How to Use MACC (Microsoft Azure Consumption Commitment) for Azure OpenAI
Executive Summary:
Enterprises evaluating [KEYWORD] should utilize their Microsoft Azure Consumption Commitment (MACC) to optimize value and manage costs effectively.
This advisory outlines how to align Azure OpenAI usage with your pre-committed Azure spend – explaining what qualifies under MACC, how to “burn down” AI budgets, and when to negotiate carve-outs.
IT, procurement, finance, and legal decision-makers will gain a roadmap to navigate Azure OpenAI agreements with confidence, ensuring cost efficiency and strong contractual protection.
Aligning Azure OpenAI with Your Committed Spend
Azure OpenAI consumption can count toward your MACC – but only if you set things up correctly.
Follow these steps to ensure every Azure OpenAI dollar draws down your commitment (so you don’t end up paying beyond your budget):
- Deploy under your EA: Use an Azure subscription in your Enterprise Agreement for all Azure OpenAI usage. Consumption in any non-EA (pay-as-you-go) subscription won’t count toward your MACC.
- Confirm eligibility: Check with Microsoft (and in your billing portal) that Azure OpenAI charges are tagged as MACC-eligible. They should be (it’s a first-party service), but double-check so nothing is missed.
- Monitor usage: Track Azure OpenAI costs in your cost management reports to ensure they subtract from your committed balance. If any usage isn’t counting toward the commitment, escalate it immediately.
- Fix exceptions: If some Azure OpenAI costs aren’t eligible by default (e.g. a marketplace add-on), ask Microsoft for a solution. This may involve a contract carve-out or amendment to avoid being penalized for that spend.
Maximizing Value: Burning Down Your AI Budget
Once Azure OpenAI is under your MACC, use it deliberately to get full value:
- Plan and utilize: Budget for Azure OpenAI in your cloud plan. Estimate the number of tokens or requests you’ll use and ensure it fits within your committed amount. If mid-year, you’re below your target consumption, accelerate AI projects to utilize the remaining funds.
- Consider reserved capacity: For steady high usage, Azure OpenAI offers reserved capacity at a discounted flat rate. By committing to a fixed AI capacity for a term, you unlock significant savings, and it still counts toward your MACC. The table below compares on-demand versus committed approaches:
| Option | Payment Model | Commitment? | Pros | Cons |
|---|---|---|---|---|
| Pay-as-You-Go (on-demand) | Standard pay-per-use rates; no upfront commitment. | None. | – Full flexibility – scale usage up or down freely. – No obligation if you stop using it. | – No discounts – you pay full list price per unit. – Costs can spike unpredictably with heavy use. |
| EA Commitment (MACC drawdown) | Pay-per-use, but charges draw down your prepaid Azure commitment. | Indirect (part of overall Azure commit). | – Uses budget you’ve already committed (no surprise bills). – Can negotiate better rates or credits for high volume. | – Requires good forecasting to avoid over/under spend. – Less flexible to trim AI costs without adjusting the EA. |
| Reserved Capacity (prepaid) | Pre-pay a fixed rate for dedicated AI capacity (month or year term). | Yes – for the term. | – Lower unit costs (big discounts for term commitment). – Guaranteed capacity for mission-critical apps. | – Locked-in cost regardless of actual use (use it or lose it). – Less agility if needs change mid-term. |
Negotiation Tactics and When to Seek Carve-Outs
Negotiating Azure OpenAI at enterprise scale is crucial. Key tactics include:
- Ask for discounts: Microsoft won’t offer volume discounts on Azure OpenAI unless you request them. If you anticipate high usage, bring your forecast and request a more favorable rate per unit (or credits). Microsoft is often willing to reduce pricing or provide credits in exchange for a committed volume.
- Bundle with caution: When renewing or expanding your EA, consider bundling Azure OpenAI as part of the deal. Microsoft is eager to boost AI adoption, so committing to a dedicated AI spend can yield additional benefits (e.g., lower token rates or funded pilot programs). Just be careful not to overcommit – start with a modest usage estimate you’re confident in, since you can scale up later.
