Microsoft Volume Licensing Programs: How to Choose (and Negotiate) the Right Model for Your Enterprise

Microsoft Volume Licensing Programs

Introduction — Program First, Price Second

Choosing the right Microsoft volume licensing program will drive cost outcomes more than any single discount or price point.

Many enterprises fixate on chasing the biggest discount off Microsoft’s price list, only to discover later they’re in the wrong licensing model and overspending as a result.

The truth is, the structure of your licensing agreement – Enterprise Agreement vs CSP vs others – dictates how you pay for software over time, how much flexibility you have to scale up or down, and what leverage you hold in negotiations. In other words: pick the right program first, worry about price second.

It’s not uncommon for CIOs and CFOs to discover they’ve been paying for features or capacity they don’t need simply because they were locked into an ill-fitting contract. Microsoft’s sales teams often promote the Enterprise Agreement (EA) as the one-size-fits-all solution for large customers.

Still, enterprise agreement alternatives like the Cloud Solution Provider program or others might offer a better fit depending on your organization’s profile.

By stepping back and scrutinizing Microsoft’s licensing programs side by side, you can identify which model aligns best with your business size, IT strategy, and financial goals. This buyer-first approach helps you avoid overspending by selecting the correct licensing model and ensures that any subsequent price negotiations actually yield meaningful savings.

In this guide, we’ll break down the major Microsoft volume licensing programs and how they compare. We’ll look at what each covers, which customers they’re built for, and how pricing and discounts work in each model.

You’ll get practical checklists (for example, “Is Your Current Program Still the Right Fit?”) and negotiation tactics tailored to each program.

By the end, you’ll have a clear framework to choose the right licensing agreement for your enterprise and concrete tips to negotiate the best deal within that model. Remember: the licensing program is the foundation of your Microsoft spend – get that right, and every dollar you negotiate off is pure savings.

The Microsoft Volume Licensing Landscape

Microsoft offers a range of volume licensing programs, each suited for different customer sizes and needs.

The landscape can be confusing, so let’s clarify the major programs and who they’re for:

• Enterprise Agreement (EA): A three-year contract for large enterprises (generally 500 seats and above, with the EA especially shining at 2,400+ seats). The EA covers an organization-wide deployment of software and/or online services. You commit to a quantity of licenses enterprise-wide (for example, a license for every user or device) and, in return, get volume discounted pricing and added benefits like Software Assurance (upgrade rights, training benefits, support). Pricing levels (A, B, C, D) are based on volume – bigger organizations buying more get deeper discounts. The EA typically includes an annual “true-up” process where you report any increases in usage (like additional users or devices) and pay for them retroactively, which provides some flexibility to grow. This program is ideal for enterprises that want a direct relationship with Microsoft, need a predictable 3-year budget, and are willing to make a broad commitment to Microsoft’s product stack.
• Cloud Solution Provider (CSP): A program where you purchase licenses and cloud services through a Microsoft partner (reseller) rather than directly from Microsoft. There’s no minimum seat requirement – CSP works for small businesses up to mid-sized and even some large orgs for certain needs. Unlike the EA, CSP has no fixed term; it’s an evergreen agreement where you pay as you go, either month-to-month or on annual subscriptions that you can adjust at renewal. This means flexibility: you can increase or even decrease certain subscription counts as needed (monthly in the case of month-to-month plans, or annually if you choose an annual term). CSP pricing is set by the partner (who, in turn, gets a standard discount from Microsoft), so while there isn’t a built-in volume discount like the EA, you can shop around among partners for competitive rates or value-added services. CSP often appeals to organizations that favor operational expenditure (OpEx) and agility – for example, startups or companies with fluctuating workforce numbers who need to scale licenses up or down frequently. It’s also common in scenarios where an enterprise wants a partner-managed solution or where the organization is too small to justify an EA. Keep in mind, however, that CSP does not include Software Assurance by default, and not every Microsoft product is available through CSP (certain legacy server licenses or specific offerings may be limited).
• Microsoft Customer Agreement (MCA): A relatively newer option, the MCA is Microsoft’s move toward a simplified, web-based agreement that customers of any size can sign when purchasing cloud services directly. In an enterprise context (“MCA-E”), it’s often positioned as an alternative to EA for mid-sized customers or for organizations focusing heavily on Azure cloud consumption. The MCA is evergreen (no end date) – you accept the terms once, and then you can buy or subscribe to services as needed, with no specific commitment term required by the agreement itself. Think of MCA as Microsoft’s direct pay-as-you-go model: for example, you could sign an MCA to enroll in an Azure plan or to buy Microsoft 365 subscriptions directly from Microsoft’s portal. Pricing under MCA is set by Microsoft’s pricelist (unlike CSP, where a partner sets the final price). There aren’t formal volume discount tiers in an MCA like in an EA; however, Microsoft may extend custom discounts or incentives if you commit to certain usage levels or growth (for instance, committing to spend a certain amount on Azure could yield pricing benefits). Typical customers for MCA include mid-market companies that don’t meet EA minimums or who have been encouraged by Microsoft to move off EA, as well as larger enterprises that are “cloud-first” and willing to manage their own purchasing without a reseller. One thing to note: an MCA by itself doesn’t include traditional Software Assurance benefits, so purely on-premises software licenses with SA are usually not purchased via MCA – those might still require an EA or MPSA (defined below) if SA is needed.
• Microsoft Products and Services Agreement (MPSA): A flexible transactional licensing agreement with no expiration date. MPSA was Microsoft’s attempt to consolidate and replace older programs like Select Plus (and the now-retired Open License) with a single agreement. Under an MPSA, you can purchase licenses for software and online services as needed, when needed – there’s no organization-wide commitment, and no specific term. However, unlike just buying retail, you do get volume pricing based on a point system: each product license contributes a certain number of points, and higher point totals move you into better price levels (A, B, C, etc.). Typically, MPSA makes sense for organizations with over 250 seats (below that, you might use Open Value or CSP) who want volume license pricing but aren’t ready or eligible for an EA. It’s common in organizations that prefer to buy licenses outright (CapEx) or have unpredictable needs that don’t fit a three-year EA cycle. With MPSA, Software Assurance is optional – you can choose to add SA to a license purchase or not, which gives flexibility (whereas EA always bundles SA). MPSA is great for ongoing, ad-hoc purchasing of licenses (for example, adding a few Project or Visio licenses mid-year outside of any enterprise subscription). Do note, Microsoft has at times signaled that MPSA would phase out in favor of the MCA, but many customers (especially those with mixed cloud and on-prem needs) still actively use MPSA.
• Open Value (and Open Value Subscription): Open Value is a program tailored for small to mid-sized businesses (typically 5 to 250 PCs/users, though sometimes even slightly larger orgs use it for specific needs). It’s essentially the “mini-EA” for smaller companies. An Open Value agreement lasts for 3 years, similar to an EA, and offers volume licensing of Microsoft products. There are a couple of flavors: Open Value (Organization-wide): You commit to covering all your PCs/users for certain products (much like an EA’s organization-wide requirement). In return, you receive a discount (often ~5% off the list price) and the convenience of spreading payments over 3 years annually
  • . You own the licenses perpetually at the end. Software Assurance is typically included, giving you upgrade rights during the term.Open Value Subscription (OVS): This is more like an “EA Subscription” for small businesses – you subscribe to the licenses for 3 years instead of purchasing. Upfront costs are lower (since you’re not buying perpetual rights), and you can true-up or true-down annually (meaning you can decrease license counts at the anniversary if your user count dropped, a flexibility not all agreements offer). However, if you stop subscribing, you lose the rights (or have to purchase the licenses at the end if you want to keep using them).
  Typical customers for Open Value are organizations that don’t meet the EA minimum but still want a formal volume licensing deal with Microsoft. Pricing is usually “Level Open” (comparable to EA Level A in many cases). While discounts aren’t as steep as EA (because volumes are smaller), it can be more cost-effective than buying retail or relying purely on CSP for certain software. Open Value is also popular for government and education institutions on a smaller scale, often via specialized variants.
• Select Plus: This was a legacy volume licensing program for medium and large organizations (250+ seats) that wanted transactional purchasing without an enterprise-wide commitment. Select Plus allowed customers to buy licenses on an as-needed basis, and like MPSA, it used a point-based volume discount model (Levels A-D pricing based on cumulative purchases). One key aspect was that Select Plus agreements didn’t expire – they were “evergreen” so long as there was purchase activity. Microsoft has since retired Select Plus for commercial customers (replacing it with MPSA), but some government and academic customers still use Select Plus, and some enterprises have old Select Plus agreements still active for specific purchases. If your organization has been around in the Microsoft ecosystem for a while, you might have remnants of Select Plus or entitlements from it. In today’s context, think of MPSA as the successor to Select Plus with very similar attributes (no term, transactional buying, point-based discounts).

