The Rise of the Microsoft Customer Agreement: Is It Time to Move On from EA?

The Rise of the Microsoft Customer Agreement: Is It Time to Move On from EA?

Introduction

Microsoft is shaking up its licensing model, and many CIOs and procurement leads are taking notice. The traditional Enterprise Agreement (EA), a staple for large organizations to lock in pricing for three-year terms, is increasingly being challenged by the Microsoft Customer Agreement (MCA).

As we head into 2025 and 2026, Microsoft is positioning the MCA as the future of how customers buy its products and services, especially for mid-market and smaller enterprises.

EA might remain an option for the very largest organizations, but the trend is clear: the MCA is gaining traction as the new default. Read more about Microsoft Licensing Trends 2025–2026: What’s Changing and How to Respond.

This shift presents both opportunities and risks for customers. On paper, the MCA promises more flexibility and a simplified buying experience.

In practice, it also means less structure and fewer opportunities to negotiate significant discounts.

In this article, we’ll explore why Microsoft is steering customers toward the MCA, what advantages and drawbacks it brings, and how you can adapt your strategy to ensure you’re not caught off guard by these changes.

The goal is to provide you with practical, strategic insight from a licensing negotiation expert’s perspective – on whether it’s time to move on from the EA and adopt the new model (and if so, how to do it wisely).

1. The Trend: Microsoft Steering Customers to MCA

Microsoft’s licensing strategy is evolving under its “New Commerce Experience” platform, and a key part of that is the Microsoft Customer Agreement.

In 2025, Microsoft is actively nudging (and in some cases, requiring) certain customers to adopt the MCA instead of the traditional Enterprise Agreement.

The clearest push is for organizations below a certain size threshold – roughly those with under 2,400 users (which historically was the EA Level A segment). Suppose a company in this mid-market range is coming up for renewal and primarily uses cloud services.

In that case, Microsoft is likely to steer them away from renewing an EA and into an MCA or a Cloud Solution Provider (CSP) agreement. In fact, many new customers of that size are being told that an EA isn’t even an option for them.

Why 2,400 seats as a tipping point? Microsoft appears to be raising the bar on who qualifies for an Enterprise Agreement. In the past, any organization with 500 or more users could sign an EA. Now, Microsoft is focusing EAs on larger enterprises (often with 2,400 to 5,000 seats or those with very complex needs).

Smaller and mid-sized customers are seen as better fits for the more agile MCA or CSP approach. This change didn’t happen overnight – it has been a developing trend, but 2025 is a milestone year where it has become very noticeable.

Microsoft is effectively phasing out the EA for a large portion of the mid-market, making the MCA the default agreement for most customers over the next 1–2 years.

For those larger enterprises that still meet the EA criteria, the EA isn’t gone yet – but even they are feeling the pressure. Microsoft is reducing some of the legacy perks of the EA (for example, automatic volume discounts on cloud services are being eliminated) and highlighting the “flexibility” of the new model.

The direction is clear: Microsoft envisions a future where the majority of customers, except perhaps the mega-sized ones, are on the Microsoft Customer Agreement.

It’s a strategic shift aimed at modernizing the sales process and optimizing Microsoft’s revenue. Customers need to be aware of this trend when planning their IT procurement strategies.

2. MCA Advantages – What Looks Attractive on Paper

If you listen to Microsoft’s sales pitch, the Microsoft Customer Agreement sounds like a win-win.

There are indeed several attractive features of the MCA, especially when contrasted with the old EA, that look great on paper:

