Jack Parry
Public Sector Microsoft Team Leader
Jack Parry Linked In
The Microsoft licencing landscape is about to change. Starting on Saturday 1st November 2025, Microsoft is flattening volume licencing discounts for Online Services across Enterprise Agreements (EA) and Microsoft Products and Services Agreements (MPSA). If you're managing Microsoft licencing for your organisation on these agreement types, this could significantly impact your budget.
Goodbye volume discounts
For years, larger organisations have enjoyed deeper discounts through Microsoft's tiered pricing structure. Think of it as a loyalty reward system - the more users you had, the better your deal:
- Level A (500-2,399 users): ~3% discount
- Level B (2,400-5,999 users): ~6% discount
- Level C (6,000-14,999 users): ~9% discount
- Level D (15,000+ users): ~12% discount
As of November, everyone will have the same standardised rate, regardless of size. Microsoft is aligning itself with cloud industry norms where volume doesn't necessarily equal better pricing.
Who will be affected?
This change impacts most commercial and government customers using EA or MPSA for Online Services. Education customers are exempt, and this only affects Online Services - not your on-premises software or Azure services.
The timing matters too. Changes kick in at agreement renewal or when you purchase new Online Services not already on your agreement. If your EA expires on Friday 31st October 2025, you'll be among the first to experience the new pricing.
What this means for your budget
If you're currently on pricing levels B, C, or D, expect a cost increase. Organisations with 15,000+ users could see their Online Services costs jump by circa 12%. For a large enterprise spending millions on Microsoft 365 and other Online Services, this represents a significant budget impact.
Cloud Solution Provider Agreement (CSP) becomes more attractive
Here's where things get interesting. With EA pricing now matching CSP, the CSP model becomes compelling for organisations of all sizes. Through CSP, you can access the same pricing while benefiting from enhanced service delivery, flexible purchasing options, and the added value that partners like Softcat bring to the table.
Three steps every IT leader should take now
- Audit your current position - review your existing agreements and calculate your potential exposure. Understanding your current discount level and Online Services spend will help you assess the financial impact.
- Explore your options - don't assume renewal is your only path forward. Compare EA renewal costs against CSP alternatives. Consider hybrid approaches or timing strategies that might work in your favour.
- Plan your timing - if your agreement doesn't expire until 2026 or beyond, you have time to strategise. Use this window to optimise your current licencing and plan your transition approach.
Looking forward: industry implications
Microsoft's move reflects broader industry trends toward simplified, standardised pricing. While this creates short-term budget challenges for larger organisations, it levels the playing field and makes licencing decisions more transparent.
This change also signals Microsoft's confidence in the value of their Online Services portfolio. The emphasis is now shifting towards leveraging available funding and programmes to support deployment and maximise the real value of your Microsoft technology investment.
True benefit will come not from agreement pricing discounts, but from unlocking and realising the full potential of the Microsoft technology portfolio.
The bottom line
Change brings both challenges and opportunities. While some organisations face higher costs, others gain access to more flexible licencing models and simplified decision-making processes. The key is understanding your options and acting strategically.
At Softcat, we're already helping customers navigate these changes. Whether it's modelling cost impacts, evaluating CSP alternatives, or planning transition strategies, our licencing specialists are equipped to help you turn this challenge into an opportunity.
Need help assessing the impact on your business? Connect with your Softcat account manager or contact our Sales team. We're here to help you navigate Microsoft's evolving licencing landscape.