Microsoft changes the rules to suit Microsoft; the CIO reads the change before signing it
Microsoft changed its licensing and pricing rules again across 2025 and 2026, from the New Commerce Experience to Copilot add-ons to list increases on core products, and each shift adds commitment or adds a premium. The default offer always favors Microsoft. Most of the changes are negotiable if you prepare, and the buyer-side win is matching term and channel to real volatility rather than accepting the default, because the discount on a longer term is rarely worth the seats it strands.
Prepared by Redress Compliance · August 9, 2026 · Microsoft advisory. Based on roughly 30 to 45 Microsoft renewals advised 2024 to 2025.
Executive summary
The New Commerce Experience traded flexibility for a small discount, and the trade usually favors Microsoft.
It changed how cloud subscriptions are termed, paid and cancelled, tightening the cancellation window and rewarding longer commitments.
So annual term subscriptions now carry a narrow cancellation window and penalties for mid-term reduction, while monthly costs more per seat but keeps flexibility for volatile workforces.
The buyer-side answer is not one term across the estate: split it, placing stable seats on annual and volatile seats on monthly, so you protect the flexibility you actually need without paying monthly rates across the board.
The longest term wins the discount and loses the flexibility, and the right answer is usually a blend.
Copilot arrived as a per-user premium on top of Microsoft 365, so treat it as a pilot before a rollout.
It is licensed and priced separately with a prerequisite on the base license, so every Copilot seat is an addition to that user's existing cost, and buying broadly before adoption was proven left 30 to 50 percent of seats showing low usage.
Buy Copilot for a measured, time-boxed pilot, track real usage by seat, and expand only where value shows, and confirm the prerequisite plans are already optimized first so you are not stacking a premium on an inefficient base. Broad early purchase funds seats that may not be used.
List increases landed on several core products, so the renewal is a price defense before it is a purchase.
Microsoft applied list increases to several core products and adjusted regional pricing, and the defense has three parts: clean the baseline by removing inactive seats and downgrading over-licensed users before the quote, because the corrected baseline absorbs part of the uplift before you negotiate.
Pick the channel deliberately, because an Enterprise Agreement suits large stable estates while CSP suits flexibility and the choice changes both price and the freedom to flex seats mid-term; and challenge the bundle, because bundles raise the floor commitment for features you may not need.
Price the components separately and refuse upsells that do not map to a real requirement.
Matching term and channel to real volatility held 10 to 22 percent of the proposed uplift.
The standard guidance is to consolidate onto longer annual and multi-year terms for the discount and roll out Copilot broadly so the workforce is not left behind.
We disagree, because in 6 of 10 renewals the longer term locked seats for a workforce that fluctuated and broad Copilot buying funded low-usage seats.
The buyer-side move is to match term to real volatility, blend monthly and annual seats, and pilot Copilot to proven adoption, because bundles look cheaper per item but raise the floor commitment, which suits Microsoft more than the buyer.
And the buyer who reads the new term before signing keeps the flexibility the default is designed to take away.
The New Commerce term trade-offs
| Term | Price per seat | Flexibility | Best for |
|---|---|---|---|
| Monthly | Highest | High | Volatile roles |
| Annual | Lower | Low | Stable seats |
| Multi-year | Lowest | Lowest | Core, fixed base |
New Commerce tightened cancellation windows and added penalties for mid-term reduction, rewarding longer commitments with a small discount, and the trade usually favors Microsoft.
You can split the estate, placing stable seats on annual terms and volatile seats on monthly, which protects the flexibility you actually need without paying monthly rates across the board.
The three headline 2025 and 2026 shifts each add commitment or cost: the term tightened under New Commerce, prices rose on core products with regional adjustments, and Copilot added a new premium layer per user. Each is negotiable if you prepare before renewal.
The full model detail sits in the 2025 to 2026 licensing guide, and the business-versus-enterprise plan decision in the business vs enterprise guide.
What Copilot adds, and how to pilot it
- Copilot is a real cost on top of existing licensing: a per-user add-on with a prerequisite on the base license, so every Copilot seat is an addition to that user's existing cost, not a re-price of the seat.
- Pilot before you roll out: buy Copilot for a measured, time-boxed group and track real usage by seat, because broad early purchase funds seats that may not be used, with 30 to 50 percent showing low usage.
- Check the prerequisites first: confirm the base plans are already optimized before adding the premium, so you are not stacking a premium on an inefficient base.
- Expand only where value shows: add Copilot seats only where the pilot proves usage, because realized value tracks daily use, not seats assigned.
- Keep the Copilot decision inside the wider renewal: it is a per-user premium that co-terms with the EA, so the renewal is where the seat count and price protection are set. The full Copilot economics sit in the Copilot pricing guide.
The Microsoft EA renewal playbook
The renewal moves, the New Commerce term framework, the Copilot framework, and the buyer-side moves across the full estate.
Get the white paper →Defending cost against the price increases
You defend cost with a clean baseline, the right channel, and a willingness to challenge the bundle.
Clean the baseline first: remove inactive seats and downgrade over-licensed users before the renewal quote, because the corrected baseline absorbs part of the uplift before you negotiate, and renewing on a cleaned seat count is the cheapest lever available.
Pick the channel deliberately: an Enterprise Agreement suits large, stable estates with predictable volume, while cloud solution provider through a partner offers more flexibility to flex seats.
And under New Commerce the channel choice changes both the price points and the freedom to adjust mid-term, so match the vehicle to your workforce volatility rather than the default.
