Microsoft EA Negotiations FAQs
Q: What are the best practices for negotiating a new Microsoft EA?
A: Best practices include:
- Start early: Engage Microsoft and your LSP well before your desired signing date (preferably 6-12 months prior). This gives time for proper analysis, internal alignment, and multiple rounds of negotiation.
- Gather detailed data: Come to the table with facts—current license deployment, usage stats, growth projections, and alternative costings. Solid data lends credibility to your requests and counters.
- Define your objectives: Know what you want from the deal (e.g., a certain budget limit, inclusion of a new product, more flexibility). Prioritize your must-haves vs nice-to-haves so you can focus on negotiations.
- Benchmark and leverage peers: If possible, find out what similar companies negotiated (through advisors or networking). While NDAs often prevent sharing actual pricing, you can get hints. Knowing that “Company X got 25% off” can bolster your case that you deserve similar.
- Consider the total relationship: Microsoft looks at your total potential value. Mention that you’re also evaluating Azure vs. AWS. Let them know if you plan to deploy new Microsoft solutions (Dynamics, Power Platform). These factors can encourage Microsoft to offer a better deal to win or keep those workloads.
- Use quarter/year-end timing if possible: As discussed, aligning final negotiations with Microsoft’s fiscal year or quarter-end can provide extra leverage. They may be more willing to concede on price to book the deal by a certain date.
- Ask for everything (within reason): Don’t be shy about asking for concessions – whether it’s more discount, payment terms, adding a benefit, etc. The worst they can say is no, and often, they’ll come back with something in between. If you don’t ask, you won’t get it.
- Maintain a positive tone: Negotiations can be tough, but keeping it professional and aiming for a win-win sets a collaborative tone. Microsoft is your partner, and you’ll work with them post-signature, so negotiate hard but fairly. A little goodwill can sometimes result in extra perks (like more free support hours thrown in) because the account team wants you happy.
- Get it in writing: Ensure all negotiated points are captured in the paperwork. If the sales team promises something verbally (“we’ll give you 100 free Azure hours”), make sure it’s written into the contract or an official email/quote.
Following these practices can secure a more favorable EA that aligns with your organization’s needs and budget rather than just accepting the initial offer.
Read Microsoft EA Cost Optimization FAQs.
Q: How can we negotiate better pricing or discounts in an EA?
A: To secure better pricing/discounts:
- Emphasize your volume and growth: Make your purchase’s scale and future growth clear. Microsoft is more inclined to give discounts for larger volumes and to keep a growing customer. Use phrases like “We plan to standardize 100% on Microsoft 365, which is why we need the most competitive pricing per user.”
- Show competitive alternatives: If applicable, mention you are evaluating alternatives (Google, AWS, etc.) for some services. Without directly threatening, you can say, “Of course, we have options, but we’d prefer to stay with Microsoft if the commercial terms are favorable.” This puts pressure on them to win your business on price, not just product.
- Ask for a match of the best pricing band: If you’re just short of a higher discount tier, ask if they can extend that tier’s pricing to you (as a courtesy or in anticipation of growth). Sometimes, framing it as “If you can meet Level B pricing, we’re ready to sign now” can do the trick, especially if it’s not far off.
- Leverage enterprise-wide adoption: If you commit to deploying a certain Microsoft technology broadly, use that as leverage. For example, “We’ll move our phone system to Teams (500 lines) if we can get a significant discount on the Teams Phone licenses.” This gives Microsoft additional business and justifies a discount.
- Play reseller quotes against each other: As mentioned earlier, get quotes from multiple LSPs. Even though Microsoft sets the baseline price, resellers can be influenced and offer rebates or services. You can use one quote to prompt another to improve (“Reseller A offered us a higher discount on Azure; can you match it?”). Eventually, all quotes will likely converge at Microsoft’s best-authorized discount, and you’ll know you got the best price.
- Bundle for bargaining: If you purchase ancillary things like Microsoft consulting services or support, you could negotiate those in a package. For instance, “We’ll sign the EA now and renew Premier Support for three years, but we need an extra 5% off the EA licenses.” Microsoft might consider the total revenue and agree.
Overall, be respectfully bold in negotiations – Microsoft expects customers to push back on price. If you have a target number or percentage in mind (grounded in some reality), propose it. You might not get exactly that, but it anchors the discussion and often yields a compromise closer to your goal than if you accepted the initial numbers.
