Microsoft Customer Agreement (MCA) Explained
Introduction: Why Microsoft Is Pushing MCA in 2025
Microsoft is accelerating its shift to the Microsoft Customer Agreement (MCA) model in 2025 as part of its New Commerce Experience (NCE). The MCA is positioned as a modern, “evergreen” subscription contract that streamlines the purchase of cloud services.
Microsoft’s goal is to reduce licensing complexity on its end and drive cloud subscriptions.
However, many CIOs and IT procurement managers are skeptical of Microsoft’s motives, suspecting that this push shifts cost predictability and risk onto customers.
By nudging organizations off traditional Enterprise Agreements (EAs) and onto the MCA, Microsoft gains more control over pricing and billing.
At the same time, customers lose some long-term price locks and negotiation leverage. Read our complete guide to choosing between Microsoft EA and CSP.
Under the banner of “cloud-first” and unified commerce, Microsoft is phasing out some smaller EAs in favor of the MCA. The key question: Is the MCA replacing the EA, and if so, how should enterprises adapt?
Below, we break down what the MCA entails, how it compares to an EA (and even CSP partner agreements), and strategies to adjust your negotiation approach in this new licensing era.
What Is the Microsoft Customer Agreement (MCA)?
The Microsoft Customer Agreement is a relatively new contract framework for purchasing Microsoft cloud services and software on a flexible, subscription basis.
Unlike an EA, which has a fixed 3-year term, the MCA is an evergreen licensing agreement – it has no end date. You sign it once (typically via a digital acceptance), and it remains in effect until either party terminates it.
Microsoft can update the standard contract terms with notice, making it a “live” agreement that evolves.
There is an enterprise-focused variant, often referred to as MCA-E (Microsoft Customer Agreement – Enterprise). MCA-E is essentially the MCA tailored for organizations that would traditionally use enterprise volume licensing.
With MCA-E, an enterprise deals directly with Microsoft (rather than through a reseller) for its subscriptions. It is part of Microsoft’s strategy to modernize contracts: direct, subscription-centric, and cloud-optimized.
How the MCA differs from an EA structure: The MCA is a simple, standardized contract – often just an online form – whereas an EA is a lengthy negotiated contract.
Under MCA, you can mix and match subscriptions (e.g., Microsoft 365, Azure services, Dynamics 365) and pay for them monthly or annually. There’s no requirement for a company-wide commitment or an upfront purchase of a fixed number of licenses for 3 years.
Essentially, the MCA shifts Microsoft licensing to a subscription contract model similar to a cloud service subscription: you add or remove services as needed, and the contract auto-renews continuously.
Read how to mix CSP and EA, Mixing Enterprise Agreement and CSP: How a Hybrid Licensing Approach Can Save Money.
Key Differences: MCA vs EA (and Where CSP Fits In)
Understanding MCA vs EA is critical for any enterprise rethinking its Microsoft licensing:
- Contract Term: An EA is a 3-year contract (typically with an optional renewal or renegotiation at term end). In contrast, the MCA is evergreen – there is no fixed term. You simply keep using it until you cancel. This means no big renewal event every few years. The Cloud Solution Provider (CSP) program (Microsoft’s partner-led channel) is similarly open-ended; you subscribe to services via a partner with monthly/annual terms, but no overarching contract end date.
- Pricing and Discounts: EA pricing is based on volume tiers (Levels A–D) and locks in prices for 3 years, often yielding significant volume discounts and protection from price hikes. Under an MCA, pricing is generally at Microsoft’s retail rates (MSRP) unless you negotiate specific discounts. There are no automatic volume discount tiers with MCA-E. Each subscription or purchase is priced per the current lists or special deals Microsoft may offer. This can mean higher per-user costs if you were previously getting EA discounts. CSP agreements likewise usually charge close to list price (partners might give small discounts, but no built-in volume pricing). Over a multi-year span, MCA pricing may rise as Microsoft adjusts cloud prices annually, whereas an EA would have locked prices.
