1. Programme Overview: EA and Open Value
How each programme works and the core distinction
The Microsoft Enterprise Agreement (EA) is a three-year volume licensing contract designed for large enterprises, typically 500+ users or devices. It bundles software and cloud services under one agreement with organisation-wide coverage, offers significant volume discounts and fixed pricing for the term, but requires a considerable upfront commitment to Microsoft products across the entire business.
Microsoft Open Value (OV) is a simpler volume licensing programme for small and mid-sized organisations, 5 to 499 users. It also spans three years but is tailored to lower volumes. Open Value allows annual payments and offers two modes: a perpetual licence model (owning the software after payment) and an Open Value Subscription model (lower yearly cost with licences rented during the term, plus the option to true-down annually).
💡 Core Distinction
EA is suited to large, centralised licensing needs with broad commitments and deep volume discounts. Open Value serves smaller-scale or specialised needs with more flexibility and lower entry requirements. The choice comes down to organisation size, complexity, and strategic direction, not which programme is inherently “better.”
2. Target Organisations and Eligibility
Size thresholds, discount tiers, and mid-market dynamics
| Factor | Enterprise Agreement | Open Value |
|---|---|---|
| Minimum size | 500+ users or devices (traditional threshold) | 5 licences minimum (practical range: 5-499 users) |
| Ideal for | Large global enterprises, organisations needing centralised licensing across affiliates/regions, entities wanting maximum volume discounts | SMBs, independent subsidiaries, regional offices, growing companies not yet at enterprise scale |
| Discount tiers | Level A (500+), Level B (2,400+), Level C (6,000+), Level D (15,000+). The more users, the greater the discount | No formal discount tiers. Modest pricing improvement for organisation-wide commitment |
| Sector eligibility | Commercial, government, education, non-profit | Commercial, government, education, non-profit |
| Mid-market trend | Microsoft has been steering sub-2,400-user organisations toward CSP or Microsoft Customer Agreements in recent years | Remains available and practical for organisations wanting volume licensing with on-premises rights |
The mid-market segment, 500 to 2,400 users, is where the EA vs Open Value decision gets genuinely complex. You technically qualify for an EA, but you are at the bottom of the discount tiers. Microsoft may push you toward CSP subscriptions instead. The critical analysis is comparing your three-year total cost under each model: an EA’s mandatory organisation-wide coverage for enterprise products versus Open Value’s ability to licence only what you actually need. For many mid-market organisations, the EA’s all-in requirement inflates costs if not everyone needs every product. We see enterprises save 15-25% simply by choosing the right programme structure.— Fredrik Filipsson, Co-Founder, Redress Compliance
3. Cost Structure and Pricing
Payment models, discounting, licence ownership, and shelfware risk
| Aspect | Enterprise Agreement (EA) | Open Value (OV) |
|---|---|---|
| Typical customer size | 500+ users (large enterprise) | 5-499 users (small to mid-size) |
| Agreement term | 3 years | 3 years |
| Upfront commitment | Must cover all “qualified” users/devices for chosen enterprise products (organisation-wide licensing) | Flexible scope. Can licence organisation-wide or just specific needs (no full enterprise mandate) |
| Payment structure | Three equal annual instalments | Three annual payments (or upfront lump sum) |
| Volume discounting | Yes. Tiered volume discounts (Levels A-D) plus negotiated enterprise discounts for large deals | Limited. Pricing is largely fixed. Small platform discount for standardising organisation-wide |
| Price protection | Yes. Per-unit pricing fixed for full term | Yes. For products under org-wide commitment or subscription, price is locked for term |
| Licence ownership | Perpetual licences in standard EA (you own software after term). No ownership under EA Subscription variant | Perpetual in standard Open Value. No ownership under Open Value Subscription (rental model) |
| True-up/adjustment | Annual true-up for added licences. Cannot reduce during term (except EA Subscription allows reduction) | Can add any time. OV Subscription allows reducing at each anniversary if user/device count drops |
| Software Assurance | Included by default (increases upfront cost but provides upgrade rights, training, and support benefits) | Optional in perpetual model (decide per product). Included automatically in OV Subscription |
| Negotiation flexibility | High. Enterprise deals involve direct negotiation with Microsoft for pricing, custom terms, and concessions | Low. Sold via resellers at published price list. Terms are standardised, limited discount room |
Microsoft Licensing Knowledge Hub
Comprehensive guides, comparison articles, and expert analysis covering all Microsoft licensing programmes: EA, Open Value, CSP, SPLA, and cloud transitions.