• Flexibility: Unlike the rigid three-year EA term, the MCA is not a 3-year lock-in. You can add or remove licenses with greater frequency (even on a month-to-month basis for many subscriptions). This means if your headcount drops or a project ends, you can scale down licenses without waiting for an annual true-up or EA renewal. Conversely, if you need to ramp up quickly, you just add subscriptions as needed. This flexibility is ideal for organizations with dynamic growth, seasonal workers, or projects with shifting usage patterns. It’s the cloud pay-as-you-go ethos applied to your enterprise agreement.
• Simplified, Evergreen Contracting: The MCA is an evergreen agreement – it doesn’t expire every three years. You accept it digitally once, and it stays in place as a running contract. As you purchase new products or services, the relevant terms simply get appended. No more lengthy contract negotiation cycles and paperwork every few years. The paperwork is notably slimmer and standardized, which can greatly speed up procurement and reduce legal overhead. In many cases, organizations can accept the MCA online with just a single click, rather than reviewing a 100-page EA document. Microsoft touts this as significantly shortening the buying process.
• Unified Purchasing Across Services: Under an MCA, you can procure all your Microsoft cloud services under one umbrella agreement. Azure, Microsoft 365 (Office 365), Dynamics 365, Power Platform, and even Windows 365 – all fall under the same master agreement. In the old world, an EA often had multiple “enrollments” (one for Microsoft 365, a separate Azure enrollment, etc.). With MCA, it’s one continuous arrangement. This unified model, combined with Microsoft’s modern commerce portal, provides a single, consolidated bill and a single view of all your Microsoft subscriptions and usage. Finance and IT teams can more easily track spending in one place.
• Monthly Billing and Adjustments: The MCA aligns with cloud subscription norms by often allowing monthly billing cycles and short-term commitments. For instance, you might choose a monthly term for certain licenses, giving you the ability to drop those licenses after a month if they’re not needed. Even for services that you might lock in annually or multi-year (to get a better price), the MCA typically still bills monthly (spreading out payments) and lets you increase or decrease at the next cycle. This granularity can help with cash flow management and avoid the large upfront payments associated with an EA annual order.
• Direct Relationship (for MCA-E): In the enterprise flavor of the Customer Agreement (sometimes called MCA-E), you are essentially contracting directly with Microsoft. There’s no mandated middleman LSP (Licensing Solution Provider) taking a cut or complicating communication. Many organizations appreciate having a direct line to Microsoft for both sales and support issues. It can mean faster support escalation and hearing about new product offerings or promotions straight from Microsoft. And if you do negotiate any special pricing or credits, they come straight from Microsoft’s margin – which can simplify and clarify the deal.

On paper, these advantages sound very appealing, especially to a CIO or CFO who’s been through painful EA true-ups or renewal negotiations.

The MCA presents itself as agile, convenient, and modern, aligning with how cloud services are consumed. Microsoft essentially says: “Why stick to an outdated three-year cycle when you can have continuous access and flexibility?”

To crystallize the differences, here’s a quick comparison of EA vs. MCA and their respective strong points:

As the table shows, the EA vs. MCA decision ultimately comes down to pricing lock versus flexibility, and structured negotiation versus agility.

The EA’s strength was predictability and negotiated savings, whereas the MCA’s strength is adaptability and simplicity. These are almost opposite values – and each organization will have to weigh which matters more for their situation.

Microsoft’s pitch is that the MCA provides customers with greater agility in a cloud-centric world.

And indeed, for many scenarios, the MCA’s advantages are real: If you’re growing fast, in an industry with seasonal demand, or want the freedom to adopt new Microsoft technologies the moment they launch, the MCA’s model is very attractive. Simply click to accept the new service and proceed – no need to wait for a tri-yearly contract renewal.

However, experienced IT negotiators know to read the fine print and look at the trade-offs. For every benefit the MCA provides, there may be an equal and opposite risk, which we’ll explore next.

3. Customer Concerns and Risks with MCA

The Microsoft Customer Agreement’s flexibility and simplicity come with a price – and not just in dollars. Customers have several valid concerns and potential risks when moving to an MCA.

Here are the major ones to keep in mind, from a buyer’s perspective:

• Loss of Big Renewal Negotiations: Under an EA, every three years you had a natural renewal event – a major opportunity to renegotiate discounts, revisit your product mix, or even consider alternative vendors. Microsoft knew that at renewal time, you could walk away or cut licenses, which pressured them to offer concessions and aggressive discounts to keep your business. With an MCA’s evergreen model, that all-or-nothing moment goes away. There’s no expiration date forcing Microsoft to “earn” your renewal with a deal – the agreement just keeps rolling. Customers lose a key leverage point. Yes, you can still negotiate on individual purchases (say you’re adding 500 new users of a product – you can ask for a better price), but it’s not the same as leveraging a $10 million renewal on the line. Microsoft’s standard stance is that the MCA terms are mostly fixed and not meant to be heavily customized per customer. In short, your negotiating power is naturally reduced under the MCA structure.
• Exposure to Price Increases: An EA traditionally locked your prices for three years. Even if Microsoft announced a 10% price hike globally, your EA pricing was protected until the end of your term. Under an MCA, you’re far more exposed to Microsoft’s periodic price adjustments. For cloud services, Microsoft has been known to announce price increases (and foreign exchange adjustments) on an annual basis. With MCA, when a subscription term is up (for example, your monthly or annual term renewal for Office 365), the price can be adjusted to the current rate. That means cost predictability is much lower. You might budget X this year for Microsoft licenses, only to find mid-year that the costs of Microsoft 365 or Azure have gone up. Budgeting and forecasting become a challenge when you can’t guarantee stable pricing beyond the short term. Microsoft will give notice of changes, but they set the terms – you don’t have a contract protecting you beyond whatever short commitment you’ve made.
• No Volume Discounts = Higher Costs: Many organizations under EA enjoyed built-in volume discounts (especially larger ones in Level B, C, D tiers). Those automatic discounts shrink or disappear under an MCA. By default, MCA pricing is often at list price or close to it. Unless you proactively negotiate a special discount, you could end up paying significantly more for the same licenses. For example, if your EA provided a 20% on Microsoft 365 E5 due to your size, moving to MCA might mean you pay full price once your current term lapses. Over hundreds or thousands of seats, that’s a huge cost increase. And it’s not just a hypothetical – many companies have reported 10-30% cost jumps when they shifted to MCA or CSP without careful negotiation. Simply put, the MCA isn’t designed to give you a deal – it’s designed for flexibility – so you have to seek out savings on your own.
• Administrative Burden & Oversight: The flip side of flexibility is increased management responsibility. Under an EA, many customers fell into a comfortable “set it and forget it” mode for most of the term. You negotiated the deal, knew your allocation, and only did major adjustments at true-up or renewal. With an MCA, it’s a continuous management scenario. Licenses can be added at any time, which means they should also be removed when no longer needed – and it’s up to you to stay on top of it. You’ll likely need stronger internal processes (or tools) for tracking license usage and spending month-to-month. Some companies establish a governance team or assign software asset management (SAM) roles to regularly review and right-size subscriptions. If you don’t, it’s easy for “license sprawl” to occur – where departments quietly add subscriptions over time and you end up with a bloated bill. Think of an EA like a prepaid buffet (you pay upfront for a set amount) versus an MCA as an à la carte menu – it offers freedom to choose, but if everyone orders freely, you might blow your budget. Without discipline, flexibility can lead to cost creep and even compliance issues (since there’s no annual true-up safety net – if you overuse, you’re immediately out of compliance).
• Reduced Visibility into Deal Opportunities: In the EA era, large deals and special concessions were often part of the game – you knew when the renewal was coming and could orchestrate an RFP or get competitive bids from Microsoft partners, consider moving workloads to AWS/Google, etc., to pressure Microsoft. Under the MCA, everything is more continuous and piecemeal, which can make it harder to create a single, comprehensive negotiation. Microsoft isn’t forced to put a giant renewal proposal on the table, so there’s less “big picture” visibility into your total relationship value at a single point in time. Any discounts you receive might be small and tactical, rather than broad strategic discounts across your entire estate. This also means enterprises need to negotiate constantly in smaller bites, which can be resource-intensive and requires careful coordination.
• Legacy and On-Premise Licensing Gaps: The MCA is fundamentally a cloud-first agreement. It doesn’t inherently cover traditional on-premises software with Software Assurance. If your organization still needs to buy, say, Windows Server or SQL Server licenses with SA, or you rely on EA perks like version upgrade rights and training vouchers, those aren’t available under MCA by default. You’d have to manage a separate agreement (like the Microsoft Products & Services Agreement, MPSA, or other channels) for those legacy needs. This introduces complexity – running two parallel licensing regimes – and could lead to things falling through the cracks. It’s a risk if you have a hybrid environment. Additionally, some benefits, like Software Assurance support or training credits, will vanish unless you replace them. In short, moving to MCA can mean fragmenting your licensing if you’re not 100% cloud, which is an extra administrative headache and a potential cost if you lose benefits.
• Standard Terms Favor the Vendor: With an EA, large customers often negotiate custom terms and amendments – such as a cap on price increases, special audit provisions, or privacy and regulatory clauses tailored to their specific needs. Under the MCA, Microsoft is offering a standardized contract that cannot be easily changed per customer. You generally have to accept Microsoft’s standard terms, which, of course, are written to favor Microsoft. If Microsoft updates the program or terms (and they can periodically), you are subject to those changes (with some notice). There isn’t a concept of “locking” custom terms for you, like you might have done in an EA negotiation. This can introduce risks: for example, if you require all data to be in certain regions or need a specific compliance term, you must hope that Microsoft’s standard MCA addenda cover it. The power to change things lies more with Microsoft in an evergreen model, whereas an EA at least fixed your terms for its duration. Regulatory compliance, data residency, or liability protections need extra attention under MCA’s boilerplate terms.

