Microsoft To End Certain Volume-Licensing Discounts In Potential CSP Boost

Cutting these volume discounts ‘changes the dynamic of the relationship between the customer and Microsoft,’ SHI’s Lane Shelton told CRN.

Microsoft plans to eliminate discounts that reward larger per-user commitments for online services such as its Microsoft 365 software package starting Nov. 1, marking what one partner calls the biggest change in 22 years to the tech giant’s Enterprise Agreement licensing program.

Online services bought through volume licensing programs will now have one price that matches the publicly available pricing on Microsoft’s website, the Redmond, Wash.-based vendor said in an online post.

“This update builds on the consistent pricing model already in place for services like Azure and reflects our ongoing commitment to greater transparency and alignment across all purchasing channels,” according to the vendor. “This update is part of Microsoft’s ongoing efforts to simplify licensing and improve pricing clarity for our customers.”

CRN has reached out to Microsoft for comment.

Microsoft Volume Discounts

Lane Shelton, vice president of licensing consulting and IT asset management (ITAM) services at Somerset, N.J.-based Microsoft partner SHI–No. 12 on CRN’s 2025 Solution Provider 500–told CRN in an interview that cutting these volume discounts “changes the dynamic of the relationship between the customer and Microsoft” and could encourage earlier customer renewals to avoid price increases after Nov. 1.

Large Microsoft customers can have a mix of EAs and agreements with partners in Microsoft’s Cloud Solution Providers (CSP) program.

Microsoft has been trending away from certain volume-licensing discounts with its emphasis on cloud consumption and subscriptions as opposed to license deals. Microsoft’s AI tool Copilot also did not come with per-level discounts, selling for $30 a user a month no matter the user count. Microsoft eliminated Azure waterfall discounts back in 2017 and level A EA discounts compared to the CSP many partners sell through in 2018.

Microsoft and other AI vendors are redefining customer relationships to account for the emerging technology, and Shelton doesn’t “think this will be the last change.”

“Volume doesn’t really matter that much–it’s really about what you’re going to do with the Microsoft ecosystem,” he said. “It’s really about your roadmap. How deeply are you going to go? How much are you willing to commit?”

Kelly Yeh, president of Chantilly, Va.-based Microsoft partner Phalanx Technology Group, told CRN in an interview that his company ditched working with customers on volume licenses years ago in favor of cloud-based deals where Microsoft handles the hardware, maintenance and liability.

“That was part of our math for clients,” Yeh said. “We’ve been pushing cloud, so this doesn’t affect our clients.”

Waterfall Discounts Done

Starting Nov. 1, Microsoft will eliminate waterfall discounts under its B to D price levels for online services sold under EA and the Microsoft Products and Services Agreement (MPSA), according to the vendor. Customers are considered level B for 2,400 to 5,999 devices and users, according to a Microsoft document on EAs last updated in March.

Level C applies to organizations with 6,000 to 14,999 devices and users, according to the document. D applies to organizations with 15,000-plus devices and users. The upcoming changes could increase level B prices by about 6 percent, level C by about 9 percent and level D by about 12 percent.

The change will apply starting Nov. 1 at the customer’s next agreement renewal or when customers purchase new online services not already listed on their customer price sheet. On-premises software pricing, U.S. government price lists and worldwide education price lists are excluded from the changes.

Shelton said that even though the earliest customers will be affected by the change is Nov. 1 if they have a renewal or make a new qualifying purchase, less than three months is enough time for any affected SHI customers.

Customers that are considering a large purchase of licenses early next year might need to purchase those licenses earlier to avoid a price change, he said. SHI will start with its largest customers that could see that largest financial hit.

“This is a great time to sit down and look at where you are at with your agreement and plan accordingly,” he said.

The discount elimination also comes as Microsoft makes other changes to the EA program that has pushed more customers to the CSP program that many partners participate in.

Back in January, Microsoft eliminated EAs for customers with less than 2,400 users and devices, encouraging them to move to CSP or the Microsoft Customer Agreement for Enterprise (MCA-E). Other changes Microsoft has made this year to ease the transition from EA to CSP include three-year subscription terms for Microsoft 365 E3 licenses and other products in CSP plus a channel transfers interface in Partner Center.