Each of these programs has a distinct pricing structure and benefits. To summarize the landscape, enterprise agreements (EA/EAS/SCE) tend to favor large commitments with the best unit pricing and full benefits (but less flexibility).

In contrast, transactional agreements (CSP, MPSA, Open Value, etc.) favor flexibility and pay-as-you-go at the cost of potentially higher unit prices.

The key is to match the program to your organization’s size, technology mix (cloud vs on-premises), and appetite for commitment. Next, we’ll compare these programs side by side on major criteria to make those differences clear.

Comparing the Programs Side by Side

It’s helpful to see a Microsoft licensing program comparison at a glance.

The table below compares the major volume licensing programs on key factors like organization size, agreement term, flexibility, discount model, Azure options, admin overhead, and risks:

This side-by-side comparison shows that each program has trade-offs.

For instance, the EA vs. CSP vs. MCA vs. MPSA debate boils down to flexibility versus unit pricing and commitments.

An EA locks in pricing and terms for 3 years and rewards you for a big upfront commitment – great for stable environments looking for the lowest unit cost and full Software Assurance benefits.

CSP and MCA favor flexibility and cloud-first purchasing – great if you want to scale down or up quickly or avoid long commitments, but you might pay a bit more per license, and you lose some traditional benefits. MPSA and Open Value occupy the middle ground for mid-sized and smaller customers, giving volume pricing without the full weight of an EA.

Microsoft’s pricing strategy across these programs is intentional: it incentivizes larger, longer commitments (EA, Open Value) with bigger discounts, while providing flexible options (CSP, MCA) that may cost more per unit but reduce the risk of overbuying. Understanding this strategy helps you as a buyer – it means if you’re currently in a rigid program and your needs have changed, you might save money by switching to a more flexible model (even if the headline discount is lower).

Conversely, if you’re growing rapidly, moving up to an enterprise program could unlock volume savings that pay off. In the next sections, we’ll explore how to identify eligibility triggers for each program, how discounts really work in each model, and concrete negotiation tactics to maximize value.

Eligibility Triggers That Drive Program Fit

Which licensing program is the best fit for your enterprise? Some clear triggers and thresholds can guide your decision.

Microsoft often sets eligibility criteria (like minimum seat counts) for certain programs, and your own business situation will also push you toward one model or another.

Below, we discuss a few key scenarios and triggers, and then provide a handy checklist titled “Is Your Current Program Still the Right Fit?”

• Organization Size & Growth: Size is usually the first filter. If you have under 500 users, you generally won’t qualify for an Enterprise Agreement – Microsoft will steer you toward CSP, Open Value, or similar. Between 500 and ~2,400 users, you could do an EA (500 is the official minimum), but Microsoft has been nudging many in this range to consider CSP or MCA instead, especially if a lot of your spend is on cloud services. Why 2,400? Microsoft historically structured EA pricing so that the best discounts (Level C/D pricing) kick in at higher counts – in practical terms, enterprises with around 2,400 seats or more tend to see the most benefit from EAs. If you’re well above that (thousands of seats), an EA is almost always the cost-effective choice on pure pricing. Conversely, if you’re smaller, the enterprise agreement alternatives become attractive because the EA’s overhead and minimum purchase requirements might outweigh its discounts.
• On-Premises vs Cloud Mix: Your current and future tech stack matters. Maintain significant on-premises infrastructure (Windows Server, SQL Server, etc.) and rely on Software Assurance for upgrades or license mobility. An EA (or an EA-like program, such as Open Value, for smaller organizations) might be necessary to achieve those benefits. CSP currently has limited offerings for on-prem server licensing (and no traditional SA). MPSA can cover on-prem needs with optional SA without a long contract – this might be a trigger if you’re in a phase of reducing on-prem footprint but not fully done with it. On the other hand, if you’re cloud-first (e.g., all Microsoft 365, Azure services, no legacy servers to worry about), a CSP or MCA could cover you just fine, and you wouldn’t need the complexity of an EA.
• Commitment vs Flexibility: Some triggers relate to how predictable or volatile your needs are. If your user count or IT requirements fluctuate significantly (seasonal staff, acquisitions or divestitures, rapid growth or downsizing), a flexible model like CSP or an Enterprise Subscription Agreement (EAS) or Open Value Subscription (which allows true-downs) is advantageous. If you anticipate stable growth and want price predictability, a fixed 3-year EA can be a safe harbor (prices locked in, guaranteed access to software for everyone, etc.). Think about whether you’ve had to cut back licenses in the past or wished you could – if yes, being locked into a high, fixed license count could be risky.
• Global Footprint & Administration: Enterprises spread across multiple countries or with decentralized IT may find it challenging to manage numerous separate CSP subscriptions or Open agreements. An EA is centralized and global, which can simplify compliance and asset management if that’s a priority. On the other hand, smaller firms or those with autonomous divisions might appreciate letting each unit manage its CSP subscriptions. If your procurement is centralized and you want one big contract to cover everything, EA or MPSA triggers that need; if it’s decentralized, CSP in various locales or a mix of programs might actually work better.
• Vendor Negotiation Stance: This is a bit internal, but consider your philosophy: do you want a direct enterprise relationship with Microsoft where you can negotiate special terms and engage Microsoft executives? Then an EA/MCA (direct relationships) is the way to go. If you prefer to offload vendor management to a partner and not deal with Microsoft red tape, CSP triggers that approach by putting a partner between you and Microsoft. Also, note that Microsoft sometimes uses carrots or sticks: they may offer special promos to move you from one program to another (e.g., a discount to transition from EA to CSP if you’re a smaller enterprise, or vice versa). If Microsoft is strongly advocating a change during your renewal discussions, that’s a sign to re-evaluate fit (though take their advice with a grain of salt – it’s driven by their strategy).

Now, use this checklist to assess whether your current licensing program is still the right fit for your needs:

Is Your Current Program Still the Right Fit? (Checklist)

• ✓ Have your user counts changed significantly since you signed the contract? (E.g., dropped well below your EA’s minimum or grown beyond your Open Value scope?)
• ✓ Are you finding unused licenses or “shelfware” in your environment? (This could indicate you’ve over-committed in a too-rigid program.)
• ✓ Has your IT strategy shifted (on-prem to cloud or vice versa)? (For example, moving to Azure and SaaS might mean you need a program with cloud flexibility, like CSP/MCA, instead of a traditional EA built around on-prem license bundles.)
• ✓ Did Microsoft retire or change your program? (E.g., Open License program was retired; Select Plus replaced by MPSA. If you’re on a legacy program, it might be time to move to the current equivalent.)
• ✓ Do you need more flexibility to reduce costs or reassign licenses? (If you’re stuck paying for things you don’t use until the term ends, consider a more flexible model next round.)
• ✓ Are you managing multiple agreements that could be consolidated? (Perhaps you have separate contracts for different divisions – you might save by consolidating into one EA, or conversely, if one part of the business has very different needs, splitting into a separate agreement or CSP could optimize cost.)
• ✓ Has Microsoft (or your reseller) suggested you’re not eligible to renew your current program? (For instance, smaller EAs are being told to move to CSP. That’s a sure sign to evaluate alternatives.)

If you ticked any of the above, it’s a prompt to re-examine your volume licensing strategy. The goal is to ensure that your agreement aligns with your reality. A mismatch can mean either wasted spend (too much capacity, wrong features) or missed savings (not taking advantage of volume pricing where you could).

The good news is, Microsoft provides multiple program options – and you can switch when it makes sense (usually timed with your agreement renewal).

In the next section, we’ll dive into how each program actually yields discounts (or not), so you can understand the savings levers and limitations in your current vs. potential new program.

How Discounts Work by Program

Every Microsoft licensing program has its own pricing and discount model.

To maximize savings, you need to know where the discounts come from in each program – and what pitfalls to watch out for.

Below is a quick-hitting comparison of how discounts are earned in EA, CSP, MCA, MPSA/Open Value, etc., along with common pitfalls for each:

As you can see, the way you get a discount varies widely. Under an EA, the largest savings are achieved by committing broadly and negotiating upfront.

