Maximizing Discounts in Dynamics 365 Agreements
Introduction:
Microsoft Dynamics 365 licensing can be expensive, but enterprise customers have significant opportunities to secure discounts and favorable pricing in their agreements.
Read our Microsoft Negotiation Guide.
Maximizing discounts requires knowledge of Microsoft’s sales tactics and the effective use of various negotiation levers.
Unlike commodity purchases, Microsoft’s pricing is highly negotiable, especially if you demonstrate a volume commitment or are willing to consider competitors.
This article guides CIOs to drive deeper discounts in Dynamics 365 deals, whether during initial purchase or EA renewal.
Organizations can save substantially off the sticker price by employing strategic timing, bundling, and hard-nosed negotiation, and obtain contract terms that protect those savings over time.
Read CIO Playbook: Negotiating Microsoft Dynamics 365 Contracts.
Know the Available Discounts and Programs
Before negotiating, it’s important to understand how Microsoft structures discounts for Dynamics 365:
- Volume Licensing Discounts: Large seat counts typically qualify for tiered price reductions under an Enterprise Agreement. Microsoft doesn’t publish an official volume price list, but enterprise customers often see lower unit prices than smaller clients. For example, an EA with 5,000 Dynamics users may automatically come with a base discount (5-15%) compared to direct web pricing. The discount is determined by Microsoft’s internal pricing bands and the discretion of the sales team.
- Initial Adoption Offers: Microsoft frequently provides promotional discounts to encourage new customers or expansion. First-time Dynamics 365 customers migrating from on-premises or a rival product may receive a significant introductory discount (20% or more) for the first year or term. These are essentially “welcome” incentives. However, they often expire after the initial term, so you must plan how to maintain or replace them at the time of renewal.
- Agreement Type Differences: The way you buy can affect discounts. Enterprise Agreements allow direct negotiation with Microsoft for custom pricing. In contrast, Cloud Solution Provider (CSP) pricing is typically based on preset margins for partners and often closer to retail rates (though some CSP partners may offer small discounts by cutting their margin). For large enterprises, EAs usually unlock better discounting potential. Be cautious when moving from EA to CSP – ensure you negotiate to retain equivalent pricing, as a shift to standard CSP rates could result in the removal of prior discounts.
- Bundled Suites and Add-ons: Microsoft offers discounted pricing when you bundle products. In Dynamics 365, the “attach” licenses (for users who need multiple Dynamics apps) are a prime example – an attach license is heavily discounted (often around $20/user) compared to the full price of a standalone app. Additionally, there are enterprise offers where buying Dynamics 365 as part of a broader Microsoft 365 bundle or industry-specific bundle can yield overall savings. Understand these bundle options as they can be a source of hidden discounts beyond the base license price.
Read Dynamics 365 Renewal Strategies.
Effective Negotiation Tactics for Better Pricing
Winning better discounts is less about asking nicely and more about leveraging.
Here are key tactics:
1. Benchmark Against Competitors:
Come to the table with knowledge of alternative solutions and their costs.
Even if you have no intention of switching from Dynamics 365, having a credible comparison can put pressure on Microsoft. For example, obtain indicative pricing from Salesforce for an equivalent number of CRM users, or SAP for ERP functionality.
If Salesforce offers a 15% lower price for a similar module, you can use that information: “We have other quotes that are more competitive.” Microsoft reps know they must keep Dynamics priced attractively if credible alternatives are available.
Be prepared to share just enough detail (without revealing confidential info) to make Microsoft believe that your organization might pivot if the deal isn’t compelling.
The goal is to make Microsoft eager to “beat the competitor’s deal” by increasing your discount.
2. Leverage Your Microsoft Stack:
Dynamics 365 is often one piece of a larger Microsoft investment. Microsoft may grant concessions on Dynamics if it means keeping or growing your overall account. For instance, remind Microsoft of upcoming renewals or expansions in Office 365, Azure, or other Dynamics modules during negotiations.
