Surviving Microsoft EA Renewals in 2025–2026 – How CIOs Can Cut Through Price Hikes and Reclaim Cost Control
CIOs now face a survival challenge as they approach Microsoft Enterprise Agreement (EA) renewals in 2025 and 2026. Across-the-board price hikes and aggressive bundling have turned these contracts into budget traps. Read our Microsoft EA negotiation guide.
Microsoft’s dominance means many organizations feel they have no choice but to pay more at renewal time. However, while you can’t stop Microsoft from raising prices, you can stop your organization from overpaying by using smart tactics and preparation.
Enterprises can’t stop Microsoft from raising prices, but they can stop overpaying.
1. Why Microsoft EA Renewals Are Tougher Than Ever
Renewing a Microsoft EA is more challenging than ever due to Microsoft’s recent pricing moves and lock-in tactics. First, Microsoft has rolled out price increases that hit nearly every customer.
In late 2025, for example, it eliminated the volume discounts for enterprise cloud subscriptions – meaning even the largest companies now pay baseline rates. Many organizations are experiencing 6–12% higher costs at renewal simply for the same licenses they had before.
Second, there’s a lack of competition. When practically everyone in the enterprise relies on Microsoft’s ecosystem (Office, Windows, Teams, etc.), Microsoft knows you have limited alternatives. You can’t easily replace these core platforms without massive disruption, which severely reduces your leverage in negotiations.
Finally, Microsoft uses bundling to its advantage. The company packages many services together (for instance, stuffing security and analytics tools into the Microsoft 365 E5 suite).
This means you often pay for features you might not fully use, and it’s hard to opt out without losing something important. Microsoft’s representatives are aware that you feel dependent on their stack, and they capitalize on that advantage. All these factors make the 2025–2026 renewal cycle especially tough for enterprises.
2. The EA Cost Spiral
An EA renewal can trigger a dangerous cost spiral if you’re not careful. Rising per-user license fees, combined with any growth in headcount, will lead to an increase in your spend.
For example, a 20,000-user enterprise facing a 20% price hike on its licenses would pay roughly $8 million more over a three-year term compared to the last term. That’s a huge hit with no extra value in return.
Doing nothing means accepting those increases and locking them in for three more years. Once you sign at the higher rates, you’re stuck with that spend. There’s no easy way to dial it back if you realize you overbought.
In effect, inaction locks in a higher IT expense baseline for years to come. To avoid that, seek cost-saving adjustments before renewing – trim unneeded licenses, negotiate better terms, and explore alternatives – rather than simply rubber-stamping Microsoft’s proposal.
3. Unused Licenses: The Silent Drain
A major hidden source of waste in many EAs is unused or underutilized licenses.
It’s common to find that 15–30% of an enterprise’s Microsoft licenses aren’t being actively used at any given time. For example, in a 12,000-seat EA, you might discover 3,000 accounts assigned to former employees or to staff who rarely log in.
If each of those accounts costs $100 per month, that’s about $3.6 million per year spent on “shelfware” – licenses paid for but sitting idle.
Microsoft won’t alert you to this problem – those idle licenses are pure profit for them. You must find and eliminate this waste yourself. Before renewal, identify all inactive or low-usage accounts and plan to either eliminate them or reassign their licenses.
By freeing up that 15–30% in unused licenses, you immediately offset a good portion of any price hike – even before you start negotiating on discounts.
4. Stop Before You Sign: Usage Audits
Before signing anything, conduct a thorough usage audit of all your Microsoft services. Audit all major areas – Office 365, Teams, Power Platform, Azure, etc. – to see what’s really being used versus what you’re paying for.
Inevitably, you’ll find overspend. Maybe you upgraded everyone to E5, but only a fraction uses any E5-only features. Or perhaps you’re paying for thousands of Power BI or Teams Phone add-ons that only a handful of people actually need. These insights show exactly where you can trim costs.
Crucially, start the audit early – ideally a year before renewal. That gives you time to make changes (downgrade plans, cancel idle accounts, etc.) before the renewal crunch.
By negotiation time, you’ll have cleaned up inefficiencies and armed yourself with hard data. That prevents Microsoft from pushing an “as is” renewal full of fluff. With facts in hand, you can keep the conversation focused on what truly needs to be renewed.
5. License Optimization: Right-Sizing the EA
With audit data in hand, the next step is to optimize your Microsoft Enterprise Agreement by right-sizing your licenses. Don’t keep paying for premium products that aren’t fully utilized. One company, for example, found that downgrading 5,000 users from E5 to E3 would result in $4 million in savings over a three-year period.
They kept E5 only for the small group of power users who truly needed the advanced features, and moved everyone else to E3. This change slashed costs with no noticeable impact on productivity.
Also, look for overlaps or redundant tools. If Microsoft’s bundle duplicates something you already have (such as a third-party security or backup solution), consider excluding that part of the bundle or not licensing it for everyone. Aim for an EA where every line item is truly needed and adds value. That way, you’re not overbuying out of habit – you only pay for what you actually use.
6. CSP vs EA – Breaking the Lock-In
Under a traditional EA, you’re locked into a three-year contract and generally can’t reduce your license count mid-term. The Cloud Solution Provider (CSP) option, by contrast, lets you adjust licenses much more freely – often on a month-to-month basis.