Under CSP and MCA, it’s about optimizing terms (monthly vs annual) and leveraging partner or Microsoft incentive programs (like Azure credits or limited-time promotions). With transactional agreements like MPSA or Open, it’s about smart purchasing patterns and possibly engaging a reseller who will give a concession on a big deal.

The key takeaway: the best “discount” is avoiding paying for what you don’t need.

A 20% discount on something you never use is wasted money. So, ensure you choose a licensing model that aligns with what you’ll actually consume, then focus on maximizing the discounts within that model.

Managing Cost Models: User, Core, and Cloud

Microsoft licensing spans different cost models – some licenses are per user, some per core (or device), and cloud services are consumption-based.

How you pay for these under each program can significantly influence your costs.

Let’s break down considerations for per-user, per-core, and cloud (consumption) licensing across the programs:

• Per-User Licensing (e.g., Microsoft 365, Office 365, EMS, Windows E3/E5 user licenses): This is the dominant model for Microsoft’s modern workforce products. In an EA, per-user licenses are typically bought for every “Qualified User” in your org. You commit upfront to an initial quantity (say 1,000 E3 licenses) and can add more during the term via true-up. You’ll pay a set annual rate (which might be discounted from MSRP) locked for 3 years. The downside is that you’re also committing to continue paying for those users even if your count drops (except at renewal, when you can adjust). In CSP/MCA, per-user licenses are extremely flexible – you can start with 1,000 E3 licenses. If you have layoffs or seasonal reductions, drop to 900 the next month (assuming you chose monthly subscription options). You pay month-to-month or annually per user, at approximately the MSRP (unless your partner offers a slight discount). The trade-off: EA might give you, for example, a $30/user/month price locked in, while CSP could be $35, but you can reduce quantity at will. Over-licensing vs per-unit cost – that’s the balancing act. Negotiation tip: If you’re in an EA and worried about overcommitting E5 licenses, consider doing a mix – e.g., cover everyone with E3 in the EA and only a subset with E5 (via Add-ons or separate CSP purchase) to avoid E5 shelfware. Meanwhile, if you’re in CSP and have a stable base of users, commit those to annual subscriptions to save the 20% premium, and only leave truly variable users on month-to-month.
• Per-Core or Per-Device Licensing (e.g., Windows Server, SQL Server, CALs, specialty on-prem software): In an EA, you usually count up all your existing servers and buy licenses for them (with SA) at the start, then true-up if you deploy more cores/servers. The EA (especially if you do a Server and Cloud Enrollment add-on) can provide significant discounts on these when you commit to a standard platform. It’s great if you’re maintaining a large datacenter footprint because the EA/SCE can bundle in Azure Hybrid Benefits, etc. In CSP, per-core licenses for servers are not widely available – Microsoft wants cloud subscriptions, so they limit perpetual on-prem licenses in CSP (only a small selection of server licenses can be bought as one-time purchases in CSP, and things like Windows Server are often only available as subscription licenses tied to Azure). Suppose you need lots of on-premises server licensing and want to pay as you go. In that case, MPSA might be your friend: you can buy what you need when you need it, perhaps coordinating purchases to get volume discounts, and you can also choose to skip SA on certain workloads to save money (if you don’t need upgrades or mobility on them). Core licensing under Open Value is possible for smaller orgs (e.g., you could cover your two SQL servers via Open Value rather than retail). Still, large server estates usually push you to an EA or SCE for cost efficiency. Key point: If your cost model includes a lot of per-core licensing, lean toward programs that support it well (EA/SCE, MPSA) and consider a 3-year lock-in on pricing because Microsoft tends to raise server license prices annually. If you plan to migrate those servers to Azure or decommission them, avoid long-term commitments – consider staying transactional and only paying for SA yearly via Open or MPSA, so you’re not stuck with unused licenses.
• Cloud Consumption (Azure, and other usage-based services): Consuming Azure is essentially like having a meter running – you pay for what you use by the second/hour/GB. Under an EA, you usually make an Azure monetary commitment: for example, you commit $500k per year to Azure for 3 years. Microsoft bills that in advance (or annually), and you draw down against it as you use Azure. If you exceed your limit, you will incur an overage charge quarterly. If you under-use, you lose what you paid (no refunds). The benefit is that Microsoft often gives a discount or some free credits for committing, and you lock in some Azure pricing protections. Under an MCA or CSP, Azure works as pay-as-you-go (unless you opt into Azure Savings Plans or reserved instances for specific resources, which are like pre-paying for those resources at a discount). With pay-go, you get monthly bills for actual usage, no waste – but you pay list price (unless your partner/Microsoft applies a slight discount). For very large Azure consumers, EAs or special CSP arrangements can yield something like 5-15% better pricing via negotiated terms. For moderate usage or spiky usage, the flexibility of CSP/MCA (no commit) may save you from over-committing the budget. Important: If Azure is a huge part of your IT spend, treat the Azure commit like its own negotiation line item. In an EA renewal, you might say “we plan to grow Azure to $X over 3 years, what incentive can you (Microsoft) give?” This could result in credits or a better rate on certain services. In a CSP scenario, you might negotiate with the partner for a rebate program (e.g., “if we spend $100k/month in Azure with you, give us 3% back as a service fund”). Always align your Azure consumption strategy with your licensing program: a misalignment could mean either leaving Microsoft money on the table or not having the flexibility to throttle usage if needed.

Bottom line: Know your cost drivers. If the majority of your spend is per-user (Microsoft 365 seats), focus on the program that gives you the best per-user economics and flexibility.

If you’re heavy on servers and cores, the program that offers the best volume break on those licenses (and SA benefits if needed) might override other considerations. And if cloud is king, you want the model that maximizes cloud discounts or at least doesn’t penalize you for unpredictable consumption.

Many enterprises have a mix – for example, user licenses in EA, but Azure via CSP. That can work, but be cautious of overlap or conflicts (which we’ll touch on in a moment). The next section on negotiation tactics will help ensure that whichever mix you choose, you squeeze the maximum value out of it.

Negotiation Tactics by Program

Negotiating with Microsoft (or partners) requires tailoring your approach to the program you’re using. Each program has its own unique rules, stakeholders, and pressure points.

Below, we outline how to approach negotiations for an EA, CSP, MCA, and MPSA/Open Value, followed by a checklist of must-have contract protections to include in any deal.

Enterprise Agreement Negotiation:

When negotiating an EA, preparation is everything. Start 12+ months before your EA expiration to give yourself time (we’ll provide a timeline later).

Key tactics:

• Benchmark and Build a Case: Know what similar companies are paying. Microsoft won’t hand you a price list beyond your level, so leverage insights from peers or consultants. This helps you set realistic discount targets (e.g., aim for Level D pricing or better if you’re a large enterprise; know the dollar per user per year you want for each product).
• Show Willingness to Walk: Even if you fully intend to renew EA, hint that you’re exploring alternatives like CSP or splitting into smaller agreements. Microsoft’s sales reps fear losing the account to a partner-led CSP model. This can bring them to the table with concessions. For example, if they think you might move some business to CSP, they might offer a deeper discount to keep you all-in EA.
• Leverage Year-End or Quarter-End: Microsoft has yearly fiscal targets (June 30 year-end for Microsoft). Align your negotiation timeline such that final discussions hit at the end of Microsoft’s quarter or year – they’ll be more flexible to book the renewal. We’ve seen companies get extra one-time discounts or freebie add-ons because Microsoft needed the deal booked by a deadline.
• Executive Escalation: Don’t be afraid to involve your executives. Having your CIO or CFO communicate with Microsoft’s higher-ups (like a Microsoft account executive’s manager or a Microsoft VP for large deals) can escalate negotiations. A polite but firm message that the deal needs improvement to be signed can work wonders. Microsoft will often bring in a specialist “negotiation team” or concessionaire if the revenue is significant and at risk.
• Optimize the Bundle: EA negotiations often involve deciding which product bundles to take (E3 vs E5, etc.). If Microsoft is pushing an E5 suite, but you only need parts of it, push back. For instance, say, “We’ll consider E5 if you discount it to only 15% above the E3 price” or have them include a year of free Teams Phone or add-ons to sweeten the deal. Alternatively, stick to E3 and add just the security or phone components you need. Microsoft would prefer you on the bigger bundle for their cloud score metrics, so use that as leverage to get something in return (like flexible true-down terms or extra funding for adoption).
• Don’t Forget Secondary Items: Everything is negotiable in an EA if you ask: pricing for additional products (like Visio, Project), the discount on Azure plan, payment terms (maybe you want annual in arrears instead of upfront), even things like a contractual price cap on increases for when you renew next time. Bring these up – Microsoft won’t volunteer improvements, but often will agree if it keeps you on EA happily.