- Billing and Payment: EA customers typically pay annually (or upfront) for a set number of licenses, providing predictable budgeting over the term. The MCA uses a unified billing approach for all your services, invoicing you as you go. You can be billed monthly for usage (like Azure consumption or month-to-month Microsoft 365 licenses) or annually for 1-year subscription commitments. There is greater flexibility in billing frequency (OpEx-friendly), but less predictability – your spend can fluctuate each month with license changes or new service additions. CSP similarly offers monthly or annual billing via the partner, often with the ability to true-down monthly. Still, monthly terms come at a ~20% premium for that flexibility in Microsoft’s NCE.
- True-ups vs. Continuous Management: In an EA, you lock an initial quantity of licenses and then perform an annual true-up – reporting any additional users/products you added during the year and settling the bill for those. True-ups act as a once-a-year reconciliation and provide a compliance safety net (if you go over, you just pay at year-end). Under MCA, there are no true-ups because you simply add licenses when needed and pay for them in the next billing cycle. Compliance is immediate – if you add a user, you need a license right away. This demands more active license management. There’s no built-in grace period; the onus is on the customer to stay in compliance month-to-month.
- Negotiation and Custom Terms: EA contracts are highly negotiable. Enterprises can negotiate custom terms and amendments (for example, special privacy clauses, extended support arrangements, or specific pricing protections). MCA contracts are standardized – Microsoft generally will not alter the legal terms for one customer. Negotiation under an MCA mostly revolves around getting better pricing or incentives, not changing the contract language. Microsoft can also update MCA program terms unilaterally (with notice), since it’s a standard form contract. This limits a customer’s ability to secure unique protections. In CSP, terms are also standard (set by Microsoft’s Master Customer Agreement plus the partner’s own agreement), and negotiation is typically about the partner’s margin or added services rather than Microsoft’s base terms.
- On-Premises Coverage: An EA can cover both cloud subscriptions and on-premises licenses with Software Assurance (SA) in one agreement. It bundles SA benefits (version upgrades, training, support credits, hybrid use rights) for any perpetual licenses included. MCA is cloud-focused – it does not include Software Assurance or perpetual licenses by default. If you still need on-premises software with SA, you cannot get those through MCA; you would need a separate contract like the Microsoft Products and Services Agreement (MPSA) for those purchases. This means an organization might use MCA for cloud services but maintain an MPSA for legacy on-prem needs, adding complexity. (CSP does offer some perpetual licenses and doesn’t include SA either; any SA-equivalent benefits for servers require either separate agreements or switching to subscription versions of those products.)
- Partner vs Direct: The EA has traditionally been sold via a licensing partner (LSP), but it’s essentially a direct Microsoft agreement with the partner as an intermediary. MCA-E is a direct agreement with Microsoft – no reseller in the middle for cloud subscriptions. This “direct billing” model is appealing to Microsoft as it streamlines sales and cuts out reseller fees. CSP, on the other hand, is a partner-driven model: you buy through a reseller who may bundle support and manage your account. Some enterprises prefer direct (MCA) for more control and potentially slightly lower costs (no partner margin on licenses), while others like a good CSP partner for hands-on support.
In summary, EAs provide price lock and volume benefits but less flexibility, while MCA (and CSP) provide flexibility and simplicity but less built-in discount and more price variability. Next, we’ll explore the concrete pros and cons of moving to an MCA.
Read our checklist on how to change agreements, Switching from an EA to CSP or MCA: A Transition Checklist for a Smooth Change.
Benefits of MCA (Microsoft Customer Agreement)
Why would an enterprise consider the MCA model?
Here are the key benefits of Microsoft’s evergreen agreement:
- Month-to-Month Flexibility: MCA brings cloud-style flexibility. You can scale licenses up or down as needed, often every month. If you need to onboard 100 new users this month, you just add subscriptions – no need to wait for an annual true-up or mid-term EA amendment. Conversely, if you downsize or a project ends, you can reduce licenses at the next monthly cycle or end of an annual subscription term, avoiding long-term shelfware.