Q: When is the best time to negotiate our EA (e.g., fiscal year-end considerations)?
A: As discussed, aligning with Microsoft’s fiscal year-end (June 30) can be advantageous. The best time is usually late in Microsoft’s Q4 (May/June) when they are eager to close deals. That said, you need to balance this with your schedule – don’t rush into a bad deal just to hit June. But if you can plan negotiations such that final approval happens in June, you might find Microsoft more flexible.
Also, consider your company’s fiscal year or budgeting timeline: you want the negotiation done in time to secure budget approval. If your fiscal starts January 1 and you need signed contracts by then, you might negotiate in Microsoft’s Q2 (Oct-Dec). In that case, leverage their quarter-end (December) or mid-year push if possible. Microsoft often has mid-year promotions if sales are behind.
In practice, many companies aim to negotiate in Microsoft’s Q3 (Jan-Mar) or early Q4 (Apr-May) so that everything is hammered out by the end of Q4 (June). June is often the month where deals get their final “sweeteners” from Microsoft higher-ups if they need to be signed.
If your EA doesn’t align with that, it’s not the end of the world – just be mindful that negotiating in August might be a bit more drawn out because teams are less pressured (and sometimes on summer vacation!). If that happens, you could ask if they can extend your current EA to June and align renewal. Sometimes, companies intentionally align with Microsoft’s FY cycle for convenience and leverage.
So, in summary, ideally, negotiate to close at quarter-end, especially year-end. If not, understand where you are in Microsoft’s cycle and adjust tactics (e.g., if it’s early in Microsoft’s year, you might need to provide more reason for them to give maximum discounts since they’re less desperate at that point).
Q: What information should we gather before negotiating with Microsoft?
A: Gather:
- Current deployment and usage: Know exactly what Microsoft products you use and how many of each. For example, “We have 800 Office 365 E3 users, 200 E5 users; 50 servers running Windows Server Standard, etc.” and how heavily they’re used (if relevant).
- License entitlements and costs: What do you currently own, and what do you pay? You should have copies of your current EA order, pricing, and special terms. Understand your effective price per license for key items in the last EA to benchmark.
- Future requirements: Work with IT and business units to forecast the next three years. Are you planning to hire 200 people? Open new offices? Undertake a cloud migration requiring new licenses (e.g., moving on-prem Skype to Teams)? Document these plans because they directly influence what you need in the EA.
- Alternatives and competitive quotes: If you are considering alternatives (even partially, like AWS for some workloads or Google for some users), gather cost comparisons for those. You don’t necessarily share the detailed numbers with Microsoft, but you want to know the value of your BATNA (Best Alternative To a Negotiated Agreement).
- Internal budget and constraints: Know your budget ceiling or any approval thresholds. Knowing the CFO will not approve more than $X is key information—it sets your negotiation guardrail.
- Past issues/pain points: Review the last EA term – did you have any compliance scares? Overages? Underutilization? Knowing these helps you negotiate terms or support to address them.
Essentially, come to negotiations as prepared (or more) than the Microsoft sales team. That levels the playing field and often allows you to drive the conversation rather than letting Microsoft steer it.
Q: How do we leverage our organization’s size or spending to get better terms?
A: Emphasize the total value of your account to Microsoft. If you’re a large enterprise, make sure Microsoft sees the big picture: this EA’s revenue and all the other ways you engage with Microsoft (Azure usage, Dynamics, future projects). Remind them of your global footprint or influence in your industry (sometimes Microsoft cares about having marquee customers as references – they might offer better terms if you potentially act as a positive reference or case study down the line).
Use statements like, “We’re committing our entire company to the Microsoft platform.” – this signals that keeping you happy yields long-term revenue for them, justifying a good deal now. If you have subsidiaries or sister companies not yet on the EA, mention that a successful deal now could lead to expanding the agreement later (carrot approach).
If your spending is huge, you can also politely push escalation. Sometimes, you may request a meeting with a Microsoft executive (like a regional sales director) to ensure your needs are heard. Big customers can get that audience, leading to extra discretionary discounts or concessions because higher-ups have more authority to approve those for strategic accounts.