CSP Negotiation: With CSP, your negotiation is largely with the partner (reseller or service provider) rather than Microsoft directly. ‘

Tactics here:

• Shop Multiple CSP Providers: Pricing and service levels vary. Solicit quotes from at least two or three CSP partners. Let them know you’re comparing. This often motivates them to cut margins or include value-added services (e.g., free migration support, license usage reports, or training) to win your business.
• Check Partner Incentives: Understand how the partner benefits. Microsoft gives rebates for CSP sales and Azure consumption. A savvy move is to say, “We plan to spend $X on Azure and Y on licenses through you. In return, we expect a rebate or discount of Z%.” If one partner balks, another might agree. They know their margins – often CSP partners can afford to give a few percent off Microsoft’s price and still profit via backend incentives.
• Service Agreement Layer: When negotiating CSP, ensure the master services agreement or whatever contract you sign with the partner covers things important to you: e.g., the right to switch provider or go direct at any time (you don’t want to be locked to a CSP beyond month-to-month), clarity on support response times, and data handling. While you can’t change Microsoft’s customer agreement via CSP, you can set terms with the partner about how they manage your account.
• Multi-Year Commit with Escape: If you’re comfortable, you could negotiate a discounted rate by agreeing to stick with a partner for a certain term – but insist on performance clauses. For example, a partner might say, “If you commit to 3 years with us, we’ll guarantee a 10% discount on license prices.” You then include a clause that if service levels aren’t met or if Microsoft drastically cuts direct prices, you can exit that commitment.
• Volume Flexibility: If you have known seasonality (e.g., an educational institution with more licenses during the school year, fewer in summer), talk to the partner about a pricing construct that averages it out. Perhaps you agree on a baseline at a good rate and handle peaks as an exception. The key is to ensure the partner is aligned with your consumption pattern, so you’re not constantly paying peak prices or scrambling to adjust licenses.

MCA (Microsoft Customer Agreement) Negotiation:

The MCA is a bit more “take it or leave it” since it’s a standard agreement, but for larger enterprises under MCA-E, you can negotiate certain aspects through your Microsoft rep:

• Azure Consumption Deals: As mentioned, if you plan to spend a lot on Azure via MCA, negotiate an Azure consumption commitment or volume discount with Microsoft. This might not change the MCA itself, but Microsoft could provide a discounted rate card for certain Azure services or give you a quarterly rebate if you hit spend milestones. Get those in writing via email or a contract addendum.
• Price Protections: One advantage EAs have is a price lock for 3 years. Under MCA, prices for subscriptions can change annually. You might negotiate with Microsoft to fix your Microsoft 365 subscription prices for, say, 2 years. Microsoft has occasionally done this for big customers, not on EA, to win their business. Alternatively, negotiate a cap (e.g., “any annual price increase will not exceed 5%”).
• Account Management and Support: Ensure that, even as an MCA customer, you get some level of account management. If you’re giving up an EA with a dedicated rep, ask Microsoft to continue providing an account manager or access to fast support channels. This isn’t a “discount” but it’s value.
• Hybrid Use / License Transfers: If you are transitioning from an EA to MCA and have existing perpetual licenses, negotiate clarity or agreements on how those can be used going forward (e.g., you keep the right to use your on-prem licenses with SA benefits for a while). Microsoft might allow some grace periods or other considerations to smooth your transition – but only if you ask.

MPSA/Open Value Negotiation: These programs have less wiggle room because pricing is based on published volume levels.

Still:

• Reseller Competition: For MPSA or Open, you still purchase through partners or Licensing Solution Providers. Use that to your advantage by letting resellers compete for your orders, especially large one-time purchases. They might offer you a percent off or throw in some free consulting hours.
• Large Order Discounts: If you foresee a big purchase (like a company-wide upgrade of Windows or Office through MPSA), talk to your LSP about special pricing. They can sometimes get approval from Microsoft for an exception discount on a specific order if it’s big enough. It’s not guaranteed, but if you don’t ask, you don’t get.
• Contractual Clarity: On Open Value, negotiate any special needs at the start through your partner. For instance, if you anticipate needing slightly more licenses for a short period, can they accommodate that and reduce them later (not standard, but small exceptions sometimes occur for Open Value Subscription)? With MPSA, ensure you understand the terms for co-terming Software Assurance; you may negotiate to align purchase anniversary dates so that multiple purchases renew together, simplifying management.
• No Double Dipping: If you’re using MPSA alongside an EA (some do this, e.g., EA for users and MPSA for extra stuff), be careful not to buy the same product in both at the same time (for example, don’t have Office 365 licenses in EA and also buy some in MPSA – it can mess up compliance counting). As a negotiation, or rather an internal negotiation, decide the boundary (maybe all cloud services in EA, all perpetual extras in MPSA) and stick with it to avoid waste.

Regardless of the program, you should secure certain protections.

Here’s a checklist of must-have contract protections to consider in your Microsoft agreements negotiation:

• ✓ Price Increase Caps: Ensure the agreement limits how much prices can rise for renewals or unpurchased products. For EA, get a cap on list price increases for optional items you might add later. For CSP/MCA, have an understanding with your provider that they’ll honor a quoted price for X months even if Microsoft raises rates.
• ✓ Flexibility to Adjust Down: Try to incorporate the right to reduce quantities under certain conditions. EAs typically don’t allow reducing mid-term, but you might negotiate a swap (e.g., drop 100 licenses of one product if adding equivalent value of another). In CSP, ensure you have no penalty for reductions after any commitment term. If you sign a multi-year CSP deal, clarify that you can reduce at annual checkpoints.
• ✓ True-Up/True-Down Rules in Writing: Get clear language on how true-ups are calculated (they should be pro-rated or annual, not paying a full year for something deployed in the last month, for instance). If you have any ability to true-down (like in an Enterprise Subscription or Open Value Subscription), document the process and that there’s no fee for reducing appropriately.
• ✓ Transfer and License Mobility Rights: Especially if you have on-prem licenses, make sure you have rights to transfer licenses to the cloud or to new hardware. If you negotiate an EA, ensure you include Azure Hybrid Benefit rights, allowing your Windows/SQL Server licenses to cover Azure VMs (that’s usually standard with SA, but call it out). If you anticipate mergers, request expanded transfer rights so you can transfer licenses to an affiliate or buyer in an acquisition scenario without incurring fees.
• ✓ Renewal Notice and Extension Options: Ask for a longer renewal quote lead time – e.g., Microsoft provides pricing 90 days before expiration (so you’re not caught last-minute). Also, consider negotiating a bridging option: if, for some reason, a new agreement isn’t signed by expiration, can you get a 30-60 day extension to avoid lapse? This safety net can be invaluable in complex deals.
• ✓ Lock in Incentives/Promotions: If Microsoft or a partner offers a special incentive (like “free 100 Azure migration hours” or “20% off first year if you sign by June”), write that into the agreement or an addendum. Memories can fade; you want any promised concessions documented and enforceable.
• ✓ Data Ownership and Privacy (for cloud services): Ensure any privacy and security clauses meet your compliance needs. While Microsoft’s standard agreements are generally okay, some industries negotiate addendums for data residency, audit rights, or termination assistance (exporting your data if you leave a cloud service). Don’t overlook these if they matter to your risk office – Microsoft will often accommodate reasonable requests for large customers.

By tailoring your negotiation strategy to the program and including these protective measures, you put your enterprise in a strong position.

Microsoft’s contracts are complex, but they’re not set in stone – especially the EA, which is highly negotiable. And even the newer programs have room for special arrangements if your business is valuable to Microsoft or its partners.

Choosing the Right Program for Your Business

At this point, it’s clear there is no one-size-fits-all. The best licensing program depends on your organization’s profile and priorities.