- No Big Renewal Cycles: With an evergreen contract, there’s no massive renewal negotiation every three years. This can reduce the stress and resource-intensive process of an EA renewal. Instead of facing a large all-or-nothing renewal deadline (which Microsoft often uses as leverage), customers under MCA have a continuous relationship. New services can be adopted quickly without waiting for a renewal window – you just accept the standard terms and start a subscription at any time.
- Simplified Contract and Onboarding: The MCA paperwork is relatively short and standardized. Many organizations can accept it online without heavy legal negotiations. This simplicity speeds up procurement. When a new Microsoft product or service launches (for example, a new AI add-on or Azure service), MCA customers can often access it immediately by adding it to their account. There’s no need to amend a contract or go through a reseller order form – it’s frictionless. Microsoft also provides a unified billing portal under the MCA, which lets you see all your purchases across Microsoft services in one place, set up cost centers, and manage subscriptions easily.
- Direct Relationship & Support: With MCA-E (the enterprise variant), you are a direct Microsoft customer. That can translate to engaging with Microsoft’s own support and sales teams more directly. Enterprises might get assigned Microsoft account managers and can purchase Premier or Unified Support from Microsoft for their environment. Some customers prefer this direct line, as it can mean faster escalations and getting news or promotions straight from Microsoft. Additionally, without a reseller margin in the mix, any discounts or incentives you negotiate go directly against Microsoft’s price – potentially making deals clearer (e.g., Microsoft might give an Azure consumption credit or a discounted unit price for a certain commitment).
- Optimized for Cloud & “Evergreen” Needs: MCA is designed for subscription services and cloud consumption. It aligns with how Microsoft wants customers to buy: as an ongoing subscription that can adapt. For organizations heavily invested in Azure or rapidly adopting new cloud services, the MCA is convenient. It supports modern Azure billing features like the Azure consumption commitment (you can commit to spend $X on Azure under MCA to get better pricing). It also avoids the scenario of overcommitting resources for three years – you pay for what you use and can adjust purchases as your cloud strategy evolves. In fast-changing tech environments (think adding Microsoft Copilot AI services or shifting workloads to Azure), MCA provides the agility to adopt and pay for those quickly.
In short, the MCA brings cloud-era agility to Microsoft licensing. But that agility comes with trade-offs, especially around cost control and negotiation, as we explore next.
Drawbacks of MCA
Moving from a traditional Enterprise Agreement to an MCA isn’t all positive.
There are some significant drawbacks and risks to be aware of:
- Loss of Negotiation Leverage: With no big renewal events, customers lose the major negotiation opportunity that an EA provided every 3 years. In an EA renewal, enterprises could leverage the possibility of switching vendors or dropping products to negotiate better discounts or concessions. Under an MCA, since the contract just continues, Microsoft isn’t forced to “earn” a renewal as explicitly. It’s harder to orchestrate a large competitive negotiation when everything is piecemeal. Microsoft’s standard position is that MCA terms aren’t customized per customer, so you have limited ability to negotiate beyond maybe some discount on a case-by-case basis.
- Higher Risk of Incremental Overspend: The flexibility to add licenses on a whim can lead to cost creep. In an EA, you at least had a fixed commitment and awareness when true-up time came. Under MCA, every month can introduce new subscriptions, and without strict internal governance, you might over-provision. There’s also the temptation to add services (since it’s easy), which can accumulate costs. Without the discipline of an EA’s fixed entitlement, companies need strong controls to avoid surprise bills. One CIO described this as moving from a “budgeted buffet” (EA) to an “open à la carte menu” (MCA) – it’s easy to spend more over time if usage isn’t carefully watched.
- Less Volume Discounting, Potentially Higher Prices: MCA pricing often ends up closer to list prices. If your EA gave you 20-30% off Office 365 and locked that rate, you may find under MCA you’re paying full price or only a small discount for the same licenses. Over hundreds or thousands of seats, this is a substantial cost increase. Additionally, Microsoft regularly announces price increases for cloud services (and currency adjustments internationally) each year. Under an MCA, you’re exposed to those changes. For example, if Microsoft raises the Microsoft 365 E5 price by 5% next year, an MCA customer will pay that new price upon their subscription renewal. Cost predictability diminishes, making budgeting more challenging. In short, cost predictability is sacrificed – an EA’s multi-year price lock is gone.