Then challenge the bundle: bundles raise the floor commitment for features you may not need, so price the components separately and refuse upsells that do not map to a real requirement, because a bundle that looks cheaper per item but raises the floor suits Microsoft more than the buyer.
The common advice to consolidate onto longer annual and multi-year terms for the discount and roll out Copilot broadly is exactly the trap, because in 6 of 10 renewals the longer term locked seats for a workforce that fluctuated and broad Copilot buying funded low-usage seats.
So the buyer-side move is to match term to real volatility, blend monthly and annual seats, and pilot Copilot to proven adoption.
The discount on a longer term is rarely worth the seats it strands. The seat-reclaim tooling sits in the M365 license optimizer.
- Percentile standing for your exact deal size and industry, from real closed transactions
- Scenario simulation before the call: test alternative terms and see the financial impact of each
- A negotiation playbook, talking points, and a two page executive brief on day one
What we saw across Microsoft renewal engagements, 2024 to 2025
Across roughly 30 to 45 Microsoft renewals we advised between 2024 and 2025, matching term and channel to real volatility held 10 to 22 percent of the proposed uplift, and the common advice gives that back.
The standard guidance is to consolidate onto longer annual and multi-year terms for the discount and roll out Copilot broadly so the workforce is not left behind. We disagree:
Of seats locked on annual terms for a workforce that fluctuated, later sitting idle because the longer term stranded them.
Of Copilot seats bought broadly before adoption was proven that showed low early usage while billing in full.
Three patterns recurred: annual term commitments were signed for workforces that fluctuated, locking 15 to 25 percent of seats that later sat idle; Copilot was bought broadly before adoption was proven, with 30 to 50 percent of seats showing low usage.
And bundle upsells raised the floor commitment by 10 to 20 percent for features the buyer did not request.
Microsoft changes the rules on its own cadence and the default offer always favors Microsoft, so the CIO job is to read the change before signing it, because most of the 2025 and 2026 shifts add commitment or add a premium and each is negotiable if you prepare.
The buyer-side sequence is to map current Microsoft spend by product, term and channel before the renewal, remove inactive seats and downgrade over-licensed users to clean the baseline, blend monthly and annual terms to match real workforce volatility.
Pilot Copilot to a measured group and expand only on proven usage, compare Enterprise Agreement and CSP for your profile, challenge any bundle upsell that does not map to a real requirement, and engage independent advisory before signing.
The buyer who reads the new term before signing keeps the flexibility the default is designed to take away. The wider library sits in the Microsoft practice.
Your first five moves
- Map current Microsoft spend by product, term and channel before the renewal, because you cannot match term to volatility on a spend you have not mapped.
- Clean the baseline: remove inactive seats and downgrade over-licensed users, because the corrected baseline absorbs part of the uplift before you negotiate.
- Blend monthly and annual terms to match real workforce volatility, stable seats annual, volatile seats monthly, rather than one term across the estate.
- Pilot Copilot to a measured group and expand only on proven usage, and optimize the base plans before stacking the premium.
- Compare EA and CSP for your profile and challenge every bundle upsell against a real requirement. The Microsoft practice runs the renewal with you.
Frequently asked questions
What changed in Microsoft licensing for 2025 and 2026?
The main changes are the New Commerce Experience reshaping term, payment and cancellation rules, list price increases on several core products with regional adjustments, and Copilot arriving as a per-user premium add-on.
Each adds commitment or cost, and each is negotiable if you prepare before renewal. Microsoft changes the rules on its own cadence and the default offer favors Microsoft, so the CIO job is to read each change before signing it rather than accepting the default.
How does the New Commerce Experience change cost?
New Commerce tightened cancellation windows and added penalties for mid-term reduction, rewarding longer commitments with a small discount, and the trade usually favors Microsoft.
Annual term subscriptions carry a narrow cancellation window and mid-term reduction penalties, while monthly costs more per seat but keeps flexibility.
The buyer move is to blend monthly and annual terms rather than locking the whole estate onto annual, placing stable seats on annual and volatile seats on monthly.
Is Copilot included in Microsoft 365?
No. Microsoft 365 Copilot is a per-user premium add-on with a prerequisite on the base license, licensed and priced separately, so every Copilot seat adds to that user's existing cost.
It should be piloted and measured before any broad rollout, because broad early purchase funded seats with low usage in 30 to 50 percent of cases. Confirm the base plans are optimized first, so you are not stacking a premium on an inefficient base.
Should we move everything to annual terms for the discount?
Not usually. A longer term wins the discount but locks seats for a workforce that may fluctuate, and in 6 of 10 renewals we advised the longer term locked seats that later sat idle.
Blending annual terms for stable seats with monthly terms for volatile roles protects flexibility and is generally cheaper than stranding idle annual seats. The discount on a longer term is rarely worth the seats it strands.
How do you defend against Microsoft price increases?
Clean the baseline by removing inactive seats and downgrading over-licensed users, pick the channel that matches your volatility, and challenge bundle upsells against real need.
A corrected baseline absorbs part of the uplift before negotiation even begins, the channel choice changes both price and mid-term flexibility, and pricing bundle components separately stops upsells that raise the floor commitment for features you did not request.
What is the difference between EA and CSP now?
An Enterprise Agreement suits large, stable estates with predictable volume, while cloud solution provider through a partner offers more flexibility to flex seats.
Under New Commerce the channel choice changes both the price points and the freedom to adjust mid-term, so match the vehicle to your workforce volatility rather than the default. Matching term and channel to real volatility held 10 to 22 percent of the proposed uplift in our engagements.
