an E5 license but only a fraction of users leverage the E5-only features, consider downgrading a chunk of those to E3. Make a list of all these “dead weight” licenses and plan to remove or reduce them in the renewal.

This may involve eliminating certain SKUs or reducing quantities to match the active user counts. Likewise, plan license downgrades (E5 to E3, or E3 to F3, etc.) for those who don’t need the top-shelf package.

Communicate these changes to Microsoft during the negotiation so that the final contract reflects the updated numbers.

Document every change (for example, in an email or internal memo) so you have a record of why certain quantities went down. The goal is to enter the new term, only paying for what you actually use.

Microsoft won’t trim your order for you—you must initiate it. Every license you drop now is real money saved and prevents compounded waste over the next few years.

Pitfall #4: Omission of Negotiated Terms

Verbal promises or sales emails mean nothing once the contract is signed. It’s a harsh truth: if a concession or special condition isn’t written into the agreement, you shouldn’t assume it will be honored.

A classic pitfall is finishing EA negotiations thinking you’ve secured a great deal—maybe Microsoft’s rep said you can true-down (reduce licenses) mid-term, or promised that “any new licenses you add later will get the same discount as your initial purchase,” or offered some free Azure credits for year one.

But when the paperwork arrives, those custom terms are nowhere to be found. Microsoft’s standard contract won’t automatically include them, and sales reps notoriously have short memories after the ink is dry. If you don’t catch the omission before signing, you’re out of luck later because only the written contract governs the relationship.

Fix: Get it in writing. Every single negotiated item—price protections, special discounts, flexible terms, credits—must appear in the contract, ideally in a dedicated section or schedule for clarity.

A good practice is to create a “Commercial Exceptions” schedule as part of the EA. In this schedule, list out all the deviations from standard terms that you negotiated.

For example: Discounts: 25% off SKU ABC, 30% off SKU XYZ; Price Hold: Unit prices for products ABC and XYZ fixed for 3 years; True-Up/Down: Customer may reduce up to 10% of licenses at anniversary with no penalty; Credits: $100k Azure credit to be applied in first year; etc. Make the language unambiguous.

Before you sign, double-check that every promise made during negotiations appears either in the main agreement or in this exceptions schedule. If anything is missing, raise it immediately and get an amendment or addendum added. Do not accept “We’ll remember” or “It’s in an email” assurances.

Also, be wary of any phrase in emails like “this is a one-time offer” that doesn’t show up in the contract; if Microsoft is giving you a break or a special deal, it needs to be legally documented.

Contract Cue: Push for a clause such as “The pricing and discounts herein apply to any additional licenses purchased during the term (i.e., a ‘same-discount’ rule).”

This ensures if you grow your deployment, you won’t pay a higher unit price for those new licenses. Likewise, if you negotiated a cap on price increases or a right to reduce certain licenses, include wording for that (e.g., “Customer may decrease up to 15% of license count at renewal anniversary with 30 days’ notice”). The key is to have all these custom protections in writing.

Pitfall #5: Ignoring Future Projects

An EA renewal isn’t just a procurement exercise for the status quo—it’s a chance to realign with where your organization is headed. If you ignore your near-future projects and strategic plans, you might sign a deal that’s misaligned with your needs.

Common scenario: the team negotiating the renewal focuses on last year’s usage and this year’s quote, without input from other stakeholders about upcoming changes.

But maybe the business knows that in the next 12-18 months, a major shift is coming: a divestiture that will reduce headcount, an acquisition that will increase headcount, a move of some workloads to a different cloud, a big push to adopt a new Microsoft product, or conversely, a plan to drop a Microsoft product in favor of a competitor. If the renewal doesn’t reflect these things, you could end up over-buying or under-preparing.

For example, if you’re planning a large Azure migration next year but don’t include Azure in your EA, you might miss out on commit discounts. Or if you lock in a huge 3-year Azure spend and then your projects get delayed, you’ve overcommitted budget to capacity you won’t use.