Let’s map a few typical enterprise profiles to recommended programs as a decision framework:

• Large Global Enterprise (Thousands of seats, diversified IT): If you’re, say, a 10,000-seat company with offices worldwide, running a mix of on-premises and cloud, an Enterprise Agreement is usually the right backbone. It will offer the most comprehensive coverage and volume pricing. You might augment it with Server & Cloud Enrollment (SCE) for heavy server workloads to get extra discounts on those. This profile values a direct relationship with Microsoft and predictable costs. The EA gives you that, plus flexibility to add new Microsoft 365 users or products enterprise-wide with standardized pricing. However, even a large enterprise could use a mix. For example, you might put your core users and products in the EA, but use CSP for a niche project in a subsidiary or for trialing new services outside the EA cycle. Just manage it carefully to avoid conflicts. Still, the primary recommendation: EA (possibly with an EAS variant if you want subscription flexibility) remains king for this profile.
• Mid-Sized, Cloud-First Business (~500-2,000 seats, mostly cloud services): For a company of this size that has minimal on-prem footprint and wants agility, Microsoft CSP or MCA can be a strong choice. You’re big enough to possibly do an EA, but you might find the administrative burden and lack of mid-term flexibility unnecessary. If you lean on a trusted IT partner for support, CSP is great: you get one consolidated bill for Microsoft 365, Azure, etc., and you can scale licenses easily. If you prefer direct control, an MCA with Microsoft (essentially buying direct from Microsoft) could work too, though you’ll have to self-manage more. One thing to consider: if you are around that 1,000-2,000-seat mark, ask Microsoft for pricing comparisons – sometimes they will show you an EA quote vs CSP costs over 3 years. If CSP/MCA comes out similar or cheaper, the flexibility is likely worth it. But if you have some specific needs like keeping a bunch of Windows Server licenses with SA, you might end up with a hybrid: e.g., keep a slim EA just for those on-prem licenses and put the rest of your cloud services in CSP. Recommended default for mid-size cloud-centric org: CSP with a reputable partner, plus possibly MCA for Azure if you want direct control or to leverage any Azure commit deals.
• Small Business or Emerging Growth (<500 seats): Under 500, you won’t qualify for an EA anyway (and frankly, you don’t want the overhead). CSP is typically the first choice here due to its simplicity and low commitment. If you have an IT consultant or service provider, they can manage your CSP licenses, and you can focus on your business. However, don’t overlook Open Value for certain cases: if you know you’re going to use, say, 50 copies of Windows Server Standard and some Office licenses for 3 years, an Open Value agreement can be cost-effective and include upgrade rights. Some small organizations that prefer owning licenses (CapEx) and want the ability to upgrade to new versions might opt for Open Value for those perpetual licenses, and CSP for Microsoft 365, which is essentially a subscription. If you’re an SMB that needs on-prem software (like a specific version of SQL Server) with Software Assurance, Open Value is your friend; otherwise, CSP covers most needs. Recommendation for SMB: CSP for cloud services & regular software needs; consider Open Value if you need volume perpetual licensing with payment spread out.
• Fast-Growing Tech Company (Unpredictable needs, hiring in spurts): A cloud-native tech firm might double in size one year, shrink the next, pivot products frequently… For them, maximum flexibility is key: CSP every month is ideal, as it allows for true month-to-month changes. They might pay a bit more per license (the 20% premium for not locking in annual), but they avoid any wasted spend if half the staff switches projects or if they pivot off a Microsoft platform. If they get bigger and reach stability, they can transition to an EA or annual CSP terms later. Additionally, such a company might benefit from MCA for Azure with no commitment, allowing them to only pay for what they use while iterating on their cloud infrastructure. Recommended: CSP/MCA all the way, with minimal commitments, to keep the company agile.
• Organizations with Volatile Workforce (seasonal or project-based staff): Think of a company that ramps up contractors or staff for projects, then ramps down. Examples: consulting firms, game development studios, or retailers with holiday season staff. These should avoid being stuck with fixed counts. CSP is great for this – you can license those users for exactly the duration needed (even for one month). If the user count fluctuations are within a year, you might still consider annual CSP subscriptions for the baseline and add extra capacity via monthly subscriptions for peak times. Another tactic: Enterprise Agreement Subscription (EAS) – this is a lesser-known variant of EA where you don’t own the licenses and can reduce at each anniversary. Large organizations with a history of downsizing have used EAS to facilitate true downsizing. However, EAS is still a 3-year contract; CSP is more granular, so it is likely better for most volatile scenarios. Recommended: CSP, possibly with some EAS if enterprise-scale and needing true-down annually in a controlled way.

To make a decision, you could also plot yourself on two axes: commitment vs flexibility, and size vs complexity.

An EA is characterized by high commitment and is suited for large and complex projects. CSP is highly flexible, better suited for smaller or highly dynamic needs. MPSA/Open sits in between.

If your profile doesn’t neatly fit one program, remember you can mix and match to some degree. Many enterprises use multiple Microsoft agreements concurrently (just take care to align with Microsoft’s rules – e.g., avoid double-licensing the same users).

Finally, think about the future: where do you want to be in 3 years? If you anticipate growth that would make you eligible for a more advantageous program, you might opt for a shorter commitment now.

For instance, a 400-person company planning to acquire another firm soon might avoid locking into a 3-year Open Value, and instead use CSP for a year or two, then jump to an EA when they cross 800 seats.

On the other hand, if you expect stability or contraction, maybe you don’t want to re-sign a big 3-year EA and instead shift to CSP to scale down if needed.

The key is to choose a program that fits before chasing discounts (one of our expert recommendations). It bears repeating because a lot of negotiation effort can be wasted trying to get a big discount on a model that isn’t the best for you. Select the right model, and you will have a solid foundation to negotiate prices.

Transition and Migration Playbook

Switching from one licensing program to another (or even merging multiple agreements into one) is a project in itself. Whether you’re moving from Select Plus to EA, or from EA to CSP, you’ll want to manage the transition carefully to avoid compliance gaps, double-paying, or other hiccups.

Here’s a playbook of best practices for migrating between programs:

1. Inventory Your Entitlements and Usage: Start by knowing exactly what you have under your current agreements. For example, if you’re moving off an EA, list all the licenses covered (both perpetual and subscription) and any Software Assurance benefits. If coming from MPSA or Open, gather all purchase records. Essentially, you need a clear picture of “we own these licenses outright, we subscribe to these services until date X, we have these Azure credits remaining,” etc. Also, inventory how those are being used in your environment. This will help ensure nothing critical is lost in the move.

2. Map Equivalents in the New Program: For each item in your current inventory, determine how it will be handled in the new agreement.

Some examples:

• You have 500 Office 365 E3 users in EA, which would be 500 Microsoft 365 E3 (same product) subscriptions picked up by the partner starting immediately after EA ends.
• You have on-premises Windows/SQL Server licenses with active SA. If moving to CSP/MCA, note that CSP doesn’t sell perpetual licenses with SA. You might either (a) keep those licenses and renew SA via a separate agreement (e.g., an Open Value just for SA renewals, or using the legacy EA SA-only renewal option if possible), or (b) plan to transition those servers to Azure with hybrid benefit, or (c) let SA lapse and accept no upgrades from now on. It’s a big consideration – you may need a hybrid approach where you maintain an MPSA or Open just for certain on-prem renewals while shifting user licenses to CSP.
• If moving from Open Value to EA (say your company grew): you might be able to “roll up” those existing licenses into the EA as prior purchases so you’re not double-buying. Microsoft has processes to recognize existing investments; work with your reseller so that, for example, the Office licenses you bought last year via Open are counted toward your EA baseline (you wouldn’t repurchase them, you’d just start paying SA on them in the EA).
• Retiring Select Plus to MPSA: Microsoft actually automated a lot of this for customers, but double-check that all your Select licenses and points level carried over to the new MPSA.

3. Timing and Co-terming: Aim to have the new agreement start the day after the old one ends, to avoid gaps. But also avoid overlap where you pay twice. A common strategy is to co-term expiration dates: if your EA ends June 30, plan for a new CSP/whatever to kick in July 1. If you are moving gradually, maybe you have a window of overlap: for instance, you start moving some pilot users to CSP 3 months before EA ends. That’s fine, but try to get Microsoft to allow a short overlap without extra charges. Sometimes they’ll allow you to run a few pilot licenses in parallel to test, as long as you’re ultimately not using more than licensed. If not, time the cutover as tightly as possible. For Azure, it can be tricky – you might have to set up new Azure subscriptions under the new agreement and migrate resources (which could be complex). In some cases, Microsoft can migrate Azure subscriptions between agreements on the backend – ask about an Azure subscription transfer from EA to CSP/MCA to avoid having to move VMs manually.

