Renewal vs. Recompete: Should You Renew Your Microsoft EA or Switch Licensing Programs?

Renewal vs. Recompete: Should You Renew Your Microsoft EA or Switch Licensing Programs?

Introduction – Renewal or Recompete?

If your Microsoft Enterprise Agreement (EA) is coming up for renewal, it’s time to pause and strategize. Microsoft traditionally assumes that customers will renew their EA for another 3 years without much fuss.

However, the landscape has changed – programs like the Cloud Solution Provider (CSP) and the Microsoft Customer Agreement (MCA) now offer alternative licensing models. In other words, renewal time is decision time.

Should you stick with the tried-and-true EA, or switch to a more flexible model? This is the “renewal vs. recompete” question. Taking a fresh look at your options can save money and better align your contract with your IT and business needs.

In this guide, we’ll compare staying on EA versus switching to CSP or MCA, focusing on cost, flexibility, and negotiation leverage to help you make the best choice for your organization.

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

Staying with EA – Pros & Cons

Staying on your Enterprise Agreement can feel comfortable – it’s the devil you know.

But does it still serve your interests? Let’s break down the pros and cons of renewing your EA:

Pros of renewing the EA:

• Price Protection & Predictability: An EA locks in pricing for a 3-year term. You get fixed per-user rates for three years, shielding you from Microsoft’s frequent price hikes. This makes budgeting and forecasting easier, offering CIOs and CFOs stable costs over the term.
• Volume Discounts: Enterprise Agreements reward scale. If you have a large user count (typically 500 seats or more, with deeper discounts at thousands of seats), you likely receive tiered volume discounts off Microsoft’s list prices. The bigger your commitment, the bigger the potential discount – often making EA the lowest unit cost option for stable, large environments.
• Included Software Assurance: EA deals include Software Assurance (SA) by default. SA provides benefits like version upgrades, training credits, and hybrid use rights for on-premises software. This is valuable if you still run Windows, Office, or SQL Server on-premises or in hybrid clouds – you retain rights to the latest versions and other perks without extra fees.
• Unified Agreement & Billing: With an EA, you cover a broad swath of Microsoft products (Windows, Office 365, Azure, etc.) under one contract. You typically receive one consolidated annual invoice from Microsoft or your Licensing Solution Provider, simplifying procurement and expense tracking. Everything co-terms to the same end date, reducing administrative overhead.
• Negotiation and Extras: Large EA customers can negotiate custom terms and concessions. For example, you might secure a special discount beyond standard tiers, add a price cap on Azure overages, or tweak contract language to suit legal needs. Microsoft is often more flexible in accommodating large customers in an EA, providing enterprise-grade contract protections not found in standard agreements.

Cons of renewing the EA:

• Rigid 3-Year Lock-In: An EA is a three-year commitment. You’re generally stuck with your initial purchase quantities for the duration. If your company downsizes or you want to drop a product, you usually can’t reduce your license count until the EA renewal. (Microsoft only allows limited reductions for certain subscriptions at anniversaries, and you must stay above minimums.) This rigidity can lead to paying for “shelfware” – licenses you don’t actually use – if your needs shrink.
• True-Up Only, No True-Down: While you must report and pay for any usage growth annually (the “true-up”), the EA offers little flexibility to scale down mid-term. There is effectively no easy “true-down” if you overestimated. This means overpayment risk: if you bought 1,000 seats and later only need 800, you still pay for 1,000 every year until the contract ends. In a world of fluctuating headcount, this can be costly.
• Upfront Commit and Complexity: Entering a new EA or even renewing requires significant negotiation and paperwork. The contract can be 30 pages or more, with complex legal terms to review. You often need to project your needs years out to decide your initial order. It’s a complex sales cycle. Smaller organizations (and their finance teams) may find this overkill compared to simpler pay-as-you-go models.
• Potentially Overkill for Cloud-Only Orgs: If your organization is fully cloud (e.g., using only Microsoft 365 and Azure services) and has no need for on-premises licenses or SA benefits, the EA’s advantages diminish. In fact, Microsoft itself has been phasing out EAs for mid-sized customers. If you have fewer than ~500 seats (or under ~2,400 seats for new EAs in recent Microsoft policy), Microsoft might not even offer an EA at renewal. In those cases, you’d be steered to CSP or MCA anyway. So, for smaller deployments, renewing an EA could be “more contract than you need.”