Visit Knowledge Hub →4. Commitment and Flexibility
Organisation-wide coverage, adding/removing licences, and contract complexity
Organisation-Wide Commitment
The EA is inherently an enterprise-wide agreement. You agree to licence all qualified users or devices for chosen “Enterprise Products”, typically Windows Enterprise OS, Microsoft 365 Apps (formerly Office Pro Plus), and Core CAL or Enterprise CAL suites. This all-in strategy simplifies compliance and maximises volume discounts, but you are paying for every user whether they fully utilise the software or not.
Open Value gives you a choice: opt for an organisation-wide Open Value (covering all PCs with certain base products to achieve platform pricing) or a non-organisation-wide Open Value where you only purchase licences for specific needs. A 300-user company could licence 300 copies of Office (organisation-wide for the platform discount) but only 50 copies of Visio for the specific users who need it.
Adding and Removing Licences
Both agreements allow adding licences mid-term. The critical difference is reduction flexibility. In a standard EA, you cannot reduce your licensing obligation until the EA renewal. You are locked in for the term. The exception: an Enterprise Subscription Agreement (where you do not own licences) allows reducing counts at the anniversary. Open Value Subscription also allows annual true-down, making it attractive for organisations with fluctuating headcount.
Contract Complexity
Managing an EA requires diligent planning: tracking licence consumption for yearly true-ups, understanding complex terms (licence transfers, device retirement, mergers), and preparing for renewal negotiations well in advance. Open Value agreements are much simpler documents, easier to administer for small deployments, but if a larger organisation ends up with multiple OV agreements across different units, management can become fragmented.
The flexibility question is increasingly important as organisations restructure, merge, and shift to hybrid work models. If your headcount is volatile or you are in the middle of a cloud migration, a subscription variant, either EA Subscription or Open Value Subscription, gives you the ability to true-down at each anniversary instead of paying for licences you no longer need. We have seen organisations save hundreds of thousands by switching from a standard EA to an EA Subscription model where their workforce was declining or consolidating.— Fredrik Filipsson, Co-Founder, Redress Compliance
5. Subscription Licensing: The Shift in Focus
EA subscriptions, Open Value Subscription, CSP, and perpetual vs subscription
Microsoft is heavily pushing subscription-based licensing across all customer segments, and this affects how organisations should evaluate EA vs Open Value in 2025 and beyond.
Enterprise Agreements and Subscriptions
Today’s EAs often centre on cloud subscriptions: Microsoft 365 E3/E5 plans, Azure commitments, and Dynamics 365 licences. The Enterprise Subscription Agreement variant means you “rent” on-premises software licences during the EA term instead of owning them. Lower upfront cost and the flexibility to reduce counts, but no perpetual rights at termination unless you renew or buy out. Microsoft provides pricing incentives for committing to cloud services in an EA, including Azure Hybrid Benefit to reuse on-premises licences in the cloud.
Open Value Subscription
This flavour of Open Value is explicitly subscription-based. You pay an annual fee, often 40-50% lower per year than purchasing outright, for the right to use the software during the term. At the end of the term, you have no licences unless you renew or exercise a buy-out option. OV Subscription inherently includes Software Assurance benefits. Microsoft has maintained Open Value Subscription even as it retired the old Open Licence programme, signalling that subscription models are the future for smaller customers.
The CSP Alternative
For organisations leaning heavily into cloud services, Microsoft’s Cloud Solution Provider (CSP) programme offers monthly flexibility. CSP can be an alternative to both EA and Open Value for cloud-only needs, but it does not include traditional Software Assurance benefits (such as downgrade rights or passive use rights for on-premises deployments). Organisations with hybrid needs typically still require EA or Open Value.