4. Reconcile and Retire Old Licenses: Once transitioned, formally reconcile the old agreement. In an EA, for example, you’d do a final true-up or true-down at the end. If you moved users off early, ensure you reduced the EA count at renewal or used any allowed substitution (so you’re not stuck paying for 1000 users when 500 already left to CSP). For on-prem licenses that you own from an EA or Open, make sure you keep records of those perpetual rights – you might need them for compliance even if you’re not using them now. If you left an EA or Open Value, Microsoft will give you proof of license for perpetual entitlements (for instance, if you had an EA and didn’t renew SA on some products, you still own the last version – document what those are).

• If you are transitioning to an EA from something else, gather those existing licenses to get credit or ensure you’re not double-buying. E.g., you had 100 Office licenses on Open – in the EA, you should not rebuy them, you should just add SA or fold them in.

5. Address Contractual Loose Ends: Check for things like training vouchers, support credits, or other benefits tied to the old contract. If you have outstanding Azure credits in an EA (perhaps from an unused commitment), see if Microsoft will allow a carryover or extension (often no, but ask). If you had reserved instances in Azure under the old agreement, those might need to be moved or will stay with that agreement’s subscription – plan how to handle that (maybe wait to make large Azure RI purchases until after transition, or if mid-term, coordinate with MS). Also, if you had third-party licenses (like some add-ons or marketplace items) linked to your old agreement, ensure those are re-established under the new one.

6. Communicate to Stakeholders: Internally, let all teams know about the change. IT teams need to know how to provision new licenses now (e.g., “use the new CSP portal instead of VLSC”). Procurement and finance need to know who will invoice them (a partner instead of Microsoft, or vice versa). End-users might not notice anything if it’s done right. Still, sometimes domains or tenant settings change if moving to a new tenant (try to avoid changing tenants if possible when switching programs – usually you can keep the same tenant for M365/Azure and just change how it’s billed/licensed).

7. Use Renewal Time as a Clean Slate: The best time to change programs is at an existing contract’s end. Pushing a change mid-term is complex and often costly. For example, you generally cannot break an EA mid-term without paying for the full term. So, plan the new program to start when the old one naturally concludes. One exception: if you’re on something like MPSA or no agreement, you can start an EA anytime. In that case, coordinate to start the EA at a quarter boundary or when you need to make a big purchase (so you immediately get those EA discounts for that purchase, rather than buying under the old model).

8. Mitigate Risks of Switching: Each program has different terms – be wary of compliance traps when switching. For instance, under EA you had broader usage rights (maybe you could use a license on multiple devices for the same user, etc.). Under CSP, check the service terms to ensure you still comply. A classic example is product use rights differences: in EA, your Office license per device might allow shared computer activation if you had certain licenses; under CSP, you might need a different license to allow that. Most modern licenses align, but double-check details such as virtualization rights, multi-device use, downgrade rights, etc. If something is lost, see if there’s an alternative (maybe buy one-off licenses via MPSA to cover a gap, or adjust your usage).

9. Leverage Microsoft/Partner Help: Microsoft and large partners have dedicated teams to assist customers in transitions (especially if it’s from an older program to a newer one, which aligns with Microsoft’s goals). Don’t hesitate to request migration assistance as part of your negotiation. For example, if moving from EA to CSP, Microsoft might provide a fast-track team to help reconfigure your tenant licenses. If moving to an EA, a partner will gladly help inventory and fold in your existing assets (sometimes for free, hoping to make money as your LSP on the EA). Use all available resources to make it smooth.

In summary, a program transition should be treated as a mini project with its own timeline and owners. The effort pays off by ensuring you don’t lose entitlements or overspend during the change. The worst outcome would be paying for two programs at once or having a service interruption because a license wasn’t carried over. With careful planning, you can switch programs with minimal disruption and start reaping the benefits (cost savings, flexibility, etc.) of your new model immediately.

Common Mistakes to Avoid

When it comes to Microsoft licensing, even savvy organizations can slip up.

Here are some common mistakes to learn from, so you can avoid them:

• Overcommitting to Bundles You Can’t Fully Use: Microsoft will often push the most comprehensive (and expensive) bundles, like Microsoft 365 E5 or enterprise-wide coverage of certain products. These bundles can be a great value if you use everything in them. But buying E5 for every user when only your security team uses the advanced security features is classic shelfware. Avoid the temptation (or pressure) to “buy the bigger bundle because it’s discounted.” Instead, do a needs assessment. It might be better to stick to E3 and add one or two E5 Security or Compliance add-ons for a subset of users. Don’t pay 100% price for something you’ll only use 50% of.
• Ignoring Azure Commit Burn Rates: If you have an Azure commitment (prepaid amount under EA or a contractual goal under MCA/CSP), track it closely. One mistake is treating the Azure commit as a fixed spend – e.g., you committed $1M, and you mentally consider it “spent.” If your usage is only $800k, that $200k is money thrown away at year-end. Conversely, some commit too low and end up paying expensive overages while leaving EA money on the table for other things. Manage your Azure like a project: have someone responsible for monitoring consumption vs committing monthly. Use Azure cost management tools. If you’re behind on usage mid-year, strategize how to use that value (maybe move some workloads to Azure earlier). If you’re way ahead (overage), communicate with Microsoft early – sometimes they can raise your commitment (you pay more, but at a better rate rather than overage rates). The mistake is to set and forget the commit, then scramble in true-up season.
• Starting Renewals Too Late: Time is a powerful lever in negotiations. A huge mistake is waiting until the last minute (say, 1-2 months before expiration) to start serious renewal talks or exploring alternatives. Microsoft knows when you’re out of time – you’ll end up taking whatever is on the table. We always recommend starting the internal review of your licensing position 12 months out and initiating discussions with Microsoft/partners at least 6-9 months before renewal. If you’re considering switching programs, you need that time to evaluate, pilot, and transition. Companies that procrastinate often miss opportunities to save because they can’t thoroughly vet a move to CSP or negotiate custom terms – they’re stuck renewing the status quo under pressure.
• Assuming More Spend = Automatic Discounts: We’ve seen customers assume that if they just spend a lot (like buying extra services or more Azure), Microsoft will automatically “give a better price.” Microsoft’s pricing tiers and discount schemes don’t always work that way, especially in the cloud era. If you increase your Azure usage 50% mid-term, Microsoft isn’t going to spontaneously lower your unit costs – you have to negotiate that explicitly. Same for adding 500 new Microsoft 365 users – if you just go online and add them, you pay full price. The mistake is not using increased spending as a negotiation chip before committing to it. Always approach Microsoft with “if we do X (increase licenses or Azure), what can you do for us in return?” and get it in writing. Don’t assume someone at Microsoft is watching your account, ready to send you a thank-you discount.
• Not Managing Internal Stakeholders: Microsoft negotiations often falter due to internal misalignment. Perhaps IT wants to move to a new licensing model, but procurement was never convinced and drags its feet, or finance set a budget assuming a certain cost structure. A common mistake is not involving all stakeholders (IT, procurement, finance, and business unit leaders, if relevant) in the process early on. If you pursue an EA and then find out the CFO actually wanted an OpEx-only model, you wasted effort. Or if you count on dropping 200 licenses, but a business unit plans to hire 300 next quarter, which they didn’t tell you about, your plan to reduce spend is derailed. Regularly communicate internally about the plan, get buy-in on key decisions (like program choice, commitment levels, etc.), and update each other on changes. Microsoft’s team will certainly be coordinated – you should be too.
• Overlooking Renewal of Software Assurance or Equivalent Benefits: Especially relevant if moving away from an EA or if you have many perpetual licenses. A mistake is to assume “we own the license, we’re fine,” and then a year later realize you lost a critical benefit. For example, you bought SQL Server under EA with SA, then moved to CSP for other stuff, and didn’t renew SA on SQL. Now, a new version comes out, or you want to move that workload to Azure – without SA or subscription, you might not have rights you thought you did (like the ability to use Azure Hybrid Benefit or upgrade to the new SQL version). Always have a plan for how you will maintain or replace the benefits of Software Assurance if you still need them. This could mean purchasing subscription licenses to replace perpetual ones, or explicitly renewing just SA on a minimal agreement. The mistake is letting coverage lapse unintentionally.
• Treating Licensing as solely IT’s or Procurement’s problem: True optimization and risk avoidance in licensing comes from a team approach. If IT doesn’t tell procurement about upcoming changes in usage (like moving workloads to AWS instead of Azure, or adopting a new Microsoft product), procurement can’t negotiate the right terms. If procurement doesn’t loop in IT on what was agreed (like a cap on usage or a need to deploy a certain feature to get a discount), IT might fail to do it and negate the deal. Make sure the licensing strategy is discussed in IT governance meetings and procurement planning. Avoid silo thinking; it’s a common mistake that can lead to either compliance issues or missed savings opportunities.