To sum up the concerns: the MCA shifts more responsibility and risk onto the customer’s shoulders. You gain flexibility, but you give up the comfort of predictability and some negotiating leverage.

This doesn’t mean the MCA is bad – but it does mean you must approach it with eyes open and perhaps a more proactive management mindset.

Next, let’s look at why Microsoft is pushing this model so hard – understanding their motives can help you plan your response.

For more trends on pricing, Microsoft 365 Price Increases: Navigating Recent Adjustments and Avoiding Overpaying.

4. Microsoft’s Push – Why They’re Doing This

It’s always useful to consider the vendor’s perspective. Why is Microsoft so keen on moving customers to the Microsoft Customer Agreement?

Several reasons become apparent when you take a skeptical, strategic look at Microsoft’s motives:

• Streamlining Sales and Reducing Overhead: Microsoft has long relied on armies of licensing partners and lengthy contracts to service its customers. The MCA is a way to simplify and modernize the sales process. A single digital agreement that never expires means fewer contract negotiations and renewals to manage. Microsoft can do business with you more efficiently (often directly), saving time and reducing reliance on third-party resellers for smaller deals. This is especially true for mid-sized deals where the overhead of an EA (with multiple papers and approvals) was relatively high compared to the revenue. By eliminating complexity, Microsoft also reduces its own transaction costs and can serve more customers at scale.
• Revenue Consistency and Growth: An evergreen, subscription-oriented model ensures continuous revenue flow and makes Microsoft’s income more predictable. Under EAs, Microsoft would see big spikes at renewal and potentially lulls in between. With MCA’s continuous billing, the cash comes in steadily. More importantly, the MCA reduces the chance that a customer will make a dramatic cut at a three-year renewal, because there is no such renewal inflection point. It smooths out the revenue and, from Microsoft’s view, reduces the risk of churn. Also, without automatic discounts and with frequent price adjustments, Microsoft can steadily increase revenue per user over time. They can nudge prices up or cross-sell new add-ons (like security bundles or AI features) more fluidly when customers are on the evergreen model.
• Shifting Power to the Vendor: Let’s be frank – the power balance shifts significantly in favor of Microsoft under the MCA model. Microsoft knows that without a big renewal negotiation, customers have fewer chances to push back. They also know that if all customers are on this model, competitive pressure decreases – it’s harder for a customer to say “we’ll switch to another licensing program” because Microsoft’s rules also control the alternative programs (like CSP). By standardizing the contract and removing volume-based pricing, Microsoft is aiming to flatten out customer leverage. In an EA, a huge customer could leverage their volume for a huge discount; in an MCA world, Microsoft would prefer you pay as you go, ideally at rates closer to retail, unless you have a truly massive deal to make. From a cynical perspective, it’s about maximizing profit and control over the terms of engagement.
• Internal Alignment with Cloud Strategy: Microsoft’s entire business is now cloud-first (think Azure, Microsoft 365, Dynamics SaaS). The MCA aligns the contracting model to that reality. It encourages customers to think in terms of ongoing consumption and to stay current (evergreen terms also mean no old versions or old contracts lingering around). It’s also easier for Microsoft to introduce new cloud products under one agreement. In effect, the MCA is part of Microsoft’s cloud strategy – if you buy into their narrative, it reduces “friction” for the customer to adopt new services (which in turn drives Microsoft’s cloud growth).
• Incentives and Enticements: Microsoft understands that some customers won’t jump to a new model without a nudge. Therefore, they have been known to offer transition incentives. This may include one-time discounts, credits, or special deals if you transition from an EA to an MCA. For example, they could offer an Azure consumption credit or a 5-10% discount for the first year under MCA to “sweeten the deal”. They might also roll out new product bundles or promotions that are only available (or more lucrative) under MCA or CSP. These carrots, combined with sticks like making EAs harder to renew for smaller customers, are all part of Microsoft’s push. Keep an eye out: if your EA is ending, Microsoft might dangle something attractive – but always analyze the long-term implications. A first-year discount could vanish in year two, leaving you paying much more unless you negotiated price protections.

