How to Benchmark Microsoft EA Pricing
Executive Summary
Establishing accurate pricing benchmarks for your Microsoft Enterprise Agreement (EA) is critical to ensure fair value. Procurement leaders should systematically gather pricing intelligence, identify outliers, and understand discount trends.
This approach helps set realistic targets and strengthens negotiation positions.
The following strategies cover data sources, expert involvement, and practical tips for analyzing unit prices and total cost of ownership (TCO).
For the big picture, revisit the EA negotiation overview.
Gather Pricing Intelligence
- Collect internal data: List each EA product, license tier, unit cost, and usage volume from your current agreement. The starting point is having a clear inventory of what you pay today.
- Leverage industry benchmarks: Participate in licensing forums, user groups, or analyst surveys to see typical pricing for organizations of your size. Many large enterprises share anonymized discount ranges for common products.
- Track list prices: To frame your targets, regularly note the published list prices for key products (for example, Microsoft 365 E5 is approximately $57 per user/month). Microsoft periodically adjusts these lists, so compare your net prices against the latest rates.
- Document past deals: Review pricing from previous renewals and any partner quotes to inform future decisions. Note how discounts have trended over time in your organization to spot improvements or slippage.
- Utilize SAM tools or consultants: Consider utilizing software asset management (SAM) tools or engaging third-party advisors. They often aggregate pricing data across clients and can give you a range of what peers pay for similar EA volumes.
Identify Pricing Outliers
- Focus on high-spend SKUs: Pay special attention to enterprise-heavy products, such as Microsoft 365 E5, Office 365 suites, Windows Enterprise, SQL Server, and Azure. Small percentage swings in these can yield big savings or costs.
- Compare similar licenses: If two comparable licenses (e.g., Office E3 vs. E5 or Windows E3 vs. E5) have very different discounts, investigate why. They should scale logically with volume.
- Spot anomalies: Look for line items where your negotiated price is significantly above (or below) the market range. For example, if the M365 E5 list price is $57/user/month but your net cost is $50 (only a ~12% discount), that’s typically an outlier. M365 E5 often sees discounts of 20–30% or more in many enterprise deals.
- Peer comparison: If possible, learn what similar-sized companies pay (without violating confidentiality). For instance, if a comparable firm landed M365 E5 at $40/user, your higher price signals room for improvement. Use these data points to frame your negotiation goals. See how prices have shifted in pricing benchmarks and trends.
Engage Third-Party Experts
- Independent consultants: Licensing specialists are familiar with Microsoft’s pricing structure and often know current market norms. Engaging them can reveal blind spots in your strategy.
- Price audits: A consultant can audit your EA and identify overcharges, forgotten credits, or opportunities (e.g., a misapplied discount tier). They can also simulate alternative scenarios (like moving users between license bundles) to quantify savings.
- Aggregated data: Licensing advisors and SAM partners may share anonymized benchmark data. For example, they might reveal their clients’ average discount levels in your industry, sharpening your internal benchmarking.
- Strategic advice: Experts understand negotiation levers (bonus incentives, true-up strategies, licensing mobility) that internal teams might overlook. They can help frame arguments such as “redeploy these licenses or upgrade to reduce cost per user,” often with proven examples from other negotiations.
Analyze Discount Trends
- Monitor list price changes: Microsoft regularly raises or reconfigures its product pricing. For instance, recent global updates changed how Teams and other apps are bundled. Always update your benchmarks to the latest list prices to ensure apples-to-apples comparisons. To align your cloud commitments, learn about benchmarking Azure commitments as part of your analysis.
- Track historical discounts: Calculate the discount rate (net vs list) you got in past renewals for each major SKU. Are those percentages improving or drifting? For example, if your Office 365 E3 discount slipped from 25% to 15% over time, consider why (volume changes, renegotiation tactics, etc.) and plan to recapture lost ground.
- Consider industry expectations: Larger EA customers often command deeper discounts on big-ticket items. Use this insight to set realistic targets (e.g., aim for higher discounts for popular enterprise products and accept smaller discounts on niche items).
- Example trend analysis: If new customers are quoted slightly higher list prices, remember that renewing customers may negotiate off the old list. Document these shifts so renewal pricing reflects the older benchmark plus targeted improvements.
Use Unit Pricing and TCO Framing
- Translate to unit costs: Convert your EA prices into monthly metrics per user or device. This makes comparisons clearer. For example, list M365 E5 at $57/user/month vs. your net cost of $45/user/month (about 21% off).
- Pricing comparison table: Create a simple list vs. negotiated prices table to highlight gaps. For example: SubscriptionList Price (per user/month)Example Negotiated Price Approx. Discount Microsoft 365 E3 $ 36$28~22 % Microsoft 365 E5 $ 57$45~21 % Windows 10 Enterprise E3 $ 7$5~29 % Azure (on-demand)Pay-as-you-go—0% (no discount) Illustrative values – verify with current lists and your actual rates.
- Frame full TCO: License fees are one component of the total cost. Factor in support, maintenance, and productivity impacts when benchmarking. For instance, a lower-cost license bundle that requires additional third-party tools or administrative work might not be a true savings. Integrate benchmarking into your timeline by using the ‘Prepare Early with Benchmarking Data’ checklist.
- Example TCO perspective: Calculate your EA’s three-year cost per user (including any support contracts) and compare it to alternatives. A cheaper bundle with minimal support might cost more in terms of management overhead. Presenting these full TCO comparisons can justify accepting a slightly higher license cost if it means less overall operational work.
Strategic Summary
- Build a comprehensive dataset: Use your EA records, peers’ pricing, and public list rates to establish your position compared to the market.
- Target high-impact areas: Prioritize analysis on high-volume licenses; even small percentage gains here yield big savings.
- Leverage expert validation: An independent audit or advisor can uncover subtle savings and validate your negotiating stance.
- Focus on unit costs and value: Emphasize per-user or per-device costs and the value delivered, rather than just the sticker price. Articulate how changes affect your organization’s overall TCO.
- Set aggressive but realistic goals: Use your benchmark insights to set negotiation targets that stretch Microsoft’s justified discounts, while ensuring your EA aligns with your business’s actual needs and strategy.
If you’re still unsure, browse our common benchmarking questions answered for more clarity.
How to Slash Microsoft EA Costs The CIO’s Guide to Smarter Renewals
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