For example, if you have a new project that requires 500 temporary Microsoft 365 seats, you can provision them via CSP instead of adding them to your EA. When the project wraps up in six months, you drop those 500 CSP licenses and stop paying for them. Had they been under the EA, you’d be stuck paying for those seats until the term ended.
CSP pricing is usually similar to Microsoft’s standard rates (especially now that EAs don’t come with automatic volume discounts). But the agility of CSP means you pay only for what you need each month.
Many enterprises use a hybrid approach: keep your stable core users on the EA, but put variable or unpredictable needs on CSP. This avoids total lock-in and signals to Microsoft that if the EA renewal isn’t fair, you have the flexibility to move more of your business to a CSP.
| Aspect | Enterprise Agreement (EA) | Cloud Solution Provider (CSP) |
|---|---|---|
| Commitment Term | Multi-year (typically 3-year contract). | Flexible term (month-to-month or annual; multi-year available if needed for price lock). |
| Pricing & Discounts | Fixed pricing for the term; historically had volume-based discounts for big deals (removed in 2025, so now mostly standard pricing). Any extra discount usually tied to larger commitments. | Standard pricing (Microsoft list rates). Few upfront discounts, but you save by not paying for licenses you no longer need. |
| Adjusting License Count | Very limited ability to reduce counts mid-term (you pay for initial quantity until renewal; can only add via periodic true-ups). | Free to increase or decrease licenses as needs change (scale down immediately if users leave or projects end). |
| Flexibility | Low – locked into specific products and quantities until contract expires. | High – can start or stop services or licenses at will; no long-term lock-in on those seats. |
| Ideal Use Case | Large, steady environments with predictable needs; formerly favored when big volume discounts were available. | Dynamic or uncertain needs; ideal for pilots, seasonal staff, or maintaining leverage by not committing everything long-term. |
7. Multi-Cloud as a Survival Tactic
Adopting a multi-cloud strategy is another way to strengthen your hand. If you spread some workloads to other cloud providers (like AWS or Google Cloud) instead of running everything on Azure, you introduce real competition. Microsoft will quickly realize it doesn’t have an exclusive hold on your cloud budget.
Even a modest shift can have an impact. Suppose you plan to migrate 10% of your Azure workloads to another provider – that can be a bargaining chip.
In one case, a company’s intent to move a portion of its workloads off Azure prompted Microsoft to reduce its proposed Azure pricing by about 10% to dissuade them. Having a credible alternative changes the dynamics: Microsoft knows you have options, so they must be more flexible to retain your business.
Beyond negotiation, multi-cloud gives you technical and financial resilience.
With multiple cloud platforms in play, you’re far less beholden to any one vendor’s outages or price hikes. This multi-cloud resilience makes you a tougher customer for Microsoft to pressure, because not all your eggs are in one basket.
8. Building the Right Team to Negotiate
Don’t treat an EA renewal as just another IT procurement. Assemble a strong internal negotiation team with people from IT, finance, and procurement (or vendor management).
Each brings unique insight: IT knows what technology is truly needed (and what isn’t), Finance knows the budget realities, and Procurement knows how to negotiate contracts and spot hidden risks.
Begin planning well in advance of the renewal date. Make sure everyone agrees on the goals and boundaries (for example, target savings and non-negotiables). With a unified strategy, you present a consistent front to Microsoft.
This cohesion also thwarts common vendor tactics. Microsoft’s representatives may try end-runs, such as offering a “special deal” to an executive or creating urgency with a limited-time discount. However, a cohesive team will identify these plays and adhere to the plan.
During talks, use your data and stay aligned with your message. Counter any pressure or claims from Microsoft with facts from your usage audit and budget analysis.
Having finance in the mix ensures you don’t lose sight of cost goals, and procurement will ensure that any concessions you win are properly reflected in the contract.
By standing together, your team will negotiate from a position of strength and avoid being divided and conquered by Microsoft.
9. Looking Beyond Discounts
Beware of fixating purely on Microsoft’s discount percentage. A “20% off” deal isn’t great if it’s 20% off a bloated bundle you didn’t need in the first place. Instead, evaluate the deal holistically and pay close attention to contract terms and flexibility, not just price.
For example, negotiate for downgrade rights (ability to swap out higher-cost licenses for cheaper ones if needs change), built-in flexible scaling (so you can adjust user counts mid-term without penalty), an exit clause for certain services (an option to terminate a service if it stops providing value), and strong audit protections (to prevent surprise true-up costs). These terms can easily save you more over time than any upfront discount.
A slightly smaller initial discount on a flexible, customer-friendly agreement can beat a larger discount on a rigid, vendor-favored contract.
Your goal is to maintain cost control and agility throughout the EA term. Don’t get blinded by a big upfront “deal” that locks you into an inflexible arrangement.
Five Recommendations
- Audit your Microsoft environment 12 months before renewal – start early to identify and address inefficiencies well in advance.
- Aggressively cut unused licenses – expect 15–30% waste to be hiding in your environment if you’ven’t checked.
- Model CSP vs EA costs – consider using CSP for some licenses to gain flexibility (even if direct discounts are smaller).
- Introduce multi-cloud competition – moving even a small portion of workloads off Microsoft gives you more leverage at the negotiation table.
- Negotiate terms, not just price – push for flexibility (downgrades, exit options, audit limits), not just a low price, so you stay in control.
Read about our Microsoft EA Negotiation Service.