In summary, Microsoft’s drive toward the MCA is not just for customer convenience – Microsoft’s business objectives fundamentally drive it.

They want a simpler, more uniform contracting method that increases their control, ensures steady revenue, and reduces the heavy discounts and negotiations that EAs historically demanded.

Understanding this context, customers should approach the MCA not as an inevitable technical upgrade, but as a new playing field where the rules favor the house a bit more.

The good news is that with the right strategy, you can still come out ahead – which leads us to what customers should do in response.

5. What Customers Should Do

So, if you’re an IT leader or procurement professional faced with this changing landscape, how should you approach the EA vs. MCA decision?

Here are some practical steps and strategies to ensure you remain in control of your Microsoft licensing and spending:

• Evaluate Both Options at Renewal: When your EA comes up for renewal, don’t assume it’s either EA or bust. Request side-by-side quotes from Microsoft for an EA renewal and an MCA (or CSP) arrangement covering the same scope. This allows you to directly compare the costs and terms. Compare the 3-year total cost projections under each. Sometimes, Microsoft reps might push only the MCA, but insist on seeing both options if you are eligible for EA. This comparison will highlight differences in discounts, support benefits, and flexibility. It also puts you in a better negotiating position – you can leverage one option against the other (“We’d consider moving to MCA if you include X, Y, Z incentive” or “We’ll stick with EA unless you adjust the pricing structure on MCA”). The key is to make an informed decision rather than being steered blindly.
• Negotiate Regardless of Agreement: Just because the MCA is a “standard” agreement doesn’t mean everything is non-negotiable. You should negotiate hard, regardless of which model you choose. In an EA, of course, you negotiate the overall discount and terms at the time of renewal. In an MCA, you will need to shift your negotiation approach to specific large purchases or commitments. For example, if you plan to add a significant Azure workload, consider negotiating an Azure consumption commitment deal within the MCA to secure a discount. If you’re rolling out Microsoft 365 to a new division of 1,000 users, negotiate a price reduction or some added value (like extended price hold or bonus support) for that purchase. You might not get the across-the-board percentage discount as before, but you can still secure concessions. Microsoft sales teams do have flexibility – especially if you’re a sizable customer or adding net-new consumption. They just won’t volunteer it in the MCA model; you have to proactively bring it to the table.
• Pilot MCA with a Small Scope: If you’re unsure about jumping entirely to the MCA model, consider piloting it with a segment of your usage. For instance, you could move one part of your organization, or one product category (like Azure or a specific SaaS workload), to an MCA or CSP arrangement while keeping the rest on EA. This trial can be very informative – you’ll learn how Microsoft’s billing portal works, how flexible the monthly adjustments really are, and what new internal processes you need for oversight. Starting with a subset (e.g., a regional office or a non-critical set of licenses) allows you to iron out kinks in managing an evergreen agreement. You’ll discover things like: Can you reduce licenses promptly when projects end? Is your team identifying and addressing unused subscriptions promptly? How responsive is Microsoft or the partner on an MCA? Use those lessons to decide if you’re ready to scale up under MCA or if you need to negotiate additional support to make it viable.
• Stay Informed and Monitor Changes: Microsoft licensing programs are notoriously complex and subject to frequent changes. Now that things are more dynamic (with no set renewal points where you’d naturally conduct a full review), it’s essential to establish a continuous learning and monitoring practice. Make sure someone on your team (or an external advisor) is tasked with keeping up with Microsoft’s announcements and program changes. For example, if Microsoft announces a new licensing rule or a price increase for 2026, you want to know as early as possible to adjust your plans. Join webinars, read reliable licensing blogs, and stay in touch with your Microsoft account team or partner. Also, keep an eye on your actual usage data – perhaps using a SAM tool or cloud management tool – so you have real-time insights. If Microsoft’s admin portal isn’t giving you the forecasting or detail you need, invest in a third-party tool or process that does. Being proactive is key; under an MCA, it’s easier to fall into a pattern of just paying the bill without the formal renewal event that forces you to scrutinize it. Don’t let that happen – set calendar reminders to regularly audit your licenses and spend.