- Harder to Predict and Control Spend: With an EA, you had a known baseline cost for 3 years and only true-ups if you grew. Under MCA’s evergreen model, every month or year is potentially a new spend level. This dynamic spend model can be tricky for CFOs and procurement who prefer stable forecasts. Organizations will need to monitor license usage more frequently and may require new approval processes to add licenses or services, ensuring financial control.
- No True-Up = Immediate Compliance Risk: The lack of a true-up process means compliance issues can bite faster. In an EA, if you accidentally deployed 50 more Windows Server licenses than you owned, you’d fix it at true-up time (paying for them then). Under MCA, if you use more licenses than you have, you’re technically non-compliant right away, and Microsoft could audit or penalize that. Microsoft’s audit rights under the MCA are strong – they can audit with shorter notice and may impose penalties for unlicensed use. Therefore, customers must remain vigilant at all times, conducting continuous license compliance checks.
- Volume License Benefits Lost: Enterprise Agreements bundle things like Software Assurance, training credits, planning services days, and upgrade rights. When moving to MCA, many of these EA perks disappear. For example, without SA, you lose rights to new version upgrades for on-prem software or the ability to spread payments for certain licenses. If you still need any on-premises licenses, you’ll have to manage those separately (e.g., via MPSA as mentioned). This fragmentation (cloud services under MCA, on-premises under another agreement) adds administrative overhead and potential gaps in benefits, such as hybrid use rights or license mobility.
- Standard Contract Terms (Little Flexibility in T&Cs): The MCA’s legal terms are Microsoft’s boilerplate. Customers used to customizing their contracts will find that under MCA, you cannot easily add protective clauses. For instance, if your EA had a special provision for data residency or a cap on price increases, those likely won’t carry over. Microsoft can also update the MCA program terms periodically, and because it’s evergreen, you’re just subject to those updates (with notice). In effect, the power to change terms lies more with the vendor. This can introduce compliance or legal risks if the standard terms don’t meet your regulatory needs.
In summary, the MCA shifts more responsibility and risk to the customer.
You gain flexibility, but at the expense of assured discounts, locked-in pricing, and the negotiation leverage that came with big EAs. Next, we look at Microsoft’s strategy behind this shift and what it means for enterprises through 2025 and beyond.
MCA-E in 2025: Microsoft’s Strategy and What to Expect
By 2025, Microsoft’s intentions with the MCA for Enterprise (MCA-E) are clear: they want more customers on this modern model. Microsoft is nudging (or outright pushing) enterprise customers under ~2,400 seats onto MCA-E or the CSP program.
In fact, starting in 2025, Microsoft announced that many smaller EAs will not be renewed. Suppose an organization has an EA with only cloud subscriptions and under the 2,400-user mark (the typical EA “Level A” size).
In that case, Microsoft is directing them to transition to either a CSP agreement or an MCA-E when their EA term is up. This effectively makes the MCA-E a replacement for EA in the mid-market segment.
Why 2,400 seats? Historically, Level A of EA was 500+ users. Microsoft is raising the bar for who “qualifies” for an EA – focusing EAs on larger enterprises (often 2,400 or 5,000+ users, and especially those with some on-prem needs).
Smaller enterprises are seen as better fits for the agile MCA/CSP approach. It’s likely a cost-benefit move for Microsoft: large EAs (with big upfront commitments) are worth the custom negotiation effort, whereas managing hundreds of tiny EAs is less efficient.
So Microsoft’s EA replacement strategy is to phase out EAs for the low end and move those customers to the New Commerce models.
What about larger enterprises? In 2025, if you have well over 2,400 seats or complex requirements, the Enterprise Agreement still exists and can be the best option (especially if you need to cover on-prem and want locked pricing).
However, Microsoft is making EAs less attractive to some by reducing discounts for lower tiers and emphasizing the “flexibility” of MCA.
Over the next 2–3 years, expect Microsoft to continue raising EA minimums and possibly incentivizing even big customers to consider MCA-E – particularly if those customers are fully cloud and want more consumption-based arrangements.
