CSP vs Enterprise Agreement for Microsoft 365. Choose by seat count and growth.

CSP and the Enterprise Agreement sell the same Microsoft 365 licenses. The cheaper route depends on your seat count, whether headcount is rising or falling, and how much price lock you need.

What is the Microsoft CSP program?

The Cloud Solution Provider program sells Microsoft 365 through a partner on a monthly or annual basis. You buy from the partner, the partner buys from Microsoft, and you can add and remove seats with far more freedom than a fixed three year commitment allows. The Microsoft CSP overview sets out the model.

CSP suits organizations that change shape. Seasonal hiring, acquisitions and divestments all favor a contract where seat counts follow the business rather than a signature from three years ago.

How does the New Commerce Experience shape CSP?

The New Commerce Experience is now the mandatory purchasing engine for CSP, and it is more structured than the old month to month model. You pick a monthly, annual or triennial term for each subscription, and each term carries its own cancellation and pricing rules. The trade is some flexibility in exchange for lower headline pricing on the longer terms.

• Annual and triennial terms. The seat count is committed for the term. You can add seats, but you cannot cut them until the term renews.
• Monthly term. The only term that allows a seat reduction every month. It costs roughly 20 percent more per seat than the annual term.
• Cancellation window. Microsoft allows cancellation within 7 calendar days of purchase or renewal for license based subscriptions, with a prorated refund. After day 7 the seats are committed for the rest of the term, as the new commerce cancellation policy documents.
• Price during the term. Microsoft's partner pricing rules keep the charge for an existing subscription flat for its whole term, so list changes reach you only at renewal.

The monthly premium is the price of shedding seats every month, so reserve it for populations that do vary. A simple test decides it: at a 20 percent premium, a monthly seat is only cheaper than an annual one if you need it for fewer than 10 months of the year.

The practical pattern splits the population. Put the stable base on an annual term for the lower rate, and hold a smaller pool on monthly terms for contractors and seasonal staff. Our guide to the New Commerce Experience covers the term rules in more detail.

What does CSP do well?

• Flexibility. Seats scale up at any time and scale down at each term boundary, or monthly on monthly terms.
• Low entry. There is no large minimum and no three year lock.
• Partner support. A managing partner handles billing, provisioning and first line support.
• Portability. A new partner can take over your new commerce subscriptions mid term. The original price and end date carry over, and no new cancellation window opens.

What is a Microsoft Enterprise Agreement?

The Enterprise Agreement is a three year volume commitment that locks pricing and bundles your Microsoft purchasing into one negotiated deal. The Microsoft Enterprise Agreement page still describes it as best value for organizations with 500 or more users or devices, and that was the historical entry point.

The practical floor is now much higher. Since early 2025 Microsoft has declined most EA renewals for organizations under 2,400 users and steered them to CSP or the Microsoft Customer Agreement. Microsoft does not publish that line as a formal rule.

What does the EA still do well?

Price protection is the headline benefit. A rate locked across three years shields a growing organization from list increases that reprice CSP seats at every renewal, and seats added through the annual true up come in at that locked rate.

An EA also consolidates purchasing power. Volume pricing, a single true up each year and one negotiated price sheet give a large buyer negotiating room that scattered CSP orders rarely match. If your EA has true up exposure, our EA true up guide covers the annual reconciliation.

How strong is EA price protection after November 2025?

It is weaker than a year ago. On November 1, 2025 Microsoft removed programmatic Level B, C and D discounts for EA Online Services, flattening the old volume tiers. The change applies at your next renewal, or when you add an Online Service not already on your price sheet.

On premises software keeps its level pricing, while EA Online Services now match Microsoft.com prices. That lifted effective prices by roughly 6 percent for former Level B customers and close to 12 percent for Level D, so the price you lock starts higher than in 2024. We model the cost by level in what the price level removal costs.

How does the Microsoft Customer Agreement for Enterprise change the choice?

The Microsoft Customer Agreement for Enterprise, or MCA E, is now the third path, and it is where Microsoft steers large customers next. It is a direct contract with Microsoft, with no reseller in the room and no fixed term.

Unlike the EA, the MCA for Enterprise is evergreen. There is no three year enrollment, no annual true up and no Customer Price Sheet that fixes prices for a term. Product terms can change several times a year. Microsoft documents the setup in its MCA onboarding guide.

Who is being moved to MCA E?

From March 1, 2026 Microsoft began moving EA customers on Azure commitment plans to the MCA for Enterprise ahead of their renewal date. Treat any renewal conversation as a three way choice between CSP, EA and MCA E. Our MCA explainer walks through the contract itself.

What does MCA E take away?

The evergreen model carries a cost that is easy to miss. The old EA true up was also the point where you reset quantities down, and the MCA removes it, so nothing forces a periodic rightsizing. Unused seats can run for years without anyone asking why.

Rebuild that discipline yourself. Set a quarterly seat review, and press for a price protection clause, because the default MCA allows Microsoft to reprice more often than the EA did.