In short, renewing the EA makes sense for organizations that value price stability, consistently have high usage, and require enterprise-level support and terms.

But if you anticipate change or need flexibility, it’s worth investigating the alternatives before you sign that renewal.

How to get a better deal on your renewal, Microsoft Renewal Discounts: How to Get a Better Deal the Second Time.

Switching to CSP – Pros & Cons

The Cloud Solution Provider (CSP) program is Microsoft’s newer, partner-led model. Instead of contracting directly with Microsoft for a multi-year term, you purchase licenses through a certified Microsoft reseller (partner) with much more flexibility. Is switching to CSP at renewal the right move?

Consider these pros and cons:

Pros of CSP:

• No Long-Term Lock-In: Unlike a 3-year EA, CSP is month-to-month or annual. You subscribe to the licenses you need, and you can typically adjust or cancel at the end of each billing period. There’s no overarching 3-year contract. This means no more being stuck with yesterday’s user count – if you hire or downsize, you can adjust licenses accordingly in relatively real time.
• Pay-as-You-Go Flexibility: With CSP, you often pay monthly (or annually if you choose) for your subscriptions. This pay-as-you-go model is ideal for managing cash flow and aligns costs with actual usage. CIOs like the OpEx budgeting; you’re paying for what you use when you use it. If you only need 800 licenses next month instead of 1,000, you reduce the quantity and pay less, no EA true-up or wait required.
• True-Down Friendly: CSP is ideal for volatile or unpredictable headcount. You can “true-down” – reducing licenses – much more easily. For monthly subscriptions, reductions can take effect the next month. Even on annual CSP subscriptions (which lock the price for a year), you have an opportunity to adjust quantities at each annual renewal rather than being stuck for three full years. This flexibility can result in significant savings if your workforce or service usage declines.
• Quick Access to New Tech: CSP tends to get new Microsoft services and products added immediately as they’re released. Since it’s tied into Microsoft’s cloud commerce platform, you can trial or add new products on the fly. There’s no need to amend a big contract or wait for an EA anniversary. For innovative organizations that want agility, CSP lets you adopt new Azure or M365 features quickly via your portal.
• Partner Support Included: Under CSP, your partner (reseller) is responsible for support and license admin. A good CSP partner can act like an extension of your IT team. They may offer hands-on assistance, including provisioning licenses, optimizing usage, advising on the optimal license mix, and providing Tier-1 support. This can be a huge benefit for IT procurement and ITAM teams that are lean – you gain expert licensing support without paying Microsoft Premier/Unified Support separately.
• Lower Upfront Costs: Because you’re not committing all licenses in a lump sum, there’s no giant upfront order. You simply start subscriptions as needed. This can lower the barrier to entry for Microsoft services and avoid the big initial cash outlay that an EA often entails. In CSP, if you start with 100 licenses, you pay for 100; you don’t have to forecast and pre-pay for 1,000 just in case.

Cons of CSP:

• Higher Unit Prices: Flexibility comes at a price. CSP is generally based on Microsoft’s standard retail pricing. You lose those hefty volume discounts that large EA customers enjoy. While partners might give you a small break (e.g., a few percent off as part of their margin), you won’t see the 15–20%+ discount off list that a big EA could negotiate. In fact, Microsoft now adds a ~20% premium for month-to-month subscriptions in CSP to encourage annual commitment. So if you go fully month-to-month for maximum flexibility, each license could cost more than under an EA. Over a multi-year span of continual use, CSP might total out higher than an EA would have for the same quantity of licenses.
• Price Changes Mid-Stream: With no 3-year price lock, you are exposed to Microsoft’s pricing adjustments. Microsoft typically raises cloud subscription prices annually (and sometimes adjusts for currency fluctuations). In CSP, those increases will hit you during your usage – your cost per seat could rise each year or even mid-year if you’re on monthly terms. There’s some protection if you choose annual subscriptions (your price for that license is fixed for the year term), but beyond that term, all bets are off. This makes budgeting a bit less certain compared to the EA’s long-term price guarantee.
• Fewer Negotiated Perks: CSP is a standardized program. You usually accept Microsoft’s Customer Agreement terms with little ability to negotiate custom clauses – and your relationship is indirect (through the partner). Unlike an EA where large customers might get unique concessions (legal terms, dedicated support hours, etc.), CSP agreements are one-size-fits-all. Any extra discount or special service would come from your partner’s side deal with you, not from Microsoft bending the rules. So, large enterprises used to tailoring an EA may find CSP contracts less accommodating to special requests.
• Reliance on Partner Quality: In CSP, the partner’s competence matters. They handle your billing and Tier-1 support. If the partner is slow or unresponsive, you might feel stuck (though you can change CSP resellers, it requires moving subscriptions). Also, a smaller CSP partner might not have the deep Microsoft licensing expertise you enjoyed from a Microsoft account team under an EA. Essentially, you are outsourcing part of your IT vendor management to the CSP. Choose wisely – a great partner can enhance your experience, but a mediocre one could frustrate your IT staff.
• Limited Large-Scale Benefits: Very large organizations (thousands of seats) might find CSP a bit unwieldy. Managing a high volume of cloud subscriptions through a partner portal can be challenging if not handled effectively. Also, suppose you had access to Microsoft’s top-tier engagement models (like an Enterprise Strategy Advisor or special funding programs) by virtue of an EA. In that case, those might not automatically continue with just CSP. Microsoft tends to lavish attention on EA clients. Pure CSP customers – especially if they shrink their Microsoft spend – may get less direct insight and outreach from Microsoft’s account teams. In summary, CSP is fantastic for flexibility and operational agility, but you trade off some price advantages and enterprise-level extras that an EA provides. It often shines for mid-market and evolving companies, whereas extremely large, stable enterprises might see a cost increase going all-in on CSP.