Also, if you are financially strong and can commit to multiyear or larger upfront orders, use this: “We’re prepared to commit to a 3-year volume of X (or consider a longer term)—in exchange, we need pricing that reflects our importance as one of your largest customers.” It says, “We’ll give Microsoft what they want (big commitment), but we expect VIP pricing.”
Another angle: if you are in an industry that Microsoft is keen to penetrate or maintain (like government, education, Fortune 500), realize your brand size might make them flexible. They often fight harder not to lose big logos. You can leverage that tacitly without being arrogant by indicating you’re evaluating everything and need an exceptional deal to present to your board.
So, leveraging size is about painting the picture of a significant, long-term partnership – Microsoft should feel, “this is a must-win/keep customer.” When they feel that, they’ll pull out more stops in pricing and terms.
Q: What are common mistakes to avoid during EA negotiations?
A: Mistakes to avoid:
- Insufficient preparation: As noted, going in without knowing your needs or usage can lead to overbuying or accepting terms that aren’t ideal. If you don’t know, for example, how many SQL licenses you need, you might accept Microsoft’s suggestion (which might be higher). Avoid this by doing your homework.
- Revealing your budget or bottom line too early: If you tell Microsoft, “I have $1M to spend,” guess what the quote will likely be? About $1M. Better to get them to propose pricing first and negotiate down from there rather than anchoring the discussion at your max. You maintain leverage by not putting all your cards on the table.
- Over-focusing on unit price vs. total solution: Sometimes,a slightly higher unit price with more value (like additional services or flexibility) could be better overall. Don’t get so tunnel-visioned on discount percentage that you miss creative deals (for example, maybe Microsoft can’t go lower on price, but they throw in $100K of consulting – that’s a win, too).
- Ignoring future needs: Only negotiating for the immediate term and not considering what you might need 1-2 years in can be a mistake. If you know you’ll adopt something later, negotiate provisions or pricing for it now (or at least put in a framework for adding it).
- Signing without executive review: If the negotiation team (say IT and procurement) negotiates in a silo and signs off without CFO/legal final review, you might miss something (like a liability clause or an automatic price uplift in year 4 if you extended it, etc.). Always get final approval from the appropriate higher-ups.
- Not using escalation when needed: Sometimes, a sales rep might hit their limit. If you feel the deal isn’t where it should be, don’t be afraid to (politely) escalate – involve their manager or have your exec call their exec. The mistake is either getting hostile (counterproductive) or giving up without trying escalation. Often, an infusion of higher-level discussion can break a deadlock.
- Signing too early out of eagerness: If you get a quote early that seems “okay,” it might be a mistake to just sign without pushing a bit more. Microsoft often has some wiggle room. Many customers who didn’t negotiate wondered later if they could have gotten a better deal. It’s almost always worth a try to ask for an improvement; the worst case is they say this is best, and you sign the same deal you would have anyway.
Avoiding these mistakes ensures you don’t leave money or favorable terms on the table and enter the EA in a strong position.
Q: Can we negotiate terms other than price (payment terms, contractual clauses)?
A: Yes. While pricing is a big focus, you can negotiate other aspects:
- Payment terms: By default, EA payments are annual upfront each year. But you could negotiate, for example, semi-annual payments or perhaps delay the first payment a bit if your fiscal year requires it. Sometimes, public sector or cash-sensitive orgs negotiate different schedules. Microsoft might allow it, especially if it doesn’t affect the total revenue recognized. You could also discuss currency (if you operate in multiple regions, you might want to pay in a certain currency to avoid exchange risk).
- Contractual protections: If you have legal concerns (liability caps, data privacy, etc.), you can negotiate those clauses. Microsoft has standard contracts, but they have an amendments library for large deals. For instance, adding a clause that allows license transfer to an affiliate or clarifying usage rights in certain scenarios. It’s worth reviewing the fine print to ensure it aligns with your risk tolerance and negotiating if not.
- Renewal flexibility: While rare, you could try to insert an option to terminate early or to adjust scope mid-term under certain conditions (like a merger or divestiture). Microsoft doesn’t readily allow early termination, but in a merger situation, they might allow a carve-out for a divested entity to continue using licenses for a period (to support the divestiture). These are terms to negotiate if you foresee such events.
- True-down rights: In an EAS, you have some ability to reduce licenses at the anniversary. In a perpetual EA, you don’t. You might negotiate an option to convert to a subscription or to drop a certain percentage at a certain point, but that’s not standard. However, if that’s critical (e.g., you know you will downsize in year 2), bring it up – maybe they’ll suggest doing a 2-year EA or an EAS.