In short, customers should take control of the narrative. Microsoft may be changing the game, but you can still play it smart.

By evaluating options, negotiating creatively, testing the waters, and staying vigilant, you can ensure that you reap the flexibility benefits of the MCA without falling into a cost trap. This leads to the final piece of the puzzle: preparing your organization for a world where the EA is no longer the norm.

6. Future Outlook – EA’s Shrinking Role

All signs point to the Enterprise Agreement playing a diminishing role in Microsoft’s licensing landscape as we move further into the decade.

If the current trend continues, we can expect that within a couple of years, EAs will remain only for a minority of customers – likely the very largest enterprises or those with highly complex, hybrid requirements.

Organizations with, say, well over 5,000 seats, or those that still maintain significant on-premises footprints, may continue to find value in an EA (Microsoft will still offer EAs to those who truly need them). But for most others, the MCA (and CSP) will become the standard.

Microsoft is likely to keep raising the threshold for EA eligibility. What was 500 seats became 2,400 seats; it could increase further, effectively making the EA an elite option for mega-customers only.

They might also introduce incentives for even large cloud-only enterprises to voluntarily switch to MCA – for example, exclusive features, better integration, or special pricing on new services if you’re under the new model.

By the late 2020s, it wouldn’t be surprising if an EA is considered a legacy approach used in special cases, and everyone else is on subscription-style agreements.

For customers, this means the way you manage your Microsoft estate needs to evolve. The days of a “set it and forget it” 3-year plan are coming to an end. In the future, success with Microsoft licensing will require active, ongoing management and internal readiness. Companies should start preparing now by implementing the right governance, tools, and mindset.

Here’s a quick readiness checklist to assess if your organization is prepared for a potential transition to an MCA-driven world:

• Do we have an internal team or process in place for monitoring license usage and changes every month?
  Moving to an evergreen model means constantly monitoring adds and drops. Ensure someone is responsible for this continuous oversight.
• Have we conducted a side-by-side cost comparison of staying on EA vs. moving to MCA (or CSP) over the next 3 years?
  This analysis should include the loss of any EA discounts and benefits, as well as potential cost savings from flexibility. It will inform our negotiation strategy.
• Are we prepared to negotiate custom pricing or terms even under an MCA?
  Just because MCA is a standard agreement doesn’t mean we accept list prices. We should be prepared to negotiate with Microsoft for discounts on large purchases, commitment-based deals, or price caps on critical services.
• Do we have tools and processes in place to manage continuous license changes and prevent “license sprawl”?
  This could involve investing in software asset management (SAM) tools, establishing internal approval workflows for adding licenses, and conducting regular audits of usage to prevent paying for unnecessary software.

By evaluating yourself against this checklist, you can identify gaps and take action now. If the answer to many of these questions is “no,” it’s a sign that moving off EA could be bumpy. Better to shore up these capabilities in advance than to scramble after you’ve made the switch.

The future licensing environment will reward those who are proactive and disciplined. Organizations that embrace the change with proper planning could actually find that the MCA model, while different, works in their favor (imagine being able to dial down costs during a business downturn, something you couldn’t easily do under EA!).

On the other hand, those who stick their head in the sand might experience budget surprises or administrative chaos.

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