You might bundle the Dynamics negotiation with these: “We’re also looking at renewing Office 365 and expanding Power Platform – we need an attractive combined proposal.” Microsoft’s account teams often have flexibility across product lines.
They might give you a bigger discount on Dynamics if you commit to Azure consumption, or vice versa. Ensure all Microsoft spending is considered in a holistic negotiation; this prevents siloed deals in which you miss out on cross-product bargaining power.
3. Time Your Deal for Maximum Concessions:
Like many vendors, Microsoft has sales targets and critical periods (end of quarter, end of fiscal year). Aligning your negotiation around these times can help you secure better discounts.
Microsoft’s fiscal year ends June 30, so the April-June period is when sales teams are under the gun to close business.
If your Dynamics 365 agreement is up for renewal around that time, use it to your advantage.
Even if not, try to schedule any large purchase to coincide with Microsoft’s Q4 or a quarter-end. The urgency on their side can translate into extra percentage points off.
Tip: Don’t reveal your internal deadline if it’s later than theirs.
If Microsoft thinks you could wait another quarter, they’ll try harder to win the deal now with discounts. Create a sense that you could delay the purchase, which makes them more anxious to finalize a deal this quarter.
4. Consider Multi-Year Commitments:
Committing to a longer term or larger quantity can unlock better pricing, but do it wisely. Microsoft may offer a larger discount for a 3-year EA compared to a 1-year CSP deal due to the guaranteed revenue.
For example, a 3-year committed deal might secure a 15% discount, whereas an annual term yields only a 5% discount.
If you have confidence in your Dynamics usage, a multi-year agreement can secure savings and protect against price increases (ensure the contract fixes the per-user price for the term). However, guard against overcommitting.
Don’t sign up for more years or users than you realistically need, as you could be stuck with them. It’s a balance: you want Microsoft to reward your commitment, but also need flexibility (see next point on terms).
5. Secure Price Protections in Contract: A good discount can vanish if your contract allows future price hikes or disallows carrying that discount to additional licenses. When finalizing the agreement, negotiate clauses for price protection.
Key items to seek: fixed pricing (or capped increases) for the entire term, and discount parity for additions.
For instance, if you purchase Dynamics 365 Sales at $90/user (10% off the list price), ensure that any new Sales users you add next year also receive the $90 rate. Otherwise, Microsoft might say new users are at the current list price, eroding your savings.
Additionally, if Microsoft raises the list price by, say, 5% next year, consider negotiating that your price either remains $90 or rises at a significantly lower rate (e.g., capped at 2%). Get these protections in writing. It’s easier to win these concessions during negotiation than to fight a surprise increase mid-term.
6. Use the “Attach” Licensing to Lower Costs:
As mentioned, if users require multiple Dynamics 365 apps, consider utilizing Microsoft’s attached licensing model. Ensure that in negotiations, you quote the scenario with attached pricing applied.
For example, if a user needs both the Finance and Supply Chain modules, instead of paying full price for one, they pay full price for one and a small fee (often $20) for the second.
This effectively serves as a built-in discount for multi-app users, but you must structure your licensing correctly to receive it. When Microsoft provides a quote, double-check that they applied attach pricing where appropriate; if not, push back and recalculate.
Highlight to Microsoft that you know how the model works, so they don’t try to charge full price for every SKU. Utilizing attached licenses can significantly reduce costs per user (often 50–70% off the cost of additional apps), which represents a form of aggregate discount.
7. Ask About Promotions and Incentives:
Always inquire if there are special promotions applicable to your deal. Microsoft occasionally runs incentive programs, such as “Adopt Dynamics 365 Customer Insights and get 15% off Dynamics 365 Customer Service” or discounts for switching from Salesforce.
These might not be advertised to you upfront. During negotiations, explicitly ask your Microsoft rep and independently research if any global promotions are running.
Sometimes, agreeing to be an early adopter of a new feature or providing a reference can fetch an additional discount. Ensure that any such offer is not forgotten in the final paperwork.
Read Dynamics 365 Licensing Audits.