Switching to MCA – Pros & Cons

Microsoft Customer Agreement (MCA) is another route you can take instead of renewing an EA.

The MCA is essentially Microsoft’s modern direct purchasing program, often used for Azure and now expanding to other services. Under an MCA, you sign a simplified, evergreen contract with Microsoft (no fixed end date) and then buy cloud services as needed. It can be seen as Microsoft’s answer to a more flexible, cloud-focused agreement without the traditional EA’s constraints.

Here are the pros and cons of switching to an MCA:

Pros of MCA:

• Evergreen Contract (No Renewal Cycle): The MCA doesn’t expire every 3 years like an EA. It’s evergreen, meaning once you sign the Customer Agreement, you can keep buying services indefinitely without a big renegotiation every few years. This can streamline procurement – you accept the terms once, and then you’re free to add or remove products as needed. No more big renewal showdowns or lapsing contracts.
• Direct Relationship with Microsoft: With MCA, you buy directly from Microsoft (in what Microsoft calls “Microsoft-led” purchasing). There’s no middleman licensing reseller for the contract itself. For organizations that want direct control and accountability, this is appealing. You get invoices from Microsoft and can escalate issues directly with Microsoft’s support (though standard support plans still cost extra). Some enterprises prefer this direct model, especially for large Azure consumption, where they negotiate directly on commits and discounts.
• Great for Azure-Heavy Spend: MCA was initially built for Azure and is an excellent fit if a significant portion of your IT budget is allocated to Azure cloud services. It supports pay-as-you-go consumption or negotiated Azure commitments. Suppose you’re an Azure-first organization (e.g., doing major cloud projects or migrations). In that case, an MCA lets you handle that spend efficiently – possibly with Azure consumption discounts in exchange for committing to a certain annual spend, without needing an EA. It aligns well with how cloud services are consumed (incrementally and scalable).
• Flexible Cloud Consumption & Licensing: Like CSP, the MCA allows you to add or remove subscriptions on the fly, with monthly or annual billing for things like Microsoft 365 seats, Azure resources, Dynamics 365, etc. You can scale up when needed and scale down when not, under a single agreement. No organization-wide licensing mandate either – you purchase what you need for whichever users need it. This is useful if, say, only part of your business needs a certain product; under an EA, you might have had to cover all users, whereas under MCA, you can target the purchase. The result is often less waste and more fine-tuned control over your license count.
• Simplified Terms and Purchasing: Microsoft touts the MCA as a simpler contract – often a shorter, digitally accepted document. There’s typically less legal complexity (no lengthy negotiation on terms) and a more user-friendly purchasing portal. Also, all your cloud purchases can be consolidated under one agreement. For example, you could have Azure, Microsoft 365, and Dynamics 365 all under your MCA, getting one combined bill. This centralization is reminiscent of an EA but without the rigid term, and it’s inherently designed for online management and quick updates as you add services.

