Microsoft Ends Volume Discounts: Why the Change Matters for Licensing Strategy

On November 1, 2025, Microsoft is eliminating the longstanding volume-based “waterfall” discounts (Levels B–D) for Online Services under Enterprise Agreements (EA), MPSA, and OSPA. All customers will pay Level A list pricing for services like Microsoft 365, Dynamics 365, Azure, and more, drastically reducing the value of bulk licensing. This pivot has big implications for budgeting, cloud adoption, and Software Asset Management (SAM).

What Is Changing, and Who’s Affected

  • Microsoft will flatten pricing by removing volume discounts for Online Services purchased via EA, MPSA, and OSPA. All customers will now pay the standard Level A rate as listed on Microsoft.com.
  • The change takes effect for new Online Services purchases or renewals starting November 1, 2025.
  • Estimated price increases are approximately 6% for Level B, 9% for Level C, and 12% for Level D customers.
  • This applies to online/cloud services only (e.g., Microsoft 365, Dynamics 365, Azure, Copilot, Windows 365). On-premises licensing, U.S. Government, and Education pricing are excluded.

Why Microsoft Is Doing This

Microsoft frames the move as an effort to simplify pricing and increase transparency, aligning with the pricing model for other cloud services like Azure.

However, industry observers see a pattern: Microsoft is shifting away from volume-based incentives toward standardized, usage-driven pricing. The changes also nudge customers toward CSP (Cloud Solution Provider) and MCA‑E models, giving Microsoft greater control over commercial terms and adoption of strategic cloud offerings like Copilot and Fabric.

Implications for Enterprise Customers

  • Higher Costs for Large Customers: Without tiered discounts, enterprises that have benefited from significant price breaks now face notable cost increases at renewal, potentially millions annually.
  • Shifting Levers of Negotiation: Volume no longer secures better rates. Instead, success may hinge on strategic cloud adoption, commitments to high-margin services, or partner-managed CSP transitions.
  • CSP and MCA-E Gain Relevance: These alternative models offer flexibility (e.g., monthly billing, shorter terms) and now may equal or improve upon EA economics, especially for mid-market customers.
  • Urgency to Plan Renovation Strategy: Customers with renewal timelines after November 1 should engage now, with finance, procurement, and IT, to understand the implications and explore pre-buy or restructuring options.

What SAM Teams Should Do Now

  1. Map Your Renewal Dates & License Mix
    Identify when your EA renews and which services may be added post‑November 2025.
  2. Model Financial Impact
    Evaluate how switching to Level A pricing affects budget—and compare with CSP and MCA-E models.
  3. Update License Governance
    Tighten oversight to eliminate unused licenses and optimize coverage across user roles and workloads.
  4. Engage Partners Strategically
    Cloud partners may offer alternative tradeoffs, value adds, or timing that can reduce exposure.
  5. Align Stakeholders Early
    Bring finance, procurement, and executive sponsors into planning—this shift affects more than just IT budgets.

The elimination of EA volume discounts marks a major paradigm shift in Microsoft licensing. What once rewarded scale will now require insight, agility, and strategic alignment. SAM teams that act now, modeling impact, aligning stakeholders, and optimizing positioning, can transform potential cost pressure into competitive advantage.


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Alex Cojocaru

Alex has been active in the software world since he started his career as an Analyst in 2011. He had various roles in software asset management, data analytics, and software development. He walked in the shoes of an analyst, auditor, advisor, and software engineer, being involved in building SAM tools, amongst other data-focused projects. In 2020, Alex co-founded Licenseware and is currently leading the company as CEO.