Another example: perhaps you intend to roll out Teams Phone or Viva suite to employees next year – if you ignore that now, you might pay higher prices later outside the EA. Conversely, ignoring a likely downsizing or a shift to fewer Microsoft products could leave you stuck paying for licenses that should have been reduced.

Fix: Align the renewal with your roadmap. Well before signing, consult with IT leadership, project managers, and business units about what’s coming down the pipeline. Make a list of anticipated changes (up or down) in user count, major deployments, or technology shifts involving Microsoft products. Use that to shape your EA. Only commit to what you’re confident you’ll need.

For things that are uncertain but possible, consider negotiating flexible options: for instance, arrange an incremental Azure purchase if needed later, at a preset discount, rather than committing the full amount now.

Or include an option pool of certain licenses (like security or analytics add-ons) that you can kick off later at the same negotiated rate. If you expect a contraction, you might negotiate a shorter term or an extended payment schedule, or at least avoid increasing your license counts even if Microsoft is pushing more.

The idea is to avoid a static renewal that assumes the next three years will resemble the last three. Instead, build in scalability: the ability to expand if you must (with known pricing) and the ability to trim down where possible.

Also, synchronize the contract term with any known events; for example, if your company might be acquired in two years, maybe a 3-year lock isn’t ideal—perhaps a 2-year term or a favorable termination clause would be safer.

Don’t let Microsoft rush you into a one-size-fits-all renewal. Tailor it so that in a year, you’re not stuck saying, “If only we had accounted for X project.”

Top 5 Renewal Gotchas (Spot & Fix Fast)

Here’s a quick-reference table summarizing the top five renewal pitfalls, why they happen, the immediate risk they pose, how to spot them quickly, and what to do before signing:

Quick Tips to Avoid Gotchas (At a Glance)

• Request a redline of the contract from Microsoft (and actually read through the changes).
• Verify license quantities one by one – make sure no unused licenses are casually rolling over.
• Cross-check pricing – confirm every unit price and SKU in the agreement matches the negotiated quote (no hidden price uplifts or errors).
• Ensure discounts are in writing – every promised discount percentage per SKU should be explicitly stated in the contract (not just in a salesperson’s email).
• Confirm notice letters – if you needed to send any notice (e.g. to reduce or not renew something), double-check that it’s been sent and that Microsoft acknowledged receipt.
• Downgrade last-minute – run a final sweep for any users who can be moved from E5 to E3 (or similar downgrades) before finalizing counts.
• Double-check support – verify your Microsoft support plan (e.g. Unified Support) level and costs align with your needs; don’t pay for a premium tier you don’t require.

7-Day Pre-Signature Checklist (Print This)

✓ Receive full redline pack – Get the complete set of redlined contract documents (main agreement and all exhibits, Product Terms/OST changes) from Microsoft or your partner.

✓ Side-by-side compare terms – Compare the prior agreement to the new one line-by-line. Flag any “less favorable” changes in terms of privacy, audit rights, license transferability, etc.

✓ Verify pricing protections – Ensure all negotiated discounts and price caps are documented by SKU and by year in the contract. (If you agreed to fixed pricing or a % cap on increases, it must be written down.)

✓ Confirm true-up/true-down clauses – Check that any agreed true-up or true-down mechanisms are spelled out, along with relevant dates or notice requirements for exercising them.

✓ Reconcile license quantities – Finalize your license counts. Remove any shelfware (unused licenses) and include all planned downgrades. The quantities in the contract should align with your actual needs after cleanup.

✓ Align with roadmap – Make sure the products and quantities reflect your near-term roadmap (e.g., upcoming projects, cloud migrations, divestitures). Don’t commit to things you know will change.

✓ Send required notices – Ensure any required notice letters (for non-renewal, reduction, program switch) have been sent and ideally acknowledged by Microsoft. Don’t rely on ongoing negotiations as a substitute for formal notice.