We might see EAs become more of a niche (for the very largest or those with legacy needs), while MCA-E becomes the standard for most others by the late 2020s.
Microsoft’s Motives:
From a skeptical lens, Microsoft’s push to an evergreen subscription model is motivated by revenue consistency and growth. An MCA keeps customers always in-cycle, reduces the chances of a big competitive re-bid at renewal, and lets Microsoft adjust pricing more frequently. It also simplifies Microsoft’s internal operations (fewer custom contracts, fewer partners to pay out).
Microsoft frames it as “reducing complexity” and aligning with cloud consumption trends – which is partially true, but customers should recognize the power shift. The vendor gains flexibility to change terms and prices, and the customer carries more of the burden to manage their licenses proactively.
What to expect by the end of 2025: Many enterprises in the 500–2,400 seat range will have made or planned their transition to MCA or CSP. Microsoft will introduce more incentives (or pressures) to move the remaining holdouts.
New product offers may even be made exclusive or easier on MCA (for instance, certain Azure plans or promotional pricing might favor MCA signers).
By 2026, the threshold for EA eligibility could rise further, and Microsoft might start to position MCA-E as viable even for larger organizations if they’re cloud-only.
Enterprises should thus plan for a future where MCA-style agreements are the norm and ensure they are prepared to negotiate and manage under that model.
Negotiation and Adaptation Strategies for MCA
If you find your organization moving to an MCA (by choice or by necessity), it’s crucial to adjust your approach to licensing management and vendor negotiation.
Here are practical strategies to make the best of the MCA model:
- Secure Price Protections: While the standard MCA doesn’t lock prices long-term, you can negotiate some price protection. For example, ask Microsoft to cap price increases on key subscriptions for a set period (e.g., no more than X% increase per year for 3 years on product Y). Alternatively, consider committing to a multi-year subscription term for critical licenses under the MCA. Microsoft offers 1-year and 3-year term options on certain services, even within the MCA – a 3-year term could lock the rate (though you then sacrifice some flexibility). During your transition negotiations, explicitly seek assurances on pricing to avoid unwelcome surprises.
- Negotiate Enterprise Discounts or Credits: Just because MCA is transactional doesn’t mean you can’t get a deal. Push for discounts if you are a sizable customer. Microsoft might not have automatic volume tiers, but for a large purchase (hundreds or thousands of seats of a service, or big Azure spend) you should lobby for a custom discount. Also, leverage any transition as an opportunity to get one-time credits or funding. For instance, ask for an Azure consumption credit to ease the move, or request that Microsoft provide some free months of a new service. They may be willing to sweeten the pot to get you onto the new agreement, especially if you have alternatives or are hesitant.
- Align Billing with Your Fiscal Strategy: Under MCA, you can often choose between monthly or annual billing for a given subscription. Plan your billing to suit your budget cycles. If you have stable headcount and want cost predictability, opt for annual billed subscriptions for core licenses (and you’ll avoid the 20% premium on purely month-to-month plans). For areas where you truly need month-to-month flexibility (e.g. project-based users or seasonal spikes), use monthly terms selectively. By balancing this, you can contain cost volatility. Also, set up co-termination where possible – aligning subscription end dates – so you don’t have hundreds of little renewals scattered across the calendar. This makes it easier to review and negotiate before renewal dates.
- Request Support & Migration Assistance: When negotiating the switch from an EA to MCA, ask Microsoft (or your partner) for migration support. This could include dedicated licensing specialists to help reassign licenses under the new agreement, or funding for a deployment project (e.g. if you’re moving on-prem workloads to Azure as part of the change). Additionally, since under MCA you might lose the easy access to Software Assurance benefits, consider negotiating free training vouchers, workshops, or consulting days to replace some of those benefits. Microsoft often has programs to assist customers in adopting new models – take advantage of those.
