Microsoft Ends EA Volume Discounts: What It Means and How to Respond

Microsoft has made a sweeping change to its Enterprise Agreement (EA) contracting model that will impact all EA customers. 

On November 1, 2025, Microsoft will eliminate EA volume licensing price levels  and the programmatic “waterfall” price level (A-D) volume discounts that have long been a cornerstone of Microsoft’s EA contracting model.  

This decision marks a strategic shift in Microsoft’s approach to driving revenue and product adoption, sparking concern and resistance across its customer base. 

The volume discounting is being removed from Microsoft’s Online Services products, meaning that products like Microsoft 365 and Dynamics 365 will no longer receive the automatic discounts based on subscription volume. On-premise products like SQL will be untouched. 

This decision impacts organizations of all sizes but will hit large enterprises the hardest, especially those heavily invested in Microsoft’s ecosystem that are also likely to have additional discounting in place beyond the price tier discounting that is going away.  

Here is what Microsoft customers need to know and prepare for as we head towards November.  

Why Customers Are Concerned about Microsoft’s EA Pricing Changes

For decades, Microsoft’s EA structure rewarded higher usage with built-in discounts. Under the old model, volume levels (A–D) provided discounts of up to 12% off ERP for “Level D” customers with 15,000+ seats. Losing these automatic discounts means immediate and significant cost increases at renewal for many.   

Imagine you are a “Level D” customer with 25,000 M365 E3 subscriptions, which you moved to at your last renewal, and you have negotiated an additional 40% discount on top of the standard Level D volume pricing. In the past, if a customer did not secure renewal price protections, Microsoft could remove the additional discounts at renewal, but the customer would still pay the Level D price, which included a 12% discount.  

Now, that same customer is susceptible to Microsoft presenting pricing that has the 40% additional discount and the 12%  volume discount removed. That is going to be a massive uplift and a massive, unexpected and unbudgeted increase to the customer’s annual spend with no additional value being added. 

Additionally, for Microsoft Unified Support customers, the support fee will rise significantly because it is calculated as a percentage of product spend, without any corresponding increase in value. 

What to Expect Next: Pushback and Leverage on Microsoft’s Pricing Changes

Microsoft is well aware that this change will trigger customer pushback. Expect to hear organizations reconsidering planned investments, such as: 

• Starting or scaling Microsoft 365 Copilot adoption 
• Moving to Microsoft 365 E5 
• Adding Fabric 
• Increasing their Azure MACC (maybe giving workloads to GCP or AWS?) 
• Choosing Azure as their SAP RISE hyperscaler 
• Renewing Unified Support (opting for third-party instead?) 
• Continuing Dynamics 365 (maybe giving Salesforce a call?) 

Why is Microsoft Changing EA Pricing?

Despite the inevitable customer pushback, there are several reasons why Microsoft is eliminating EA volume discounts: 

Increase ARPU (Average Revenue per User)

Removing automatic discounts is an instant boost to revenue per user. Microsoft emphasized ARPU in its last earnings call and during pretty much all before it, and this move directly supports that goal. 

Drive Adoption of High-Margin Products

Without EA discounts, Microsoft can position discounts as contingent on adopting more premium products, like Microsoft 365 Copilot, Copilot Studio, Fabric, or upgrading to E5 licenses. 

Push Customers Toward the MCA-E

The Microsoft Customer Agreement (MCA) doesn’t offer volume discounts, removing a key advantage of the EA. This creates a more “even” choice between contracting models and potentially moves more customers into digital, evergreen, non-expiring agreements with fewer built-in protections.  

What Microsoft Customers Should Do Now

1. Get Executive-Level Conversations Started
   Your CIO or senior IT leader should immediately engage Microsoft executive sponsors. Make it clear this change impacts your future investment decisions.  It doesn’t matter how far out the renewal is, it is important to voice the concern and set expectations as soon as possible.
2. Reassess Your Licensing Strategy
   Review your current and planned usage. You may find opportunities to:
   • Downgrade from E5 to E3, or E3 to E1 
   • Replace Microsoft products with competitive alternatives, or at least get wheels in motion to make this a possibility when it comes time to renew 
   • Consolidate or eliminate underutilized services 

3. Understand Alternative Contract Models
   If you’re pushed toward or are now more interested in the MCA or CSP (Cloud Solution Provider), contracting models, know the pros and cons.
4. Use Competition to Your Advantage
   Evaluate Salesforce, AWS, GCP, and third-party support options, where viable and applicable. A credible alternative strengthens your negotiation position.

The Bottom Line

This is big news, and big changes bring big risks if you’re unprepared. Microsoft’s decision will increase costs for many, but with a proactive approach, you can avoid unnecessary uplifts, secure appropriate terms, and maintain leverage for future negotiations 

The key is to act now, arm your team with the right data, and make sure Microsoft hears your message loud and clear before your next renewal. 

If you want to discuss the specifics of how this change impacts your organization and develop a tailored response strategy, now is the time to start. 

Next Step:
Join our upcoming webinar, Breaking the Microsoft Mold: How to Negotiate on Your Terms, where we’ll share proven approaches to navigating Microsoft’s evolving licensing landscape, securing better deals, and maintaining leverage, even in the face of these sweeping changes.