By being aware of these pitfalls, you can put controls in place to avoid them.

Essentially, it comes down to planning, communication, and vigilance.

Microsoft licensing can be complicated, but most mistakes are preventable with foresight and effective management. The next section provides a timeline to follow, allowing you to execute these best practices at the right times.

12-Month Playbook for Renewal or Switch

Don’t wait until the last minute to renew or change your Microsoft agreement.

Here’s a 12-month playbook – a timeline of what to do in the year leading up to a renewal or a switch of programs, with key milestones:

• 12 Months Before Expiration: Form your core licensing team (IT asset manager, procurement lead, SAM specialist, etc.). Initiate an internal review of your current agreement. Gather data on usage: How many of each license are actually in use? What’s our Azure consumption trend? Also, determine business direction – any planned changes (cloud projects, big hires or layoffs, M&A, new offices)? Begin researching alternatives: if you’re on EA, what would CSP/MCA look like cost-wise, and vice versa. If you need outside help (licensing consultant or a friendly partner) to assess, engage them now. Milestone: Executive awareness – Brief the CIO/CFO that “one year from now we have a decision to make on Microsoft licensing, and we’re starting to evaluate options.”
• 9 Months Before Expiration: Reach out to Microsoft and/or partners informally to gather information. For instance, ask your Microsoft account manager for a renewal preview or any upcoming program changes. If considering CSP, talk to a few potential CSP providers about ballpark pricing and how they’d handle your account. Internally, refine your inventory and start projecting needs for the next 3 years (maybe your workforce will grow 10%, or you plan to drop on-prem servers by 50% in favor of cloud – document these plans). Milestone: Option analysis – have 2-3 viable scenarios (e.g., Renew EA vs. Switch to CSP, or EA vs. EA + MPSA hybrid, etc.) with rough cost estimates to compare.
• 6 Months Before Expiration: This is go-time for negotiations. If sticking with your current program (like renewing an EA), officially notify Microsoft or your reseller that you’d like a proposal for renewal. Share any RFP or requirements if you have them (e.g., “we need pricing for both an E3 and E5 scenario, and include an option with 20% fewer users”). If you’re switching programs, at six months’ notice, you should inform the current vendor of the possibility (you don’t have to reveal all your cards, but it helps move things along). Also, begin drafting any business case you need for leadership approval, because big licensing decisions often require the CFO’s sign-off. Milestone: Formal engagement – Microsoft’s team is actively working on your renewal quote, or partners are preparing CSP offers. Additionally, internally, you should have a preferred strategy identified (even if it is contingent upon securing a favorable deal).
• 4 Months Before Expiration: By now, you should have initial offers on the table (Microsoft usually provides EA renewal quotes around this time if asked early, and CSP partners can give you firm pricing). Evaluate these offers against your needs and negotiate. 4 months out is a good time to push back on pricing: plenty of time for Microsoft to escalate approval for extra discounts if needed. If the numbers don’t make sense, this is when you escalate to higher-ups (both on your side and Microsoft’s). Also, if a switch is in play (say, EA to CSP), start laying groundwork: for example, ensure your tenant is configured for a CSP transfer, or line up a plan for moving those licenses. Milestone: Negotiation checkpoint – ideally by this tim,e you’ve narrowed to a final decision on which program to go with, pending final pricing tweaks.
• 3 Months Before Expiration: Aim to have the commercial terms nearly finalized by T-3 months. That might sound early, but you will need this time to handle paperwork and any migration tasks. At 3 months out, schedule internal approvals: get that CFO or spending committee to sign off on the chosen agreement and budget. If renewing EA, you might be reviewing the contract documents, enterprise enrollment forms, etc. If moving to CSP, you might be signing a new contract with a partner around now. Also, plan the implementation timeline – for instance, if EA ends June 30, plan that on July 1 the new subscriptions will be activated on CSP; who will do that and what’s the process? Milestone: Decision made and paperwork initiated – you know which deal you’re doing, and the agreement (or partner contract) is in motion for signatures.
• 1 Month Before Expiration: With a month to go, everything should be signed or in final legal review. Use this month to clean up loose ends. For an EA renewal, ensure all last-minute true-ups are accounted for so your baseline is correct. For a program switch, run a test or pilot migration of a few accounts, if possible, to ensure it goes smoothly. Also, communicate with any affected users or admins about changes. For example, if the support contact is changing (from Microsoft to a partner), please notify your helpdesk. If the license assignment processes differ, train the administrators. Milestone: All systems go – contracts signed, and a checklist in place for the switchover day.
• Expiration / Go-Live Day: Execute the transition. If renewing EA, it may simply roll over with the new pricing effective; double-check on the portal (VLSC or Microsoft 365 admin) that your licenses display the new expiration date 3 years out, etc. If moving to CSP/MCA, coordinate the cutover: the moment your EA ends, have the CSP licenses ready to assign to those users (tip: CSP partners can actually pre-place the orders to start exactly when EA ends). Verify no user loses access. For Azure, ensure the new arrangement is billing properly from this day and that the old one is closed. Milestone: Zero downtime, zero compliance issues – everything continues running on the new agreement seamlessly.
• 1-3 Months After Switch (Post-Mortem): Review the first true-up or first CSP invoice under the new deal. Make sure the costs align with expectations. Sometimes taxes or rates may differ – catch any anomalies early and address them with the partner or Microsoft. Also, archive all the old agreement details and new ones in your SAM system. Debrief internally: what went well in this renewal/transition, what will we do differently in 3 years? This will help continuously improve your software asset management practices.

Timeline Checklist (Summary):

• 12 months out: Form team, gather data, inform executives of upcoming renewal.
• 9 months out: Explore options (EA vs CSP vs MCA, etc.), get rough quotes, project future needs.
• 6 months out: Engage Microsoft/partners officially, start negotiations, build internal business case.
• 4 months out: Receive and counter offers, negotiate terms, choose likely path, start migration prep if needed.
• 3 months out: Finalize agreement choice, get approvals, sign documents, and schedule any transition tasks.
• 1 month out: Complete signing, tie up any loose ends, communicate changes, ensure all is ready for Day 1.
• Renewal/Go-Live date: Implement new agreement (or renewed terms), verify everything is active correctly.
• Post-renewal (within 1-3 months): Reconcile initial invoices/true-up, evaluate the process outcome, document lessons.

Following this timeline can significantly reduce the risk associated with the renewal or switch process. It keeps everyone on track and ensures you’re not caught by surprise by deadlines or forgotten tasks. Many successful negotiations are simply a result of being early and organized, which gives you the upper hand over a rushed vendor sales team.

FAQs

Q: Is the Enterprise Agreement (EA) worth it under 2,400 seats?
A: It depends on your situation, but often, below about 2,400 users, the EA starts to show diminishing returns. Microsoft’s best pricing tiers for EA typically kick in at 2,400+ (Level C/D pricing), so a 600-seat company on an EA is usually paying Level A prices – not much different from CSP rates. If you’re in the 500-2,400 seat range, you should closely evaluate alternatives. The EA could still be worth it if you heavily use on-premises software with Software Assurance, or if you value a 3-year price lock and have a fairly stable environment. It also gives you direct negotiation ability for custom terms. However, many organizations in this range find that a CSP or MCA (or even Open Value for just above 500) offers similar costs with more flexibility. Microsoft itself has been encouraging sub-2400-seat customers to consider CSP/MCA, and even at renewal, some have been told they can’t extend their EA if they’re too small. In short: if you’re well under 2,400 and mostly using cloud services, an EA might be overkill – you could likely save by switching to a more flexible program without sacrificing much (if any) discount. Always crunch the numbers for your specific scenario, though, as certain use cases (like lots of Windows Server licenses) could tilt the equation back in favor of an EA.