- Strengthen Internal License Governance: With the onus now on you to manage an evergreen contract, treat license management as an ongoing process. Adapt your internal processes: implement a monthly or quarterly review of Microsoft subscriptions in use, and involve finance or asset management teams to oversee spend. Establish approval workflows for adding new licenses or services under the MCA, to ensure that each addition is justified and optimized (maybe require a business case or check for unused licenses that could be reassigned first). Essentially, you need to create your own “true-up” rhythm – proactively rightsizing licenses regularly. Investing in a good Software Asset Management (SAM) tool or cloud cost management tool can pay off by identifying unused subscriptions or opportunities to downgrade plans, thus controlling costs under the dynamic MCA model.
- Benchmark Costs vs. EA: Before fully committing to an MCA, do a total cost of ownership (TCO) analysis. Model out your Microsoft spend under the EA (with its discounts and fixed commitment) versus under MCA pricing. Include projections for growth and potential price increases. This will highlight if MCA will significantly raise your costs. If it does, use that data in discussions with Microsoft – it strengthens your case to demand discounts or reconsider aspects of the deal. Continuously benchmarking prices (what you pay per license vs. market or vs. your old EA unit prices) is wise. If you see costs climbing, engage Microsoft or your partner early to find optimizations or alternate licensing options.
By taking these steps, enterprises can adapt to Microsoft’s “evergreen” licensing world more safely. The key is to be proactive: don’t treat an MCA as “set-and-forget.”
Treat it as a living agreement that you need to manage and negotiate just as actively as an EA, albeit in smaller pieces rather than one big event.
Comparison Table: EA vs CSP vs MPSA
To put everything in perspective, here’s a side-by-side comparison of the Enterprise Agreement, the Cloud Solution Provider program, and the Microsoft Products & Services Agreement.
(The MCA-E is Microsoft’s direct analog to CSP for enterprises, so it aligns closely with CSP in flexibility.
MPSA represents a volume licensing option for buying licenses without an EA.)
| Feature | Enterprise Agreement (EA) | Cloud Solution Provider (CSP / MCA-E) | Microsoft Products & Services Agreement (MPSA) |
|---|---|---|---|
| Term & Commitment | 3-year fixed term contract (can renew or renegotiate at end of term). Requires minimum 500+ seats (practically 2,400+ in 2025 for new EAs). | No fixed term for the overall agreement. Purchase subscriptions with monthly or 1-year/3-year terms under an evergreen contract (MCA-E if direct). No minimum seat requirement (any size can use CSP/MCA). | No fixed term contract. Open-ended agreement used for transactional purchases. Remains active as long as you keep buying (was intended to replace Select Plus). No minimum seats or commitments. |
| Pricing & Discounts | Volume-tiered pricing with significant discounts (Level A-D pricing based on quantity). Prices are locked for 3 years once set, protecting against increases. Negotiation can yield custom discounts beyond standard tiers. | Generally list price or small discounts. No automatic volume discounts; pricing is per current MSRP unless negotiated. Partners can give slight discounts in CSP (or bundle services). Each subscription renews at then-current price (e.g. annually), so prices can change over time. Microsoft may offer ad-hoc discounts for large commitments (especially Azure consumption) under MCA-E, but not guaranteed or standardized. | Some volume discount via points system if you purchase enough licenses/services over time. Otherwise close to list pricing on a per-order basis. You can opt to include Software Assurance at an extra cost for each license. No built-in price lock – each order is at the price at that time. |
| Flexibility | Low flexibility during term: commit upfront to licenses for full term. Can only increase licenses (true-up) during the term, and can’t reduce until renewal (except limited subscription reductions at anniversary by prior agreement). Great for stable environments, but inflexible if you need to scale down. | High flexibility: can adjust license counts frequently. Monthly subscriptions allow true down every month; annual subscriptions lock you for a year but you can choose not to renew or reduce at that point. Able to mix-and-match products easily, and add new services at any time. Ideal for changing needs or growth spurts. | Medium flexibility: You buy what you need when you need it. No contract saying you must maintain a certain number of licenses. You can purchase licenses or cloud subscriptions one-off via the portal. However, it’s transactional – there’s no month-to-month adjustment of a given purchase (each order is a fixed quantity, though you could later order more or let subscriptions lapse). Good for a la carte purchasing but not usage-based scaling. |