How do CSP and EA compare directly?

The two routes deliver the same licenses on very different commercial terms. The table sets the main differences side by side, with MCA E added because it is now part of most renewal decisions.

The table simplifies two things. CSP repricing follows Microsoft list changes at each renewal, while an EA holds the entered price for three years from the higher post 2025 base. With EA Online Services now priced in line with Microsoft.com, the discount gap between an EA and a well negotiated CSP deal is far narrower than most buyers assume.

How do seat bands change CSP and EA economics?

Seat bands decide the contract before any discount does, because Microsoft gates program eligibility on user count. The old EA volume levels still frame the arithmetic even after the 2025 discount changes.

What does this mean below and above 2,400 users?

Below 2,400 users the realistic choice is CSP or the MCA for Enterprise, so a partner quote is usually your baseline and the work is in making two or three partners compete for it. Above 2,400 the EA is still available, but the flattened levels have narrowed its discount advantage over CSP, most of all for former Level D customers.

Read your own count carefully. Microsoft counts qualified users and devices, so contractors, shared mailboxes and frontline staff can push you across a band boundary you did not expect, in either direction.

What does the choice cost in practice?

In the two hypothetical cases below, the right route saves $42,120 a year on a seasonal workforce, and the wrong one strands $421,200 over two years when headcount falls.

Both cases use the Microsoft 365 E3 (with Teams) list price of $39 per user per month on an annual commitment, as published on Microsoft.com after the July 1, 2026 price change. Your partner or EA price will differ, but the shape of the result holds.

Case 1: a seasonal workforce on CSP

Say you run 850 stable users all year and add 150 seasonal staff for 4 months. With the monthly premium applied ($39 x 1.2), each monthly seat costs $46.80 per month.

The split works because the seasonal seats are needed for only 4 months. Stretch the season to 11 months and the monthly pool costs $77,220, more than the $70,200 those seats would cost on annual terms.

Case 2: a shrinking organization locked into an EA

Say you commit 3,000 users to an EA with no right to reduce below that count, and headcount falls 15 percent to 2,550 after the first year. The 450 surplus seats cost $17,550 a month (450 x $39), or $210,600 a year and $421,200 over the last two years of the term.

On CSP annual terms the same organization would have cut to 2,550 seats at its next renewal. It would have paid for the surplus for at most one term, and less if the renewal dates were spread across the year.

How should you choose between CSP and EA?

Start with two numbers: your seat count and your expected growth direction. A large, rising workforce leans EA for the price lock. A smaller or shrinking one leans CSP for the flexibility.

The matrix maps common organization profiles to the route that usually wins. Treat it as a starting hypothesis and test it against your own three year seat forecast.

Can you use both at once?

Yes. Many organizations put stable core seats on an EA and variable or project seats on CSP. The Microsoft Product Terms govern both, so the licenses are identical and users can be moved between pools at renewal without any change in what they can use.

What changed at renewal time?

Microsoft has narrowed EA eligibility and now pushes smaller customers to CSP when the enrollment ends. If your EA renewal is declined, model the CSP equivalent before accepting the first partner quote, and cross check entitlements against the Microsoft 365 enterprise plans. Our EA to CSP migration guide covers the cutover itself.

Why we do not choose the contract by company size

The usual advice is that the Enterprise Agreement is the enterprise grade choice and CSP is for small business. We disagree. The three year lock is an asset only while headcount rises. For flat or falling headcount it becomes a charge for seats you no longer use, as Case 2 shows.

Choose by seat trajectory. If headcount is rising, the EA lock helps. If it is flat or falling, CSP flexibility usually wins, and a mix of both can beat either one alone.

What have we seen in recent Microsoft 365 contract reviews?

We ran roughly 40 to 60 Microsoft 365 contract reviews between 2024 and 2025, all led by Morten Andersen. Across those reviews, the CSP or EA decision turned on seat count and growth rather than on the headline discount Microsoft or the partner offered.

• Small customers were moved to CSP. Organizations under 500 seats were steered to CSP, often because Microsoft had declined the EA renewal.
• The EA lock paid off for growth. Where headcount rose across the term, the EA price lock saved 8 to 15 percent compared with CSP seats repriced at each renewal.
• Shrinking EA customers overpaid. Where headcount fell, EA customers paid 10 to 20 percent more than a flexible CSP setup would have cost, because the commitment kept surplus seats on the bill.

There is no universally cheaper Microsoft contract. There is a contract that fits where your headcount is going over the next three years.

How do you negotiate partner margin under CSP?

Under CSP your price includes the partner margin, so the partner is a cost you can negotiate. Microsoft sets a wholesale price to the partner, who marks it up to you.

Partner base margins on Microsoft 365 are thin, often in the low single digits, topped up by Microsoft incentives the partner earns for provisioning and support. Ask each bidder to quote the markup over the Microsoft price explicitly, line by line.

