Negotiating Dynamics 365 Volume Discounts
Introduction
Dynamics 365 is a significant investment, especially at enterprise scale. However, Microsoft’s sticker prices are not set in stone – large organizations can and do negotiate discounts. CIOs who approach Dynamics 365 licensing strategically can secure substantial savings off the list prices.
This article explains how to negotiate volume discounts on Dynamics 365, including understanding typical discount benchmarks, leveraging Enterprise Agreements, using tiered user tactics, and bundling Dynamics with other Microsoft products for maximum leverage.
Typical Volume Discount Benchmarks
Microsoft doesn’t publish volume discount rates for Dynamics 365, but in practice, big customers receive discounts based on their purchase size and competitive pressure.
While every deal varies, here are ballpark figures observed in the market:
| Organization Size (Dynamics 365 Users) | Potential Discount (off list) |
|---|---|
| ~2,500 – 5,000 users | 5% – 10% |
| ~5,000 – 10,000 users | 10% – 15% |
| 10,000+ users | 15% – 20% (maybe more if highly competitive) |
For example, a 3,000-seat deployment might negotiate around 10% off, whereas a 20,000-seat global rollout could push closer to 20% off (especially if Microsoft is vying against Salesforce or SAP in the account). If your initial quote is only 3% off for thousands of users, you likely have room to push harder.
Conversely, expecting 25% off without a compelling competitive scenario may be unrealistic. Use these benchmarks to set target discounts and gauge the generosity of Microsoft’s offers.
Enterprise Agreement Strategies
Most large organizations license Dynamics 365 through a Microsoft Enterprise Agreement (EA) or similar volume contract.
An EA provides the framework to negotiate pricing below retail rates.
Key strategies include:
- Volume Leverage: Ensure Microsoft prices your licenses according to the full volume of your deployment. If you’re near a tier threshold (say 5,000 users), highlight that – or even consider slightly increasing your initial order – to unlock a better discount band. Even though formal EA tiers have evolved, larger quantities still drive bigger discounts.
- Multi-Year Commitments: Committing to a 3-year term (the typical EA length) can yield better discounts and guarantees. Negotiate price protections for that term – for instance, a cap on annual price increases or fixed pricing for the duration. This gives you cost predictability and serves as a concession from Microsoft in return for your long-term commitment.
- Deal Timing: Leverage Microsoft’s sales timing to your benefit. Pushing to close your deal near Microsoft’s fiscal year-end (June 30) or quarter-end can make the sales team more flexible. They have revenue targets, and a big deal might get extra discount approvals in the final weeks of a period to ensure it closes. Plan your negotiation timeline accordingly, but don’t compromise a thorough negotiation just for timing – start early, then aim to finalize at an opportune moment.
- Use Competition and Escalation: If Microsoft’s initial discount is insufficient, be prepared to push back and escalate. Engage Microsoft account executives at higher levels if needed. Sometimes, a regional manager or specialist can approve a bigger discount than a front-line rep could. Tactfully let Microsoft know if you have a credible alternative (like evaluating Salesforce CRM or another ERP vendor). A genuine competitive threat can significantly improve their offer. Always maintain credibility – don’t bluff competition unless you are willing to consider it.
Read Dynamics 365 Licensing Metrics and Models.
User Tiering and License Mix Tactics
Not all Dynamics 365 licenses carry equal weight. Analyze your license mix and use that in negotiations:
- Prioritize High-Value Licenses: Focus negotiations on expensive licenses (e.g., Sales Enterprise, Finance) where a 10% discount saves much more money per user than a 10% discount on a cheap Team Member license. It’s common to get different discount percentages by license type, so aim for the deepest cuts on the costliest SKUs.
- Tiered Pricing for Growth: If you expect your user count to grow during the contract, negotiate how those additions will be priced now. Ideally, secure the same discount rate for additional users. Better yet, include a clause that once you exceed a certain number of users, the per-user price drops further. That way, your average cost decreases as adoption increases (rewarding you and Microsoft for broader use).
- Avoid Over-Consumption Commitments: While volume helps, don’t commit to more licenses than you need to claim a higher discount tier. It’s a false economy to overbuy. It’s usually better to negotiate flexibility to add licenses at the agreed rate later, rather than buying them all upfront. Microsoft will understand that you intend to grow and can accommodate adding licenses mid-term at the negotiated discount, so there’s no need to pad your numbers beyond realistic usage.
Read Common Dynamics 365 Licensing Mistakes.
Bundling with Microsoft 365 and Azure
Microsoft often considers your total relationship value. If you also spend heavily on Microsoft 365 (Office 365 suites, EMS) or Azure, use that to your advantage:
- Combined Negotiations: Whenever feasible, discuss Dynamics 365 as part of a larger agreement encompassing your Microsoft 365 and Azure investments. A holistic negotiation can give Microsoft more latitude – they might be willing to give you a bit more off Dynamics if they see the overall contract value (including Azure/M365) growing.
- Cross-Discount Balancing: Microsoft cares about the total deal. You might negotiate something like: you’ll accept a standard discount on Office 365, but in exchange, expect an extra concession on Dynamics 365. Essentially, you’re allocating the discount where it matters most to you. Make sure any such arrangement is clearly documented in pricing – you want to avoid one product’s price quietly subsidizing another unless it’s intentional.
- Cloud Commitments: If your company is increasing Azure usage or other Microsoft cloud services, mention it. A large Azure commitment, for example, can indirectly help your Dynamics 365 deal because it increases your importance as a customer. Microsoft account reps can justify better Dynamics pricing by the “bigger picture” of your account. While Dynamics and Azure have separate budgets internally, from your perspective, money is money – don’t hesitate to say, “We’re investing heavily in Azure; we need you to reciprocate with a great deal on Dynamics.” Often, they will find a way to make the numbers work across the portfolio.
Recommendations for CIOs
- Do Your Homework: Enter negotiations armed with data. Understand what discount range is reasonable for your size and industry. Use independent licensing advisors or peer benchmarks if available. Knowledge of Microsoft’s fiscal calendar and competitive landscape will give you leverage.
- Set Clear Goals: Define an acceptable price per user (or total contract value) for your organization. Also, decide in advance any non-negotiables or walk-away points. This prevents conceding too much under pressure.
- Bring in Procurement and Exec Support: Involve your procurement specialists and consider having a senior executive (like the CIO or CFO) back the negotiation process. Microsoft will take the deal more seriously if it sees high-level engagement. At the same time, having procurement pros ensures you don’t miss contractual details and that you push on price effectively.
- Insist on Written Terms: Get all negotiated points in writing in the contract or an addendum. This includes discount percentages, price caps, included extras (like trial licenses or support benefits), and conditions for adding users. Verbal assurances or email notes are not enough – only the signed contract language will matter if there’s a dispute later. Double-check that the paperwork matches your understanding before you sign.