Cons of MCA:

• Standard Terms, Less Wiggle Room: The MCA is a “one-size-fits-all” contract for the most part. Unlike an EA where large customers might negotiate custom clauses, the MCA has standardized terms that Microsoft doesn’t individually customize for each customer. You can’t easily append unique terms about liability, data residency, or custom pricing protections – what you see is what you get. For companies with complex compliance or special legal requirements, this can be a hurdle. The EA’s flexibility to amend terms isn’t there in an MCA.
• Fewer Discounts Built-In: The pricing under an MCA is typically at Microsoft’s general price list levels (often equivalent to the old “Level A” pricing). There aren’t automatic volume discounts for buying more licenses. So a large enterprise and a smaller customer theoretically pay the same per-unit price under MCA, unless you separately negotiate something. Microsoft has largely removed the tiered discount structure in this model. While you can negotiate for large Azure spend (e.g., commit to $X million over 3 years for Azure and get Y% off or credits), those are custom negotiations, not a guaranteed programmatic discount. Similarly, you might get a slight deal for a huge Microsoft 365 subscription count, but it’s case-by-case. In short, MCA by itself doesn’t give the traditional EA bulk discount advantage.
• No Price Lock Beyond Short Terms: Since MCA is evergreen, there’s no multi-year price lock on cloud services. Prices can change with Microsoft’s public pricing adjustments. Suppose Microsoft raises the cost of a Microsoft 365 plan or an Azure service next year. In that case, your cost under MCA will also increase (aside from any limited-term commitments you chose, like an annual term for a SaaS subscription or a 1-year Azure reserved instance). There’s no blanket 3-year protection. This means you need to be vigilant on price movements and perhaps negotiate caps or longer price holds if you can (for example, negotiate a three-year Azure commitment with fixed rates on certain services). But those are negotiation items, not standard features. Budgeting under an MCA requires building in some contingency for price fluctuations.
• Not Ideal for Complex Global Enterprises: If you’re a large multinational with complex needs, the MCA can be less suited than an EA. Historically, EAs allowed umbrella agreements covering global affiliates, custom terms per region, and centralized negotiation through an LSP. With MCA, especially the “Direct” model for big customers, you lose the Licensing Solution Provider’s advisory role and their help in managing a global deal. Although all countries may be under one MCA, invoicing may be in a single currency (often USD), which can complicate local chargebacks. Also, if you operate in many regions, not all might yet be fully served under the direct MCA program (some regions may still require partner-led MCA via CSP). In summary, administrative and support complexity might increase if you have a very large, global operation – you’ll need strong internal licensing management since Microsoft’s contract is hands-off beyond selling you the services.
• Loss of Some EA Benefits: By moving to MCA, you may lose certain ancillary benefits that came with an EA. For example, Software Assurance isn’t included under MCA by default (there’s no SA on subscription licenses – you’d need a separate legacy agreement for any perpetual licenses). If you relied on SA benefits (training vouchers, upgrade rights, home use program, etc.), those may disappear or have to be re-addressed via different means. Additionally, you might lose dedicated Microsoft account management focus. Large EA customers often have a dedicated Microsoft account team that engages regularly. Under MCA, Microsoft’s involvement might be more reactive unless you’re a massive Azure spender. This isn’t a deal-breaker for everyone, but it’s a shift in the relationship dynamic.

MCA is a powerful option for organizations that are cloud-focused and want flexibility with a direct Microsoft channel.

But it works best when you don’t require heavy custom negotiation and when you’re comfortable with more standard pricing.

Many organizations use MCA for Azure and other cloud services while still maintaining an EA for things that need traditional licensing – so it’s not always an all-or-nothing choice.

Cost Comparison – EA vs CSP vs MCA

Ultimately, cost is a driving factor in this decision. How do the three models compare in terms of pricing dynamics and financial implications? Below is a quick comparison:

Cost scenario examples: To illustrate the cost difference, consider two simple scenarios:

• Stable usage scenario: You have 1,000 users steadily for three years. Under an EA, you negotiate a 15% volume discount and lock it in. Over 3 years, you pay essentially 3 * (1000 * discounted price). In CSP, assuming no change in user count, you’d pay 1,000 * full retail price every month or year. Even if your CSP partner gives a small discount, the EA’s 15% discount and price lock will generally make the EA cheaper over the full term for this steady state. Stable, high utilization tends to favor the EA’s economics.
• Downsizing scenario: You start with 1,000 users, but in year two, your company downsizes to 700 users. Under the EA, you’re stuck paying for the originally contracted 1,000 licenses for the remainder of the term (unless you had a special provision). That means 300 licenses go unused – a significant overpayment. With CSP, after the drop, you reduce your subscription count to 700 at the next billing cycle, immediately saving money by not paying for 300 extra seats. Even though CSP’s per-seat price is higher, avoiding 300 unnecessary licenses yields major cost savings. In this scenario of declining needs, CSP would likely cost far less over the 3 years than an EA where you over-bought.