How do you run the CSP tender?

Invite at least two partners to quote the same SKUs, quantities and terms. Any partner can sell the same license under the same Product Terms, and a mid term transfer keeps your price and end date, so switching is low risk and a credible threat that compresses margin.

Where does the CSP price actually come down?

• Term choice. The annual term removes the monthly premium on seats you keep all year.
• Partner competition. A second bidder on the same SKUs exposes the real floor.
• Service unbundling. Paying separately for support stops it hiding inside the license markup. Price managed services on their own line so you can benchmark each part against the market.
• Renewal alignment. Moving subscriptions onto one or two renewal dates gives you a single point each year to cut seats and retender.

CSP has no multi year commitment, so you can retender every year and keep the incumbent partner honest on price and service.

What will Microsoft and the partner say, and how should you answer?

• "Your EA will not be renewed, so we will move you to CSP with our preferred partner." Ask for the decision in writing, then tender the CSP business to at least two partners. Microsoft decides the program, but the choice of partner is yours.
• "The EA protects you from list increases." It does, but only during the term. Since November 2025, Online Services in a renewing EA are priced in line with Microsoft.com, so a renewal after July 2026 locks the new list price.
• "MCA E gives you more flexibility." Ask what price protection it carries in writing, and for how long. Without a negotiated hold, Microsoft can reprice as often as the product terms change.
• "Monthly terms keep you flexible." That flexibility is worth paying for only on seats you will release within the year, such as seasonal staff. Ask the partner to split the order into annual and monthly pools.
• "Our margin is confidential." Then ask for the Microsoft price and the total per SKU side by side. A partner who will not show the gap is pricing on the assumption that you will not compare.

Which contract terms should you ask for on each route?

Each route has a small set of terms that decide the real cost. Ask for them before signature, when you still have a choice of route.

1. CSP: a capped markup at renewal. Fix the partner margin over the Microsoft price for every renewal in the agreement, so the partner cannot raise it when list prices rise.
2. CSP: transfer cooperation. Require the partner to release subscriptions promptly if you move to another partner, since a transfer request lapses if the current partner does not act on it within 30 days.
3. CSP: a separate services agreement. Keep support and managed services in their own contract with their own exit right, so dropping the service does not disrupt licensing.
4. EA: the price hold on every SKU you may add. Get future additions such as Copilot or security add ons priced on the Customer Price Sheet now, because new Online Services are priced at the post 2025 rate.
5. EA: reduction and divestiture rights. Negotiate the right to reduce subscription counts at anniversary and to remove divested entities, which limits the Case 2 exposure.
6. MCA E: a multi year price hold. Ask for a fixed price period for named SKUs, with notice before any change to product terms that affects price.

How can you check your own position before you negotiate?

• Microsoft 365 admin center, Billing, Your products. Shows every subscription with its term, renewal date and billing frequency, whichever channel it was bought through.
• Microsoft 365 admin center, Reports, Usage. Shows active users by service, which exposes licenses that are assigned but unused.
• Microsoft Entra ID sign in activity. Flags accounts with no recent sign in, usually leavers and dormant contractors.
• Your EA license summary and price sheet. Shows the committed quantities and locked prices you would be leaving behind.

Reclaiming unused seats before you pick a route is the cheapest saving available. Our license reclamation guide sets out the process.

How do you time a migration between CSP, EA, and MCA E?

Time any migration to your EA anniversary, because seats committed under one contract cannot move mid term without waste. Start the modeling twelve months out.

The sequence matters. Inventory entitlements, model each route against a conservative seat forecast, then run the tender before the renewal quote lands, so Microsoft's number is not the first figure on the table.

What mistakes cost the most at the switch?

• Starting at T minus 60 days. By then Microsoft controls the clock. A twelve month runway gives you time to test CSP partner bids and the MCA for Enterprise route against the EA number.
• Misaligned CSP start dates. Annual CSP terms lock for a year, so start them on the migration date. A term that starts early double pays against the EA; one that starts late leaves users unlicensed.
• Stranded Azure commitments. Confirm that any Azure commitment transfers cleanly to the new agreement before you sign it.
• Missing the 7 day window. Check every CSP order in the first week. After that, a wrong quantity or SKU stays for the full term.

What to do next

1. Count. List your current Microsoft 365 seats by plan and tier, and remove unused assignments first.
2. Forecast. Project headcount direction across the next three years, with a low, expected and high case.
3. Model. Price CSP against the EA locked cost, and MCA E where it is offered, for each forecast case.
4. Split. Identify stable core seats that suit an EA or annual term, and variable seats that suit CSP monthly terms.
5. Tender. Challenge every partner quote against the Microsoft price and the published Product Terms, with at least two bidders.
6. Respond to a declined renewal. If Microsoft declines your EA renewal, price the CSP equivalent before accepting any quote.
7. Record and review. Document the chosen split, set a quarterly seat review, and revisit the route at each renewal.

Frequently asked questions