- Addition of new technology: If you know Microsoft will release a new product you’re interested in next year, you can negotiate a clause to get access to under similar discount terms. It’s not a contract clause; an understanding is sometimes noted in writing.
Microsoft’s reps might initially say, “Those terms are fixed by policy,” but many things are discussable for a significant deal. They have some latitude, especially if it’s a large or unique scenario. Engage your legal counsel to mark up the MS agreement with requests—Microsoft won’t agree to all, but you might get some concessions. Non-price terms can sometimes be as important as price in ensuring the EA fits your business needs.
Q: How to handle Microsoft’s push for certain products (like upgrading to E5 or adopting Azure) during negotiation?
A: Microsoft will often try to upsell or cross-sell – e.g., “Have you considered Microsoft 365 E5? It’d give you advanced security.” or “Why not move more to Azure?” They do this because it’s strategic for them. To handle it:
- Evaluate the value: Don’t dismiss it out of hand – maybe the product benefits you. If it does, you can use your interest as leverage (“We might consider E5 for all users, but only if the cost uplift is minimal”). Microsoft might then offer a strong deal on E5 to get you to upgrade (they often bundle promotions for E5).
- Use it as a bargaining chip: If it’s not something you were planning, you can trade consideration of it for concessions. “If we were to adopt Azure as part of this EA, we’d need a larger discount on our licenses to free budget for that Azure migration.” This frames it as a give-and-take. They get what they want (you adopt a new product X), and you get something you want (lower cost).
- Polite declination or deferral: If you don’t need what they’re pushing, you can decline it without souring the negotiation. For example, “At this time, Product X is not a priority for us – our focus is optimizing what we have. Let’s table that and perhaps revisit in a year.” Keep steering back to your agenda.
In summary, handle Microsoft’s pushes by either leveraging them if they align with your goals or firmly, respectfully setting them aside if they don’t. Never let their agenda override yours unless it genuinely brings value to your org.
Q: Should we involve a third-party consultant in EA negotiations?
A: A third-party licensing consultant can be extremely beneficial if you lack in-house expertise or deal with a very large/complex EA. They know Microsoft’s playbook, typical discount ranges, and areas where you can negotiate more.
They can quickly analyze your situation and tell you, “You’re over-licensed here, under-licensed there. Microsoft usually gives X% on this product to a customer your size.” This can save you money or help you avoid mistakes.
They can also help with the negotiation strategy itself: sometimes they even take lead in talks or prepare counter-proposals for you. A third-party licensing consultant can be extremely beneficial if you lack in-house expertise or deal with a large/complex EA.
Conversely, consultants charge fees (flat or a percentage of savings). You have to ensure the expected savings outweigh those costs. Often, for multi-million dollar EAs, they do – a 5% improvement on a $10M deal is $500k saved, which likely covers the consultant and then some.
For smaller EAs (say a few hundred thousand), you might not hire a full consultant but still use free resources or minor advisory services.
Consider at least a one-time consultation. Many firms offer a licensing optimization assessment for a fixed fee. That report can guide your negotiation. Another advantage is that it provides external justification for your asks (“Our independent analysis shows we only need 800 licenses, not 1000”).
Also, some organizations worry involving a consultant might sour Microsoft (fear that it signals distrust). Microsoft is used to it; they deal with consultants often. Just ensure if a consultant communicates with Microsoft on your behalf, they represent your interests firmly but professionally (most do).
Overall, suppose you feel unsure about the intricacies of Microsoft licensing or how far you can push. In that case, a consultant can level the playing field between you and Microsoft’s seasoned sales negotiators. Many success stories (especially of big savings) involve having expert negotiators on the customer side. It’s like having a skilled attorney in a legal case – not always needed, but very valuable when stakes are high.
Q: How flexible are Microsoft’s EA terms – can we customize them via negotiation?
A: Somewhat flexible. Microsoft has a standard EA contract, but for large customers, they often include amendments to address specific needs. You usually can’t change core program rules (like you can’t say, “I want to be able to reduce licenses mid-term” in a perpetual EA – that’s against program fundamentals). Still, you can negotiate nuances, e.g., modified definitions of “Affiliate” to cover a unique corporate structure, add a clause for extended use rights during a divestiture, etc.