In summary, an EA can be more cost-effective if you can accurately forecast usage and maintain high utilization of what you pay for. CSP or MCA can be more cost-effective if your needs are expected to decline or if you value paying only for actual usage.

A prudent approach is to model the total cost of ownership (TCO) for each option over three years, based on your best estimates of growth or shrinkage.

Don’t just assume the EA is cheapest because of discounts – factor in the cost of unused capacity if you over-allocate.

Evaluating Your Scenario

Every organization’s situation is different. The right renewal path depends on your company’s size, plans, and priorities.

Which renewal path fits you best? To figure that out, evaluate these key considerations for your own scenario:

• Organization Size & Profile: How large is your user base? Generally, very large enterprises (500, 1,000, or thousands of users) get more value from EAs due to discounts and Microsoft’s attention. If you’re a smaller organization (well under 500 seats), an EA likely isn’t even offered – CSP becomes the default. Mid-sized companies (in the hundreds to low thousands of seats) are in a gray area: they can do EAs, but Microsoft is encouraging many mid-market customers toward CSP/MCA. Consider also your ITAM maturity – do you have licensing experts to handle a complex EA, or would you benefit from a partner’s help via CSP?
• Cloud vs On-Prem Mix: What are you actually buying from Microsoft? If you’re all-in cloud (Azure, Microsoft 365, Dynamics) with minimal on-premises software, the legacy benefits of an EA (like SA for upgrades) matter less. You may want to consider CSP or MCA to better align with your cloud consumption. Conversely, if you still rely on on-premises server software or need hybrid rights, an EA or a hybrid approach might serve you better, as CSP/MCA may not cover all those scenarios neatly (for example, using existing Windows Server licenses on Azure requires SA or subscription equivalents). Your Azure adoption strategy is a significant factor: a heavy Azure spend could be managed via an MCA for flexibility, possibly alongside an EA or CSP for the remainder.
• Need for Flexibility: How much do your license quantities fluctuate? If your industry or business model sees significant workforce changes (seasonal hiring, mergers, divestitures, unpredictable growth or downsizing), then flexibility is golden. CSP will let you ratchet licenses up or down with relative ease, preventing overspend during lulls. An EA would lock you in and could waste budget during periods of downtime. On the other hand, if you foresee stable or only upward growth, you might comfortably commit to an EA volume and reap discounts. Think about the likelihood of needing to drop 10%+ of your licenses during the term – if it’s high, that leans toward CSP/MCA.
• Budgeting and Cash Flow Preferences: Some companies operate better with predictable annual budgets (EA fits that with fixed annual bills), while others prefer monthly operational expenses tied to use (CSP’s model). Also consider if a single annual bill (EA) is easier on procurement, or if spread-out payments (CSP monthly) align better with cash flow management. CFOs might favor the EA for its multi-year cost certainty, but they might also appreciate CSP’s pay-for-what-you-use efficiency. Know your financial priorities.
• Administrative Overhead: Do you have the capacity to manage a complex contract? EAs involve true-up reports, renewal negotiations, compliance checks, and coordinating with Microsoft or a licensing partner. CSP can simplify administration – the partner often handles a lot of the heavy lifting, and there’s no big renewal process each cycle. MCA also simplifies contracting, but puts the onus on you to manage your usage continuously. If your team is small, the CSP partner’s assistance could be very valuable. If your team is experienced and prefers control, a direct MCA or EA may be the best option. Also, if having one unified agreement is important (to reduce the number of vendor touchpoints), an EA or MCA might appeal over juggling many CSP subscription invoices (though a single CSP partner can consolidate these quite a bit).
• Negotiation Leverage & Relationship: Reflect on how much you value a direct Microsoft relationship. EA customers often get a designated account manager and maybe executive business reviews from Microsoft. If you move to CSP, your primary relationship is with the partner, and Microsoft is a step removed. Some organizations are fine with that; others worry they’ll lose influence or insight into Microsoft’s roadmap. Additionally, consider whether you want the ability to negotiate special terms/pricing. If yes, sticking with EA (or at least doing an MCA with a negotiated Azure commitment) might be necessary. CSP has limited room for negotiating beyond what the partner can offer.