| Negotiation Leverage | High: Because of large upfront commitment and renewal cycles, customers have leverage to negotiate custom terms, special pricing, and concessions. Microsoft field reps work with you and there’s room to tailor the deal (especially for big enterprises). | Limited: Standard agreement terms with little alteration. Pricing negotiation is possible for large volumes (especially via a partner who might reduce their margin or Microsoft offering promo discounts), but generally each purchase is at standard rates. Less leverage without a big renewal event – negotiation tends to be piecemeal. | Moderate: MPSA is somewhat transactional, but enterprise buyers can get better pricing with volume (by reaching higher point levels or during large orders). However, since there’s no long-term commitment, Microsoft isn’t “locked in” either – leverage for custom terms is limited. You mainly negotiate on pricing if your volume is significant. |
| Best For | Large, stable organizations (especially 2400+ seats) that value price protection and have predictable needs. Also those with hybrid environments (mix of cloud and on-prem) that want one umbrella agreement and Software Assurance benefits. An EA shines when you can fully utilize its discounts and need firm budgeting for multiple years. | Mid-size and agile organizations that are cloud-first or rapidly changing. Also suitable for any size that doesn’t qualify for EA or finds EA too rigid. Great for companies that want subscription “evergreen” licensing directly with Microsoft (MCA-E) or through a partner (CSP) with maximum flexibility to scale up/down services. If you prioritize agility over long-term cost lock-in, this is the route. | Organizations with specific needs or uncertain consumption, who want to buy licenses as needed without a commitment. Often used alongside other agreements to purchase on-premises licenses or small cloud sets. Good for companies phasing out legacy systems (so not entering a long EA) or those who didn’t meet EA minimums and prefer direct purchasing instead of CSP. Also a fallback to maintain Software Assurance on prem products outside an EA. |
(Note: MCA-E is Microsoft’s direct enterprise option that aligns with CSP in terms of flexibility, but with direct billing. We grouped it with CSP above since both follow the New Commerce subscription model.)
Checklist: How to Prepare for MCA
If you anticipate transitioning from an EA to an MCA (or are considering MCA for a new agreement), use this checklist to ensure you’re prepared:
- 1. Benchmark EA vs. MCA Costs: Calculate what your current EA costs (per product/user) and project what the same usage would cost under MCA pricing. Identify any major cost increases so you know where to focus negotiations or optimizations.
- 2. Identify Needed Flexibility: Assess where flexibility adds value in your organization and where it doesn’t. For example, seasonal contractor licenses or pilot projects benefit from monthly terms (MCA’s strength). In contrast, core staff Office 365 licenses might be stable (and could be on annual terms to save money). Knowing this helps you plan which subscriptions to keep in the short term versus the long term under MCA.
- 3. Push for Price Protections in Writing: Don’t proceed without seeking some price guarantees. Ask Microsoft to document any promised discounts, caps on price increases, or special terms as part of your MCA enrollment or in a side agreement. Verbal assurances aren’t enough – get it in writing, even if it’s an email or an amendment.
- 4. Update License Management Processes: Shift your IT asset management mindset from one-time EA true-up reconciliations to continuous license governance. Assign a team or owner to review Microsoft license usage regularly. Implement processes to reclaim licenses not in use and to approve new license acquisitions. Basically, tighten your internal controls to avoid over-purchasing in the free-flow world of MCA.
- 5. Plan for On-Premises Needs: Make a plan for any on-prem software you still use. If those were covered under your EA (with SA benefits), decide how you’ll handle them moving forward. Will you transition them to cloud alternatives? Or keep them via an MPSA or other agreement? Don’t let those fall through the cracks, as they won’t be included in MCA. Ensuring continuity for items such as Windows Server, SQL Server, or Office Pro licenses (if still required) is crucial to avoid compliance issues.
- 6. Secure Migration Support or Credits: When negotiating or agreeing to move to MCA, ask Microsoft (or your partner) for transition support. This could mean free advisory hours to set up your new MCA portal and move licenses, or perhaps some funding (credits) to offset any double-coverage or inefficiencies during the switch. Microsoft often provides deployment planning services or funding when customers adopt new models – leverage that to ease the change.