✓ Attach all incentives – Attach schedules for any credits or freebies Microsoft promised (Azure credits, training days, consulting services, etc.). If you negotiated it, it should be an exhibit in the agreement.

✓ Include “same-discount” clause – Double-check that a “same discount on license additions” clause (or any other special protection like price holds) is included so you won’t lose your negotiated deal when you expand.

✓ Final internal sign-off – Get last reviews and approvals from all stakeholders: IT (for technical fit), Finance (for budget), Security/Compliance (for any risks in terms), and Legal. No one should be surprised after signing.

Add-On: Unified Support Synchronization

One commonly overlooked aspect of Microsoft renewals is the support agreement (e.g., Microsoft Unified Support). Often, your support contract is tied to your EA spend or timeline. If your Microsoft licensing costs increase, your support fees (often calculated as a percentage of that spend) can jump correspondingly.

Before renewing, take a hard look at your support level and needs. Are you on a top-tier support plan that exceeds your requirements? If you haven’t been utilizing things like 24/7 rapid response or dedicated support engineers, you might be overpaying for an overly high tier. Consider adjusting the support level to match your actual usage and criticality needs.

Also, negotiate support terms as part of the renewal. For example, you can ask for a cap on annual support fee increases (so it doesn’t spike simply because you added licenses) or even tie support fees to actual user count.

Ensure that any promises around support response times or service quality are captured in writing as part of the support agreement.

And if Microsoft has performance credits (like service credits for not meeting certain SLAs), make sure you understand them and that they’re documented.

The key is to synchronize your support plan with your license plan: don’t blindly renew support at the same level if your environment or spend is changing. Right-size it, negotiate improvements, and avoid support becoming an afterthought cost that balloons unexpectedly.

Sample Clause Starters (Buyer-Friendly Language)

When pushing back on Microsoft’s standard terms, it helps to have some clause language ready. Here are a few buyer-friendly clause starters you can propose to protect your interests:

• Price Cap: “Unit pricing for Products X and Y shall not increase during the Term.” (In other words, a 0% price increase cap on key products.)
• Same-Discount Rule: “All additional licenses (Adds) will receive the same percentage discount as the initial purchase.” (Ensures you don’t pay more per unit as you grow.)
• True-Down Right: “Customer may reduce the license count by up to ___% at each anniversary with 30 days’ notice.” (Gives you a defined right to scale down if needed each year.)
• No Less Favorable Terms: “Key protections regarding privacy, audit, and data portability are no less favorable than those in the prior agreement.” (Guarantees that important protections won’t regress in the new contract.)

Feel free to adjust the specifics (percentages, notice days, etc.) to fit your situation. The goal is to get language into the contract that explicitly guards you against common risks.

FAQs

What if Microsoft won’t provide redlines?
If Microsoft or your reseller won’t give you a redlined contract (showing old vs new changes), you should create your own. Pull up your current agreement and the proposed renewal documents and use a document comparison tool (or have your legal team do it manually). It’s extra work, but it’s the only way to see what changed. If timing is tight, at a minimum, ask your Microsoft rep to point out major differences. However, ideally, don’t sign until you or someone on your side has reviewed it line by line. If Microsoft really won’t cooperate on this, treat it as a red flag and double down on your own scrutiny.

Can I reduce after signing if we missed the notice date?
Generally, no, not for that term. If your contract required, say, 60 days’ notice to drop some licenses and you missed it, once you sign the renewal, you are committing to those quantities for the duration (usually 3 years). Microsoft has little incentive to let you reduce mid-term if you didn’t reserve that right. Your best bet, then, is to see if any reduction can be achieved at the next anniversary (some subscription licenses allow for a reduction at the anniversary if it was pre-negotiated). Otherwise, you’re likely locked in until the next renewal cycle. This underscores the importance of meeting those notice deadlines before signing. Post-signature, your leverage to change terms is very small.