Create a renewal decision checklist for your team that includes these key factors. For each category, decide what your priority is (e.g., “We absolutely need flexibility to downsize if needed” or “We cannot risk any surprise cost increases, price lock is crucial”). This will clarify which model aligns best.

At the end of the day, the best licensing program is the one that fits your organization’s usage pattern and strategic goals.

Your decision might even be a mix – for instance, renewing an EA for Microsoft 365 to get the discounts, but moving Azure consumption to an MCA to gain flexibility. The key is to consciously evaluate rather than auto-renew on autopilot.

Negotiation Angle – Use Options as Leverage

Even if you ultimately decide to stay with an EA, you should absolutely leverage the existence of CSP and MCA in your renewal negotiations.

Microsoft’s sales teams know these alternative programs are available, and they understand that an educated customer might switch. Use that to your advantage:

• Signal that you’re exploring all options: Let your Microsoft rep know early that you are considering CSP or an MCA instead of simply renewing the EA. This creates constructive tension. Microsoft will be concerned about losing the predictable revenue (and the direct relationship) that an EA provides them. As a result, they may come to the table with better discounts or incentives to convince you to stay on the EA. For example, we’ve seen companies mention evaluating CSP, and suddenly Microsoft offers an additional few points off the EA or throws in some free advisory hours.
• Get competitive quotes: Work with a CSP partner to get a quote for moving your licenses to CSP, and/or ask Microsoft what an MCA deal (especially for Azure) would look like. Having actual numbers and proposals lets you compare – and crucially, you can quote those figures in negotiations. If CSP would save you $X over three years, you can challenge Microsoft to beat or match that value in an EA renewal. Use the data: “Our analysis shows switching to CSP could save us 10%. What can you do to make an EA renewal more attractive for us to stay?”
• Be willing to walk (or mix and match): To maximize your leverage, you must genuinely be willing to switch programs if Microsoft doesn’t deal. That doesn’t necessarily mean throwing out the EA entirely – it could mean partially moving to CSP/MCA. For instance, you might say, “If we can’t reach a better agreement, we’ll move our development/test workloads to CSP” or “We’ll put our Azure spend on MCA where we have more flexibility.” Microsoft would prefer to keep as much of your business in an EA as possible, so even a partial move threat can spur better terms.
• Negotiate flex in the EA: If Microsoft knows you value CSP’s flexibility, they might offer some compromise within an EA. Examples: allowing a mid-term reduction clause for a certain scenario, or granting a shorter 1-year renewal instead of 3 (though rare, some customers negotiate an “extended term” or a 1-year EA if uncertain). Alternatively, Microsoft could propose a hybrid solution, such as an EA for core licenses with an attached CSP-like subscription for specific components. By showing you’re informed, you can push Microsoft to think creatively to retain you.
• Use renewal time as a pressure point: Once you sign an EA, Microsoft has you for 3 years. So the renewal period is when you have the most leverage – don’t waste it. Bring up everything you want (price cuts, contract concessions, product bundle optimizations) and subtly remind them that you have options. Even the act of getting serious proposals from CSP providers can put pressure on Microsoft’s sales team because they have internal competition between channels. Leverage the threat of recompete to get the best of renewal. In many cases, you’ll either end up with a more favorable EA or you’ll indeed switch and save money – a win either way for you as the customer.

Remember, Microsoft’s primary goal is revenue retention and growth.

If they sense they might lose revenue to a different licensing program (even though CSP and MCA still ultimately result in Microsoft revenue, it’s less guaranteed and possibly less lucrative for them), they will negotiate harder.

Don’t reveal your hand entirely, but make clear you are informed about alternatives. This is your chance to bend the EA to be more customer-friendly or jump ship to a model that already is.

Recommendation Matrix

Still on the fence?

