For years; Microsoft’s Enterprise Agreement (EA) has been the go-to licensing model for large organizations. Its appeal rested on predictable pricing; flexible deployment; and, most importantly, deep discounts for businesses with thousands of seats. But starting November 1; 2025; that era comes to an end. Microsoft is removing the tiered pricing model that rewarded scale. From that date forward; all organizations will pay “Level A” pricing; regardless of their size. This means businesses previously enjoying discounts of 6–12% (or more) will see noticeable cost increases when they renew.
And it’s not just pricing that’s shifting. Microsoft is also restricting EA renewals for smaller organisations. Companies with fewer than 2,400 seats may no longer be able to sign a new Enterprise Agreement at all, pushing them toward alternative models such as the Cloud Solution Provider (CSP) programme or the Microsoft Customer Agreement for Enterprise (MCA-E).
Why is Microsoft making the change?
Microsoft’s stated goal is “pricing consistency.” By aligning large and small customers to the same online services rates, the company simplifies its pricing model and encourages adoption of its more modern, flexible licensing frameworks like CSP. In practice, however, it means many organisations will face higher costs and fewer choices.
What does this mean for you?
Larger organizations: Expect budget increases at renewal; particularly if you previously benefited from Level B–D discounts.
Smaller organizations: You may need to transition away from EA entirely and explore CSP or MCA-E before renewal deadlines hit.
On-premises software buyers: The good news is that perpetual software pricing isn’t changing; at least for now.
What should you do next?
- Check your renewal date. If your EA renews before November 2025, you may be able to lock in one more cycle of discounted pricing.
- Model the cost impact. Understand how much your bill is likely to increase under flat-rate pricing.
- Explore alternatives. CSP often provides more billing flexibility, shorter commitments, and additional partner services that may offset the loss of EA discounts.
- Negotiate early. Engaging with Microsoft or a licensing partner ahead of your renewal gives you more leverage and time to assess your options.
The bottom line
Microsoft’s changes to the Enterprise Agreement represent a significant shift in how organisations buy and manage their cloud services. While the new model simplifies licensing for Microsoft, it creates uncertainty—and potentially higher costs—for customers. The most successful organisations will use this moment to reassess their licensing strategy. Rather than treating the EA change as an unavoidable cost hike, it can serve as a trigger to adopt a more flexible and modern approach to licensing that aligns better with today’s rapidly changing business needs.