By following this checklist, you’ll be in a stronger position to successfully adapt to the MCA model without unnecessary cost overruns or compliance headaches.
FAQ: Microsoft MCA vs EA
Q1: Is the Microsoft Customer Agreement (MCA) replacing the Enterprise Agreement (EA) for all customers?
A1: Not for everyone yet. Microsoft is initially targeting smaller enterprise customers (generally <2,400 seats) by phasing out their EAs and moving them to MCA or CSP arrangements. Larger organizations can still renew EAs in 2025, especially if they have on-premises needs or thousands of users. Over time, Microsoft may expand MCA to more segments. Still, for now, EAs remain in place for big enterprises – MCA is effectively replacing EAs in the mid-market and for purely cloud-focused smaller enterprises first.
Q2: Does the MCA offer volume discounts like an EA does?
A2: No, not by default. The MCA does not have the built-in tiered volume discount levels that an EA has. Pricing under MCA is typically at list price. However, enterprises can negotiate some discounts or receive incentives for large commitments (e.g., a discount on 5,000 Microsoft 365 licenses or an Azure spend commitment deal). In general, expect to pay closer to standard prices under MCA unless you have clout to broker a special deal. By contrast, an EA automatically gave volume price breaks as you enrolled more licenses.
Q3: Can we lock pricing for multiple years under an MCA like we did in an EA?
A3: Not automatically. By default, MCA subscriptions will renew at whatever the current price is at the time of renewal. However, you have a couple of options to achieve some price lock: (1) Negotiate a price cap or extended price guarantee with Microsoft as part of your deal (e.g. they agree not to raise your Office 365 price for 2 years), or (2) use longer-term subscription offers within MCA – for instance, Microsoft offers a 3-year term on certain Azure plans or even Microsoft 365 licenses. If you commit to a 3-year subscription under the MCA, the price for those licenses can be fixed during that term. Keep in mind, committing to longer terms reduces flexibility, so it’s a trade-off much like an EA but on a smaller scale.
Q4: Does moving to MCA eliminate the need for true-ups, and how does that impact costs?
A4: Yes, MCA has no annual true-up process – but that means you pay for changes as you go. On one hand, you won’t have an annual lump sum true-up bill (which could be big if you grew a lot in a year). On the other hand, every time you add a user or a new service, your bill increases immediately. If you remove a user, you stop paying for them (after any pre-paid term ends). The impact is that costs under MCA are more continuous and potentially more granular. You won’t get a “grace period” of using licenses for several months before paying (like you effectively did with an EA until true-up). This is great for avoiding upfront overpayment, but it requires vigilant monitoring because costs will rise dynamically with usage. Over a long period, organizations that grew significantly may actually pay more under MCA because they started paying for new licenses right away instead of after a true-up cycle – but they also avoid paying for licenses that they drop quickly. It’s a more elastic cost model.
Q5: Is the MCA the same as buying through a CSP partner?
A5: It’s similar in flexibility, but the channel is different. MCA (specifically MCA-E for enterprise) means you’re buying directly from Microsoft under Microsoft’s agreement. CSP means you’re buying through a Cloud Solution Provider partner, who resells Microsoft subscriptions to you (and often provides support). Both MCA and CSP are part of Microsoft’s New Commerce Experience and offer monthly/annual subscriptions, no long-term EA contract, etc. The difference comes down to who you transact with and who manages the relationship. Under MCA-E, Microsoft bills you, and you interact with Microsoft’s sales team. Under CSP, the partner bills you (they, in turn, have their own agreement with Microsoft). CSP might offer more personalized service or bundle other vendor products, whereas MCA-E gives you a direct line to Microsoft. Also, pricing can differ slightly – a CSP might offer a small discount or value-added services, but they also might charge a margin. In summary: MCA and CSP achieve the same result (flexible, subscription-based licensing) via two routes – one direct, one via a partner. Many enterprises with fewer than 2,400 seats are being advised to use one of these routes as EAs are phased out.
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