6. Negotiation and Contract Management
Preparation, scope, complexity, true-up management, and renewal strategy
| Factor | Enterprise Agreement | Open Value |
|---|---|---|
| Negotiation scope | Substantial. Direct negotiation with Microsoft for pricing, custom terms, concessions, transition rights, and amendments. EA pricing varies widely between companies depending on size and negotiation skill | Minimal. Sold via resellers at published price list. Small variations from reseller margin or promotions. Terms are standardised “click-accept” template |
| Preparation lead time | Start 6-12 months before renewal. Assess licence needs, identify shelfware to cut, benchmark fair discounts, engage internal stakeholders (finance, procurement, legal) | Minimal. Request quotes from multiple resellers, select products, sign agreement. Focus on optimising product selection rather than negotiating base prices |
| Contract complexity | High. 30+ page contract plus product terms, may require legal review for non-standard clauses. Negotiate unit prices AND legal terms (liability, renewal options, licence transfer rights) | Low. Standard template agreement, minimal administrative overhead |
| True-up management | Annual true-up formality. Must accurately count new deployments and users, report to Microsoft, pay pro-rated cost at agreed prices | No formal true-up. Order new licences as needed. OV Subscription requires annual PC count verification for adjustments |
| Renewal strategy | Renewal is essentially negotiating a new EA from scratch. Opportunity to renegotiate terms, reduce scope, adjust models. Non-standard rights from prior term may not carry forward automatically | Straightforward. Decide to start new agreement, exercise buy-out (if subscription), or let lapse. Plan transition to EA if organisation has grown beyond 500 users |
Read the complete guide: Microsoft Contract Terms and Negotiation.
Microsoft EA Renewal Case Studies
Real-world examples of how global enterprises have optimised their Microsoft Enterprise Agreement renewals, cutting costs, eliminating shelfware, and securing better terms.
View Case Studies →7. Choosing the Right Agreement
Scenario-based decision framework
| Scenario | Recommended Programme | Rationale |
|---|---|---|
| Large global enterprise (5,000+ users) | Enterprise Agreement | Maximum volume discounts, centralised management, ability to negotiate global pricing across subsidiaries and regions. At this scale, Open Value would be more expensive per licence and impractical to administer |
| Mid-sized company (~800 users) | Evaluate both EA and Open Value/CSP | Eligible for EA (Level A pricing), but at the low end of discount tiers. Compare three-year total cost: EA’s mandatory all-user coverage versus Open Value’s selective licensing. The EA may inflate costs if not all 800 users need every enterprise product |
| Small organisation (50-100 users) | Open Value or CSP | Below EA threshold. Open Value provides volume licensing benefits and on-premises rights. CSP offers monthly flexibility for cloud-only needs. OV Subscription gives lowest barrier to entry with annual true-down |
| Enterprise with acquired subsidiary | Open Value temporarily, fold into EA at renewal | New 200-person acquisition not yet integrated into parent’s EA. Open Value provides immediate licence coverage. At EA renewal, incorporate the subsidiary for consolidated pricing and management |
| Cloud-first large enterprise | EA with cloud focus | EA can bundle Microsoft 365, Azure commitments, and Dynamics 365 with negotiated incentive pricing. Azure Hybrid Benefit leverages existing on-premises licences. Account support and SLAs are stronger under EA |
| Fluctuating headcount | EA Subscription or OV Subscription | Subscription variants allow annual true-down. Standard EA and standard OV lock you into initial quantities for the term. Subscription models prevent paying for licences you no longer need |
The question is not which programme is universally better. It is which one fits your organisation right now. A well-utilised EA can reduce your average price per licence by 30-40% compared to Open Value pricing. But a poorly sized EA, where you are paying for 500 licences of products that only 200 people use, is more expensive than buying 200 licences through Open Value. The analysis is always: what is the three-year total cost of ownership under each model, given your actual usage patterns? That is the number that determines the right programme.— Fredrik Filipsson, Co-Founder, Redress Compliance
8. Recommendations
Practical guidance for ITAM professionals managing Microsoft licensing
| Recommendation | Detail |
|---|---|
| Self-audit your licensing needs | Before entering or renewing any agreement, inventory current Microsoft software usage. This prevents over-licensing in an EA and identifies which products genuinely need enterprise-wide coverage |
| Factor in growth and cloud plans | If expecting significant growth or cloud migration, lean toward an agreement that scales. A fast-growing company nearing 500 seats might negotiate an EA early to lock pricing. A static company saves money with Open Value |
| Use subscription flexibility | If choosing EA Subscription or OV Subscription, review your user count before each anniversary and adjust quantities to avoid paying for unused licences. This is the built-in advantage of subscription. Use it |
| Start EA renewal prep 12+ months early | Gather internal requirements, set budget limits, engage with Microsoft or your LSP. Early preparation strengthens your negotiation position and avoids last-minute pressure |
| Maximise Software Assurance benefits | You are paying for SA in EA and OV Subscription. Use the benefits: upgrade rights, training vouchers, home use programme. If you are not using them, reconsider whether SA is worth the cost in your next agreement |
| Do not mix programmes without a plan | Avoid buying extra licences through Open Value or retail alongside an EA. This leads to compliance issues and wasted spend. Only use a secondary programme for isolated cases, and document exceptions |
| Benchmark and get multiple quotes | For EA: benchmark Microsoft’s discount against industry standards. For Open Value: request quotes from multiple resellers. Competition ensures you are not leaving money on the table |
| Plan for end-of-term | Have an exit or renewal strategy. For EA: understand perpetual rights retained without SA. For OV Subscription: budget for buy-out if you need the software after subscription expires. Surprises at term end are costly |
| Stay informed on programme changes | Microsoft frequently adjusts terms: raising EA minimums, altering CSP pricing, retiring programmes. Informed ITAM teams anticipate changes and adapt strategy proactively |
9. 5-Step Action Checklist
From assessment through implementation
Assess Your Environment
Gather data on total user/device count and Microsoft products in use. Verify current licence entitlements, review existing contracts, and determine whether you meet EA eligibility or should focus on Open Value/CSP.