Here’s a quick recommendation matrix based on common priorities. Identify which statement sounds most like your situation, and that can point you toward the ideal licensing program:

• “Flexibility is our top priority.” → Go with CSP. If you need to frequently adjust licenses or avoid long commitments due to uncertain headcount or evolving projects, the CSP model will serve you best with its month-to-month agility. You’ll happily trade a bit higher unit cost for the ability to scale down when needed.
• “We have a stable environment and need the lowest per-user cost.” → Stay on EA. If your user count is relatively steady (or only growing) and you’re running thousands of seats, an EA’s volume discounts and 3-year price lock will likely yield the lowest total cost of ownership. You’re confident you can utilize what you commit to, so the EA’s commitment risk is low for you.
• “Our focus is Azure, and we want direct control of our cloud spend.” → Consider MCA. If a large portion of your Microsoft budget is Azure consumption and you prefer a direct contract with Microsoft, the MCA is tailored for that. You can negotiate an Azure consumption commitment for discounts and manage cloud resources under a direct agreement, without a reseller in between. This gives you more control and transparency for cloud usage (and avoids the EA’s sometimes rigid structure for cloud services).
• “We want the simplest administration and purchasing experience.” → Lean EA or MCA. An EA can simplify life by consolidating all licenses under one contract and one bill – it’s straightforward once in place (until renewal). Similarly, an MCA can consolidate all your cloud product purchases under one ongoing agreement. Both options reduce the number of transactions and touchpoints compared to juggling multiple CSP subscriptions or partners. If minimizing administrative complexity is key, sticking with an EA or moving to the direct MCA approach is beneficial. (CSP can also simplify things if you have a single good partner, but you are adding an intermediary into the mix.)

Of course, many organizations have mixed priorities. You might need both low cost and flexibility – that’s where a hybrid approach comes in (e.g., core licenses on EA for discount, variable project licenses on CSP). Use the above guide as a starting point, but tailor the final decision to the nuances of your business.

FAQs

Q: Is a Microsoft EA still worth it for companies with under 500 users?
A: Generally, if you have fewer than 500 seats, an EA is often not the best fit (and Microsoft might not even offer a new EA for small orgs). The administrative overhead and commitment usually aren’t justified by the minimal discount you’d get at that level. Programs like CSP are designed for smaller customers, with no minimum size requirement. Unless you have specific needs that only an EA can fulfill (e.g., unique licensing for on-prem products), <500 users typically save money and hassle by using CSP or other smaller licensing programs. In short, EA is most worth it for large enterprises; smaller businesses should lean toward more flexible options.

Q: Can we mix an EA and CSP?
A: Yes, you can absolutely use both. Many large enterprises run a hybrid licensing strategy – for example, maintaining an EA for core enterprise-wide services (like Office 365 for all employees) while using CSP for specific needs (like a division’s Azure subscriptions, or a new project that needs only a handful of licenses temporarily). Microsoft allows this, and in fact, some organizations find value in the combination: the EA covers the stable base at a discount, and CSP handles the dynamic or exceptional cases. Just keep in mind that if you mix, you’ll manage two purchasing channels and sets of bills. It’s wise to have clear internal policies on what goes to EA versus what goes to CSP, so you maintain compliance and don’t double-purchase the same product in two places.

Q: Is the Microsoft Customer Agreement (MCA) only for Azure, or can it cover Microsoft 365 and other products too?
A: The MCA started primarily as a way to buy Azure services (especially for enterprise customers outside of an EA). However, Microsoft has been expanding the MCA program to include other cloud offerings, such as Microsoft 365 (formerly Office 365) and Dynamics 365. As of 2025, many Microsoft cloud subscriptions can be procured under an MCA in certain regions, either directly from Microsoft or via partners. So it’s not only for Azure – it’s becoming a unified way to buy cloud services in general. That said, Azure is where MCA shines brightest (since Azure is purely consumption-based). If you’re considering moving off EA, you could put Azure under an MCA and potentially still buy M365 through CSP or vice versa. Microsoft’s aim is for MCA to eventually be a broad contract that could replace EA for cloud subscriptions. But if you need traditional on-prem licenses with Software Assurance, those typically are not sold via MCA – you’d handle those through separate agreements or just move to subscription equivalents.

