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

📌 TLDR

Starting November 1, 2025, Microsoft will eliminate volume-based discounts (Levels B–D) for Online Services under EA, MPSA, and OSPA agreements. All customers will pay Level A list prices, resulting in 6–12% cost increases for many. The move pushes organizations toward CSP and MCA-E models and demands urgent financial impact analysis. SAM teams must act now to reassess licensing strategy, optimize usage, and prepare for renewal under the new pricing reality.

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.

Sources

• CRN, August 18, 2025 – Microsoft to end EA volume discounts, shifting pricing to CSP boostenowsoftware.comenowsoftware.com+4jorgep.com+4blog.livingstone-tech.com+4ServerSys+1The Register+10CRN+10surveil.co+10surveil.co+4surveil.co+4blog.livingstone-tech.com+4
• Microsoft Licensing Resources, August 12, 2025 – Official announcement on pricing consistency for Online ServicesThe Register+7Microsoft+7jorgep.com+7
• JorgeP.com, August 19, 2025 – Breakdown of changes and financial impact scenariosjorgep.com
• Livingstone Tech, two weeks ago – Analysis of negotiation levers post-discountcloudservus.com+9blog.livingstone-tech.com+9WebProNews+9
• ServerSys, five days ago – CSP model as a viable alternative to new Level A pricingServerSys