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Reading Between the Lines: An Update on Microsoft’s Online Services Pricing Changes
Microsoft’s latest pricing update for online services (effective November 1, 2025) is more than a simple list adjustment. It’s a structural shift that will ripple through enterprise renewals over the next 12 to 18 months.
For years, Microsoft’s Enterprise Agreement (EA) customers have operated within a tiered pricing model (Levels A through D). That waterfall is now gone. Starting November 1, Microsoft will standardize all online service pricing to Level A — effectively eliminating volume-based discounts that many large customers have long relied on.
The Short Version
For a more detailed recap of this major price shift, check out this blog post. Here’s a 10,000-foot view of the impacts of this change: Customers on higher discount levels will see price increases at renewal, roughly 6% to 13% depending on prior tier. While existing EAs are protected until term end, future renewals will align to the new model.
But as we’ve heard in recent conversations with sourcing and licensing leaders, the bigger story isn’t the price increase itself — it’s what this signals about Microsoft’s evolving commercial strategy.
What’s Driving the Change
Microsoft is steadily reshaping how it transacts with its largest, most profitable customers. The move away from EAs toward the Microsoft Customer Agreement (MCA) reflects several underlying forces:
- Cost Efficiency and Control – Supporting the EA model is resource-intensive. MCA streamlines ordering and lowers Microsoft’s internal cost to serve.
- Margin Pressure – Reseller subsidies have long eaten into margins. The new model shifts economics away from resellers and toward direct, digital transactions.
- AI Infrastructure Investment – Microsoft is offsetting the capital cost of its AI build-out and data center expansion.
- Simplification (for Microsoft) – Fewer pricing levers mean fewer exceptions, less flexibility — and higher predictability for Microsoft’s P&L.
For customers, that simplification often translates into less flexibility and less personalized support.
What Customers Are Seeing
In recent client conversations, several patterns are emerging. Most notably, large enterprises are realizing that this “pricing consistency” update functions as a de facto price increase. Level D and C customers are losing the discounts they’ve long depended on, and even Level B customers are seeing 6–7% uplifts at renewal.
Compounding the issue, public pricing transparency has been inconsistent. Some SKUs show list prices higher than historical Level A pricing, and we’ve seen instances where discounts are being calculated against those inflated baselines — creating a double hit for buyers.
Reseller dynamics are also shifting. As Microsoft reduces its reseller subsidies, many partners are exploring separate fees for support and professional services that were previously bundled under EA. The result is a quiet but significant change in the total cost of ownership.
Finally, renewal experiences are uneven. While Microsoft is allowing some near-term renewals to proceed under pre–November 1 price lists, the long-term direction is clear: standardized Level A pricing, fewer exceptions, and reduced negotiability.
What You Can Do Now
1. Audit Your Renewals (Immediately): Identify all Microsoft online service renewals over the next 12–18 months. For near-term renewals, request that Microsoft use the pre-November 1 price list or negotiate equivalent concessions — and get it in writing.
2. Validate the Baseline: Work with your reseller or advisor to confirm your pre-change effective list price and discount levels. Compare every renewal quote line-by-line to ensure discounts are being calculated against the correct denominator.
3. Prepare for Reseller Shifts: Talk to your reseller now about post-subsidy support models and potential new fees. Budget accordingly.
4. Evaluate Strategic Alternatives: For major workloads (e.g., collaboration, CRM, AI tools), benchmark competitive options. Even a light market scan can strengthen your negotiation leverage.
Who Should Own What (and When)
A coordinated response is essential; this isn’t a pricing update you can delegate to one team. Here’s how to align roles and timelines across procurement, finance, IT, and your reseller partners:
- Procurement / IT Licensing Lead: Take ownership of the renewal inventory and baseline validation process. Catalog all Microsoft online renewals and confirm current discount levels. Start immediately!
- Reseller / Account Team: Request written confirmation from Microsoft or your reseller on which price list is being used for each renewal quote. This should be done immediately for pending renewals.
- Finance / CFO Office: Model the expected P&L impact of these pricing shifts across FY26 and FY27 budgets. Build scenarios that account for 6–13% increases and possible new reseller service fees. Target completion within 2–4 weeks.
- IT Leadership: Prioritize which SKUs are most critical (e.g., M365, Dynamics, Copilot licenses). Decide whether any pre-effective date purchases make sense to lock in legacy pricing.
This cross-functional coordination not only minimizes budget shocks, it ensures your organization enters renewal discussions with clarity, documentation, and a unified negotiation strategy.
The Bigger Picture
Microsoft’s pricing “simplification” is the latest step in a multi-year effort to move customers into its modern commerce ecosystem — one that gives Microsoft more control and predictability, but less flexibility for enterprise buyers.
For procurement, the challenge is twofold: understanding where the hidden costs will surface, and recalibrating negotiation strategy around a fundamentally new commercial model.
Those that move early — validating baselines, documenting pricing history, and negotiating protections — will be best positioned to limit exposure and preserve leverage.
Looking for more clarity around Microsoft’s recent licensing and pricing changes? Contact us – our Microsoft licensing experts can answer your questions.