Q: Which licensing model offers the best price protection against Microsoft’s price increases?
A: The Enterprise Agreement provides the strongest price protection. When you sign a 3-year EA, the prices of the products you commit to are locked in for the term – Microsoft cannot raise those prices on you until the EA term is over. This protects you from the kind of annual price hikes that Microsoft often announces. In CSP, you only get price protection for the duration of whatever subscription you chose (up to 1 year typically). After that, if Microsoft’s list price has gone up, your cost will go up correspondingly upon renewal. MCA works similarly – there’s no long-term fixed rate, it follows Microsoft’s pricing over time (unless you negotiated something like an Azure price hold on certain services). So if your priority is to shield your organization from price increases, an EA is the safest bet. Just remember that at the EA renewal, you might get hit with a jump if list prices rose in those three years – but at least you deferred it while under contract.

Q: How do discounts differ between EA, CSP, and MCA?
A: Under an EA, discounts are typically volume-based and negotiated. Microsoft has (or had) tiered pricing levels – the more you buy, the lower the price per unit. Large enterprises might get 15-25% off (or more, depending on size and negotiation) from the list price on their licenses. Plus, the EA lets you negotiate special discounts, like a deeper cut on certain products important to you. In CSP, pricing is closer to pay-as-you-go retail. There isn’t a formal volume discount structure; however, a CSP partner might give you a slight discount as part of their deal (for example, they might take 5% off the top for you if you’re a decent-sized client to win your business). But you won’t see huge 20%+ discounts under CSP unless the partner is trimming their own margins in a special case. For Azure in CSP, the prices are usually the same as Microsoft’s published rates, though some partners have rebate programs or can offer reserved instance discounts. With MCA, think of it as standard pricing by default. Microsoft doesn’t automatically reduce your price just because you’re buying a lot under an MCA. However, you can negotiate incentive-based discounts – the most common being an Azure consumption commitment. For example, you commit to spend $1 million on Azure in a year, and Microsoft, in turn, might give you a certain percentage off or some credits. Those are negotiated, not built-in. For seat-based services (M365/D365) under MCA, currently, you’re mostly looking at the regular pricing unless you have a huge opportunity where Microsoft might agree to some discount to win the deal. In summary: EA often has the best built-in discount potential, CSP has minimal built-in discounts (but possibly better service value from the partner), and MCA has no preset discounts but allows case-by-case deals if your spend is big enough to give you bargaining power.

Five Expert Recommendations

To wrap up, here are five expert tips as you approach your Microsoft licensing renewal decision. These recommendations can help you get the best outcome regardless of which path you choose:

1. Don’t assume renewal means sticking with EA – evaluate all options. It’s easy to auto-renew out of habit, but take this opportunity to compare EA vs. CSP vs. MCA. You may find a different program better suits your current needs or that you can negotiate a much better EA by entertaining alternatives. Always do a fresh analysis at renewal time.
2. Model the 3-year total cost for each scenario. Sit down with Excel (and perhaps your Microsoft partner) and calculate the 3-year TCO if you renew EA versus if you switch to CSP or MCA. Include all factors: license costs, potential true-up costs, possible over-provisioning in EA, etc. Seeing the numbers side-by-side cuts through assumptions and lets you make a data-driven decision.
3. Use alternative programs as leverage, even if you plan to stay on EA. As discussed, let Microsoft know you have options. Getting quotes for CSP/MCA and mentioning them in negotiations can push Microsoft to sharpen its pencil. Competitive pressure is your friend – it often leads to better discounts or more favorable terms on your EA renewal.
4. Match your program choice to your primary goals (cost vs. flexibility). Be clear on what matters most to your organization. If minimizing cost with a steady state is key, then lean EA is the approach. If the ability to scale down (or up) is crucial, lean CSP. It might even mean splitting workloads. Don’t try to force-fit your needs into an EA if it no longer aligns – or vice versa. The licensing model should serve your strategy, not constrain it.
5. Whatever you choose, document protections and agreements in writing. If you do sign a renewal or new agreement, ensure any promises (discounts, price caps, flexibility allowances, special terms) are written into the contract. For instance, if the EA includes an extra discount or an allowance to drop 100 seats on the anniversary, get that formally documented. If your CSP partner promises a fixed rate or free support services, put it in the agreement. This avoids disputes later and ensures you truly get the benefits you negotiated.

By following these recommendations, you’ll approach your Microsoft EA renewal (or switch) with a clear strategy.

The goal is to get the best of both worlds – the cost-effectiveness and flexibility your organization needs, and a fair deal from Microsoft.

Whether you renew your EA or recompete to a new model, doing your homework and negotiating assertively will pay off in significant savings and a licensing program aligned to your business.

Good luck with your negotiations, and may your next Microsoft agreement be your most advantageous one yet!

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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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