Avoiding Common Pitfalls
Even with a strong negotiation plan, be wary of these pitfalls that can undermine your discount:
- Failing to Document the Discount: Verbal promises from sales representatives are insufficient. If you negotiated a 20% discount, ensure that the final agreement or order form explicitly displays the discounted unit price or includes a line item showing the discount percentage. Microsoft’s paperwork can be complex, so double-check that your agreement is captured. If it’s not in writing, it will not be honored later.
- Focusing Only on Price: A great per-user price is valuable, but also consider terms that affect cost. For example, a discount that only applies in year 1 and then allows Microsoft to raise prices in years 2 and 3 could result in a higher total cost than a slightly smaller discount that’s locked in for 3 years. Look at the total 3-year cost of the deal, not just the first-year rate.
- Not Using a BATNA: In negotiation theory, having a Best Alternative to a Negotiated Agreement. If Microsoft won’t budge on price, what will you do? Perhaps the alternative is to extend your current licenses on a month-to-month basis, use a smaller set of modules, or even pilot another solution. You don’t necessarily want to execute the BATNA, but you need to credibly signal that you could if needed. Without an alternative, you have no choice but to accept Microsoft’s terms, and they know it. Even if the BATNA is subtle (like deferring a deployment), make it part of your internal strategy.
- Accepting Undesirable Bundles: Microsoft may attempt to bundle additional products into your agreement (e.g., Relationship Sales with LinkedIn, or Power Platform add-ons) to increase the deal size, sometimes offering a nominal discount on the extras. Be careful: Only accept bundles that add value for you. A bundle discount on something you don’t need is not real savings – it’s spending. It can also complicate your licensing. It’s perfectly fine to say, “We prefer a clean deal on Dynamics 365 only,” if the bundle isn’t beneficial. On the other hand, if a bundle offer does align with your roadmap (e.g., you planned to buy that add-on later), then certainly leverage it to get a combined discount.
CIO Recommendations
- Research and Benchmark Pricing: Enter negotiations armed with market intelligence to inform your pricing strategy. Compare Dynamics 365 pricing with that of competitors (such as Salesforce and SAP) and have those figures ready. This external benchmark strengthens your case for a discount and demonstrates to Microsoft that you have alternatives if they aren’t competitive.
- Leverage Enterprise-Wide Negotiations: Don’t negotiate Dynamics 365 in isolation. Bundle your discussions with other Microsoft renewals or expansions (Office 365, Azure) to maximize leverage. Microsoft is more willing to offer concessions when looking at your total spend and strategic value as a customer.
- Time Your Deal Strategically: Plan major purchases or renewals around Microsoft’s fiscal calendar. Negotiate in Q4 (Apr-Jun) or at year-end when Microsoft has strong incentives to close deals. Use the seller’s timing to your advantage to extract a higher discount.
- Lock In Multi-Year Savings: If you commit to a multi-year term, insist on price protections. Negotiate fixed per-user prices or capped increases for the entire term, and ensure any additional licenses you add later inherit the same discounted rate. This prevents your discount from diluting over time.
- Exploit Licensing Models (Attach and Tiered Licenses): Use Microsoft’s licensing structure to save money. Always apply the “base license + attach license” approach for users needing multiple Dynamics apps, as attach licenses cost a fraction of full licenses. Verify that your agreement and pricing accurately reflect the lower attachment rates.
- Document and Verify All Discounts: Get all negotiated discounts and special terms in writing in the final agreement. Double-check that the contract or quote matches what was promised (e.g., a 15% discount should be reflected in the unit pricing or as a separate discount line). Don’t rely on emails or verbal assurances – ensure the legal document secures your discount for the duration.
- Engage Expert Negotiators: Consider enlisting independent licensing consultants (like Redress Compliance) to support your negotiation. They can provide insight into the typical discount levels of other companies and help formulate effective negotiation tactics. An expert can also interface with Microsoft’s “business desk” on complex issues, ensuring you squeeze every available benefit from the deal.
Read about our Microsoft Negotiation Service.