Q: Can we mix CSP with EA?
A: Yes, you can – and many large enterprises do mix programs – but you need to manage it carefully. For example, you might have an EA covering your core Office 365/M365 licenses for full-time employees, and then use CSP to handle a subsidiary’s separate needs or to license a group of contractors for a short term. Another common mix is using CSP for Azure or certain newer Microsoft services while keeping traditional software on the EA. Microsoft’s agreements don’t forbid using multiple programs at once. The caution is that if you have an EA with enterprise-wide commitments, you don’t accidentally violate those terms. For instance, if your EA says you license Windows Enterprise for all PCs, you shouldn’t buy a few Windows licenses via CSP outside the EA – all those PCs are supposed to be in the EA count. But mixing an EA and CSP for different solutions or different parts of the org is fine. In fact, some organizations deliberately carve out experimental projects on CSP so they’re not tied to the EA’s 3-year cycle. Just keep governance in place: track what you buy via CSP vs EA to avoid double purchasing or compliance gaps. And remember, Microsoft will see CSP consumption even if you have an EA, so be prepared to explain why (usually it’s no issue if it’s logical, like a division not in the EA, or additional Azure beyond EA commit, etc.). Mixing can give you the best of both worlds – the volume discounts of EA in some areas and the flexibility of CSP in others.

Q: What’s a realistic Azure commit incentive?
A: When you commit to spend on Azure (typically as part of an EA or a special agreement), Microsoft often provides incentives, but it’s not a one-size-fits-all percentage. Realistically, if you’re a large enterprise committing millions to Azure over three years, you might negotiate something like a 5-15% discount or credit on that consumption. For example, Microsoft might give you a 10% Azure consumption credit (meaning effectively you get 10% more Azure for the money you committed) or they might discount certain services (like maybe Azure Backup or certain high-margin services get special rates). Another form of incentive is funding for services – Microsoft might provide, say, $100k worth of consulting/services to help you deploy Azure if you commit to a big number. If you’re coming from no commitment (pay-as-you-go) and you’re willing to lock in, even a 5% across-the-board discount on Azure can translate to huge dollars. For smaller commitments, or if you’re under MCA/CSP, the “incentive” might be indirect – for instance, via CSP, a partner might share some of their Microsoft rebate with you, effectively maybe 3-5% of your spend, or Microsoft might include some free Azure credits for a limited time. Keep expectations in check: you’re not likely to get 30% off Azure unless maybe you’re one of Microsoft’s top global clients spending tens of millions annually. A realistic range most enterprises see is in that 5-10% benefit zone for a meaningful commitment. The key is to ask – Microsoft won’t usually discount Azure usage unless you actively negotiate it as part of a deal.

Q: How do we avoid E5 shelfware?
A: “Shelfware” refers to software you purchased but isn’t being used – and E5 (the top-tier Microsoft 365 Enterprise plan) often ends up in this category because it bundles a lot of advanced features not everyone needs. To avoid E5 shelfware:

• Start with E3 + targeted add-ons: Instead of jumping straight to E5 for everyone, consider getting M365 E3 for all and then add E5 Security, E5 Compliance, or other specific add-ons for the users or departments that will use those features. This way, you pay a premium only where needed.
• Pilot E5 features first: If you think you want to go E5, do a pilot with a subset of users to see which features they actually use (Advanced Threat Protection, Power BI Pro, Audio Conferencing, etc.). Use that data to scale E5 only to the appropriate groups.
• Negotiate flexibility: If you do go full E5, negotiate the ability to step some users down to E3 mid-term or at least at renewal without penalty. Microsoft sometimes allows a license mix adjustment at an anniversary if you push for it (e.g., reduce 10% E5 if you increase something else).
• Adoption programs: Ensure you have an adoption plan for E5 features. If you’re paying for a Phone System, make sure you roll out Teams Phone to replace legacy telephony within year 1. If you have E5 Security, get your security team enabled to use those tools (Defender, Sentinel, etc.). The more you use, the more value, and the less likely those components sit on the shelf.
• Audit usage periodically: Microsoft 365 admin center provides usage analytics. Check them quarterly. If you find, for instance, that only 5% of E5 users are utilizing the advanced compliance features, it’s a flag to possibly reduce the E5 count or reassign those licenses to users who will use them.

Ultimately, avoiding shelfware is about matching the license level to the user’s actual needs. Microsoft’s sales motion is to sell E5 everywhere, but a savvy enterprise will segment its users. Not everyone needs the Cadillac; some are fine with the Chevy. Use that analogy internally to justify a mix-and-match approach if necessary. Microsoft may push back (because simplicity of one SKU has appeal), but cost-wise, you’ll save by not overshooting.

Q: Can we switch programs mid-term?
A: Generally, no, at least not without financial consequences. Once you sign an EA or Open Value or any term-based agreement, you’re expected to ride it out for the term (3 years, typically). If you try to exit early, there are penalties – for instance, an EA will require you to pay for the remaining term (or at least pay a sizable penalty) if you terminate early. So, a clean switch is usually timed to the end of a term. That said, there are some nuances:

• You can add a program mid-term alongside your existing one. For example, if you have an EA ongoing but want to start using CSP for a new project, you can do so. You’re just running two in parallel. You may later choose not to renew the EA and fully transition to CSP.
• Microsoft has, in rare cases, allowed customers to “migrate” an EA to CSP mid-term if, say, they drop below the minimum seats or some strategic reason – but it’s not common. It would involve negotiation (and probably agreeing to not demand a refund for unused months or something).
• Suppose you’re in something like CSP and unhappy. In that case, you can actually switch CSP providers mid-term (or at least at the next monthly/annual renewal since CSP is flexible) – that’s easier since CSP isn’t a locked contract beyond whatever subscriptions you’ve paid for.
• MPSA/Open are transactional, so you can stop buying via one and start via another anytime; there’s no term. For instance, you could stop using Open Value mid-cycle (though if it’s Open Value, you already committed to 3 years of payments, so you’d still owe those even if you stop using the licenses).

In summary, if you have a term-based contract like EA/EAS or Open Value, plan to switch at the end of that term. Use the last year of the term to prep for the new program.

For flexible arrangements like CSP or MPSA, you have more freedom to adjust as you go. If an urgent need to switch mid-term arises (maybe a merger dictates a change), talk to Microsoft – sometimes they’ll find a creative solution, but expect it to potentially cost in fees or require an exception approval. It’s much smoother to align any program change with the natural expiration of the current agreement.

Related articles

• Overview of Microsoft Enterprise Agreement (EA)
• Microsoft Select Plus Licensing
• Microsoft Open Value
• Microsoft Products Available in Volume Licensing
• Comparing Volume Licensing Programs: Open License vs EA
• Microsoft MPSA (Microsoft Products and Services Agreement)
• Microsoft Cloud Licensing Through Volume Programs
• Microsoft Academic Volume Licensing Programs
• Volume Licensing for Government Agencies
• Volume Licensing for Small to Mid-Sized Businesses
• Software Assurance in Volume Licensing Programs
• Common Mistakes in Volume Licensing
• Benefits of Microsoft Enterprise Mobility in Volume Licensing
• What is Microsoft Volume Licensing?
• Introduction to Microsoft Open License
• Overview of Microsoft Enterprise Agreement (EA)

Five Expert Recommendations

To wrap up, here are five expert tips to remember when approaching Microsoft volume licensing:

1. Choose a program fit before chasing discounts. Don’t let a flashy discount lure you into a misaligned contract. Evaluate your needs and pick the right licensing program first. The wrong program with a big discount can still cost more than the right program with a smaller discount.
2. Benchmark partner incentives and market rates. Knowledge is power. Before negotiating, know what other organizations of your size are paying (if possible) and understand the margins/incentives Microsoft gives partners. This empowers you to demand comparable deals and not fall for the argument that “this is the best we can do” if you know otherwise.
3. Use timing and executive escalation to unlock concessions. Leverage Microsoft’s end-of-quarter/year timing to push for better deals, and involve your executives to escalate when needed. A well-timed “We need a bit more, or we might have to reconsider” from a CIO to a Microsoft VP can open budget for extra discounts or benefits.
4. Lock price protections and true-up rules in writing. Verbal assurances mean nothing later. If the sales rep says, “We’ll hold that price for you next year” or “You can true-down at anniversary,” then get it written into the contract or an email from Microsoft that you attach to the agreement. Ensure the contract clearly states how pricing can change and how usage is measured, so you don’t get unpleasant surprises.
5. Build flexibility into every agreement. The only constant in business is change. Negotiate options that give you wiggle room: the ability to swap products if needed, to adjust volumes, to extend time if a project delays (like extending an EA a few months if you don’t want to renew yet), etc. Even if you don’t think you’ll need it, having flexibility clauses is like insurance – you’ll be glad they’re there if something changes in your organization or strategy.

By following these recommendations, you’ll approach Microsoft licensing with a strategic, informed, and empowered stance. The result? An agreement that truly serves your enterprise’s interests – both technologically and financially – rather than the other way around. 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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