Evaluate Options and Model Costs
For your current and projected three-year scenario, model the total costs of an Enterprise Agreement, Open Value, and CSP. Include Software Assurance value, cloud service needs, and growth/shrinkage projections. Use Microsoft’s pricing sheets or get preliminary quotes to compare.
Engage Your Microsoft Partner
Initiate discussions with your Microsoft account team or reseller. Enterprise-scale customers should signal they are evaluating the EA to prompt competitive pricing. Smaller customers should compare reseller offerings for Open Value and explore subscription vs perpetual options.
Choose and Plan the Agreement
Determine the best programme, assemble a negotiation team (for EA), and set a clear timeline. If going Open Value, schedule purchases to align with upcoming needs. Plan internal communications so IT staff understand the new licensing structure.
Implement Licence Management Processes
For EA: implement a tracking mechanism for true-ups, diarise the annual checkpoint. For Open Value: record each licence addition. For OV Subscription: verify device/user counts annually. In all cases, ensure someone is responsible for monitoring agreement milestones.
Microsoft Licensing Advisory
Whether you are evaluating EA vs Open Value, preparing for an EA renewal, or optimising your current Microsoft estate, our team provides independent advisory that ensures you choose the right programme, negotiate the best terms, and never overpay.
Frequently Asked Questions
Common questions about EA vs Open Value licensing
With 400 users, you are below Microsoft’s standard EA minimum of 500. An Enterprise Agreement likely would not be offered (except possibly for public sector or through an exception). Open Value or the CSP programme would be the appropriate choice. Open Value lets you licence only what you need without overspending. Once you grow beyond 500, reconsider an EA for volume discounts.
Generally, large enterprises use an EA for core licensing. However, Open Value might be used for a smaller acquired subsidiary or a specific country branch that cannot immediately be included in the central EA. Keep any Open Value agreements limited and plan to integrate those licences into your EA at the next renewal for consolidated pricing.
In a standard Enterprise Agreement, you are committed to the initial quantity for the full term. You cannot reduce your payment obligation mid-term even if headcount drops. The exception is the Enterprise Subscription Agreement variant, which allows reducing counts at each anniversary. If headcount volatility is likely, the subscription model provides essential flexibility.
For purely cloud-focused small organisations, CSP offers monthly flexibility. You can adjust licence counts each month rather than annually. However, CSP does not include traditional Software Assurance benefits like downgrade rights or passive use rights for on-premises deployments. If you have any hybrid needs (on-premises Windows Server, Office downgrade requirements), Open Value Subscription is typically the better fit.
Start 12+ months before expiration. Gather internal usage data, identify shelfware to cut, model alternative programme costs (including not renewing), benchmark discount expectations, and engage finance and procurement. Early preparation dramatically strengthens your negotiation position. Read our EA Renewal Case Studies for real-world examples.
Yes. If your organisation grows beyond 500 users, you can transition to an EA. Time your Open Value to expire when you plan to start the EA. Microsoft generally does not allow mid-term cancellation without penalty. At EA signing, you may be able to negotiate credit or proration for remaining Open Value commitments. Plan the transition proactively rather than reactively.
You have three options: renew the subscription for another term, exercise the buy-out option (pay a final fee to convert subscriptions into perpetual licences you own), or let the subscription lapse, which requires removing the software. Budget for the buy-out if you need the software indefinitely. This gives small businesses an exit strategy while protecting against being locked into ongoing costs.