- Use carve-outs for flexibility: If there’s high uncertainty, negotiate carve-out clauses. For example, if Azure OpenAI is a pilot, agree that any shortfall in that specific usage won’t count against your overall commitment. Carve-outs act as insurance against unpredictable AI uptake.
Recommendations
Remember these tips when negotiating or managing Azure OpenAI in enterprise agreements:
- Make AI part of the plan: Include Azure OpenAI in your Enterprise Agreement from the start. That way, your negotiated terms govern its usage and count toward your committed spend.
- Negotiate AI incentives: Leverage Microsoft’s enthusiasm for AI. Ask for AI-specific perks – maybe a better price per token or a pool of Azure credits to support initial projects. These incentives often exist for big customers, but you must ask.
- Secure the terms: Ensure your contract’s protections extend to Azure OpenAI. Verify that data privacy, security, and liability clauses cover this service. If any unique risk applies, address it explicitly to avoid any ambiguities.
- Monitor and adapt: After deployment, track Azure OpenAI usage against your forecasts. If usage trends are much higher or lower, engage Microsoft early. You might adjust reservations or terms mid-stream instead of waiting until renewal.
- Learn from others: Talk to peers or advisors who have Azure OpenAI deals. Knowing what discounts or terms others have achieved (such as 15% off at a certain volume) gives you leverage. It demonstrates to Microsoft that you’re informed and encourages them to meet market standards.
Checklist: 5 Actions to Take
- Project your AI use: Estimate how much Azure OpenAI you’ll use (tokens, requests, etc. per month. Solid projections set the stage for negotiations and commitments.
- Confirm MACC coverage: Obtain written confirmation that Azure OpenAI spend will be counted toward your Azure commitment. Don’t assume – include this in the contract or an official email from Microsoft.
- List key requirements: Outline your must-have terms and safeguards (data handling, IP ownership of outputs, performance SLA, etc.). Use this list in negotiations to ensure each point is addressed.
- Plan give-and-take: Decide what you can commit (e.g., higher spend, longer term) and what you need in return (discounts, credits, special terms). Enter talks knowing your trade-offs.
- Set oversight: Assign team members to monitor Azure OpenAI usage and costs. Implement spend alerts and regular reviews with Microsoft. This governance ensures you get the intended value and can course-correct if needed.
FAQ
Q: Can we add Azure OpenAI to our Enterprise Agreement before renewal?
A: Yes. Microsoft allows mid-term additions via an EA amendment. Just align the addition’s end date with your EA so you can revisit it at renewal.
Q: What if our Azure OpenAI usage exceeds our committed budget?
A: You’ll pay the overage at your negotiated rate. Then talk to Microsoft about raising your commitment – they may offer credits or better pricing if you formalize the higher usage. If usage falls significantly below your commitment, a carve-out clause can help you avoid paying for unused spend.
Q: Can we get volume discounts on Azure OpenAI?
A: Not automatically, but you can negotiate one. If you commit to a high volume, Microsoft might lower your unit prices or provide some free usage. It never hurts to ask – large customers often get custom deals.
Q: Will Microsoft or OpenAI use our data to train their models?
A: By default, no. Azure OpenAI’s terms guarantee your prompts and outputs remain private and aren’t used to improve the models. Still, ensure that this is included in writing in your contract so it’s clear that your data remains confidential and you retain ownership of the outputs.
Q: How can we control costs if usage grows faster than expected?
A: Set budgets and alerts in Azure Cost Management for your Azure OpenAI service. Internally, require approval for any major increases in usage. Contractually, include a clause allowing adjustments (such as scaling a reservation or obtaining a better rate) if you significantly exceed forecasts. Active monitoring is your best safeguard against surprises.
Read about our Microsoft Negotiation Service.