Microsoft likely won’t change pricing mid-term or allow opt-out. Still, they may allow a transfer of the agreement to a new entity if you split or a clause that “if we spin-off a division, they can continue using the software for X months under our EA” (this kind of thing has been done in practice).
Also, if you have compliance concerns, you can negotiate audit procedures (some large customers have gotten Microsoft to agree to certain audit notice periods or the use of internal audit results).
While the paper may seem boilerplate, Microsoft’s lawyers and sales teams have pre-approved amendment templates for common requests. So it’s worth asking for what matters to you. For example:
- A government might need a non-appropriation clause (if funds aren’t allocated, they can exit). Microsoft often has an amendment for that.
- A company might want to ensure they can permanently use their Office 365 data offline if they leave the cloud – they might negotiate a clause about data extract rights.
In summary, non-financial terms have some give for negotiation, especially if your legal team flags something as unacceptable. Microsoft will often work with you within reason. They won’t rewrite the whole contract to be one-sided in your favor, but they do value pragmatic adjustments to get your signature.
Q: Is getting quotes from multiple licensing partners for the EA beneficial?
A: Yes, it can be. Even though Microsoft sets the product pricing, different LSPs (resellers) may offer different incentives or services to win your business. Some might offer an additional discount by cutting into their margin, a rebate on future services, or offer free SAM tools or extra support as a value-add. By getting multiple quotes, you introduce competition.
We often see that one LSP might offer a slightly better overall cost or package, which you can use as leverage with the one you prefer. For example, “We’d rather stay with LSP X due to our relationship, but LSP Y offered a deeper discount on Azure—can you match it?” The preferred LSP will often go to Microsoft or use their funds to match if they fear losing the deal.
Also, different LSPs have different levels of aggressiveness in negotiations with Microsoft. An experienced LSP might secure a concession from Microsoft that another did not think to request. Seeing multiple quotes can reveal if one got you a better deal on a certain component. You can then ask any LSP to match the best elements, so you end up with the best combination.
Remember to ensure all quotes are apples-to-apples in scope. And don’t let having multiple quotes slow down the process too much – set a deadline for final offers.
Resellers can also vary in the quality of ongoing support, so factor that in. Price isn’t everything. But initially, cast a net to see who offers what.
Important: Microsoft will know if multiple partners are quoting (because they must get pricing approved). That signals to Microsoft that you are cost-conscious and shopping around, making them more inclined to offer the maximum discount to the partner you lean towards to ensure you sign with them.
So, use competition to your advantage – just manage it carefully so it doesn’t become confusing. Ultimately, you pick one LSP, but the competitive process helps ensure the best deal possible.
Q: How can we leverage alternative options (like competing products or different license programs) in negotiations?
A: Use the existence of alternatives as a subtle bargaining chip. For example, if you are considering moving some workloads to Google or AWS or if you could use Open-Source solutions instead of some Microsoft components, make Microsoft aware that their deal needs to be compelling to keep or win those workloads.
You don’t want to come across as issuing threats, but you can say things like, “We are also evaluating Vendor X for this project; of course, if we can achieve our goals with Microsoft within budget, we’d prefer that continuity.” This lets them know there’s competition.
If a CSP (Cloud Solution Provider) program or other licensing routes would be cheaper for you given your scenario, you can even bring that up: “If we can’t get the flexibility/price we need in an EA, we may just go month-to-month via CSP for now.” Microsoft prefers you on an EA (for commitment and forecastability), which might nudge them to improve the EA offer.
However, be careful to keep it credible. Don’t claim you’ll switch all 10,000 users to Linux and LibreOffice unless you truly might – bluffing can backfire if they call it or if it sours the tone. But genuine evaluation of alternatives is fair game and often expected.
For instance, one company negotiating Office 365 price mentioned that Google Workspace was 20% cheaper for them. Microsoft then provided a discount or promotion that effectively narrowed that gap because they didn’t want to lose seats to Google.
Another angle: mention internal leadership’s stance. “Our CIO is keen to ensure we’re exploring all options, including staying on-premises or shifting to cloud providers that meet budget. Help me show them that Microsoft is the best value.” This puts Microsoft in a position to help you make the case for them.
Politely reminding Microsoft that you have choices puts constructive pressure on them to not take your business for granted and to work with you on pricing and terms.