How do I prove shelfware quickly?
If you’re short on time but suspect shelfware, focus on usage data. Use the Microsoft 365 admin center reports or Azure portal to see last login dates and active user counts. For instance, check how many users actually opened a Visio or Project file in the last 90 days vs. how many licenses you have. Look at your Azure consumption relative to any commit. Generate a list of all user licenses and see which accounts haven’t been active recently (you can often export a list of users with their last activity date for services like Exchange, Teams, etc.). Target the obvious high-cost items first: e.g., if you have 500 Power BI Pro licenses but only 100 reports are being published, that’s a sign of shelfware. Even a quick spot-check can reveal glaring gaps. Present those findings in the negotiation to justify a reduction. Microsoft can’t really argue with its own usage stats. The good news is you don’t need an elaborate study – even basic admin reports and a few hours of analysis can uncover the biggest zero-value licenses.

Are price caps realistic for mid-market customers?
Indeed, very large enterprises often have more leverage to get strict price caps, but mid-market customers can still negotiate protections. You might not get Microsoft to agree to “0% increase on everything for three years” if you’re not a Fortune 100 company, but you can often secure something like a cap on main products. For example, you could negotiate that your Office 365 pricing won’t increase more than, say, 3% per year, or that Azure base rates stay fixed for the term. If Microsoft is resistant, try focusing on your biggest cost centers – it might be easier to cap one or two key products rather than across the board. Also consider asking for multi-year price holds (e.g., “Year 1 and Year 2 prices are fixed, with a re-eval in Year 3”) as an alternative. Microsoft sales teams have some flexibility, especially if you can show budgeting concerns or competitive alternatives. In short, mid-market firms may not be able to secure everything, but achieving some price predictability is absolutely realistic and worth pursuing.

Can I delay signing to align with fiscal timing?
Often, yes. Microsoft typically wants to keep you as a customer, so it will usually work with you on timing. If your EA expiration doesn’t line up well with your fiscal year or budgeting cycle, talk to your Microsoft rep about options. Common approaches include: a short extension of the existing EA (e.g., extend it by 1-3 months) to push the renewal date into the next fiscal quarter – Microsoft may do this via a simple agreement amendment and a prorated fee. Another approach is to sign the renewal now, but for an odd term length (say 30 months instead of 36 or 42 months), so that the end date aligns with your desired schedule. Microsoft has been known to offer quarterly-aligned terms or flexible start dates when customers request them. The key is to bring this up early in negotiations. Don’t wait until the week of expiration to say, “By the way, we want to shift the date.” Start that conversation early so the paperwork can accommodate it. And whatever you do, don’t let the EA expire without a plan; if you truly need a delay, get the extension in writing, since once an EA lapses, reactivating it can be complicated (and you lose coverage in the interim). But yes, with proper coordination, you can often time things to your financial calendar.

Five Expert Recommendations

To wrap up, here are five strategic recommendations from licensing experts to ensure a smooth and cost-effective Microsoft renewal:

• Treat the renewal as a full contract renegotiation, not a simple rollover. This is your chance to reset terms, not just accept what you had.
• Document every concession in writing (e.g., in a “Commercial Exceptions” schedule). Never rely on email promises or verbal assurances when finalizing the deal.
• Perform a ruthless shelfware purge before finalizing the agreement. Don’t carry dead weight licenses into the new term – eliminate or downgrade them first.
• Proactively manage all notice periods and critical dates. Mark your calendar and obtain confirmation for every required notice to maintain all available options.
• Align the contract with your business roadmap. Only commit to what you’ll use, and negotiate flexibility (with pre-agreed pricing) for future additions or changes.

By approaching your Microsoft EA renewal with a critical eye and these strategies, you can turn what is often a vendor-tilted event into an opportunity to optimize costs and secure better terms.

Instead of post-signature regrets, you’ll have a deal that you can confidently live with for the next few years. Good luck, and happy negotiating!

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Fredrik Filipsson

Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, improving organizational efficiency.

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