For years, Microsoft Enterprise Agreement renewals followed a relatively familiar script.
Microsoft proposed an increase. Procurement expressed concern. Microsoft discovered that quarter-end was approaching. Everyone negotiated intensely, signed the agreement and promised to start planning earlier next time.
It was practically a corporate tradition.
That tradition has now received what Microsoft might call a “pricing consistency update” and what most CFOs will call something considerably less suitable for publication.
Beginning November 1, 2025, Microsoft eliminated the automatic pricing differences between Enterprise Agreement Price Levels A, B, C and D for Online Services. The change applies at a customer’s next renewal or when it purchases a new Online Service that was not already included on its Customer Price Sheet. On-premises software is not included, and U.S. Government and worldwide Education price lists are excluded.
(Microsoft licensing announcement)
In plain English, buying more Microsoft cloud services no longer automatically earns a better programmatic price.
For large enterprises, this matters. Independent licensing analysts estimate that the former Level B, C and D pricing advantages were approximately 6%, 9% and 12%, respectively. Those discounts were not extraordinary acts of generosity. They were the established reward for committing thousands of users and substantial spend to Microsoft’s ecosystem.
Microsoft’s new reward for volume is apparently the opportunity to buy more volume.
Effective July 1, 2026, Microsoft is also increasing published prices across numerous Microsoft 365 and Office 365 products.
For commercial suites with Teams:
Existing customers remain on current pricing until renewal, but new and renewing transactions after the effective date will encounter the updated rates. Microsoft is adding security, management and Copilot Chat capabilities to several suites, so the official explanation is not simply “prices went up.” It is that customers are receiving additional innovation and value. (Microsoft 365 pricing update)
Your CFO may still focus on the “prices went up” portion of that explanation.
No, Microsoft has not announced a universal 25% EA increase.
Unfortunately, that does not mean your renewal cannot increase by 25%.
Consider a large Level D customer renewing Microsoft 365 E3. Losing an estimated 12% programmatic price advantage and then absorbing the 8% July list-price increase produces a compounded increase of approximately 21%, before accounting for:
Add even a modest amount of new AI, security or premium licensing and a 25% blended increase becomes entirely plausible.
That is the distinction buyers need to understand. The individual SKU increase may be 5%, 8% or 13%. The number reaching the CFO reflects the entire estate, not the polite percentage displayed beside one product.
Microsoft sells by SKU. Finance experiences the invoice.
Microsoft 365 E7, also called the Frontier Suite, became generally available May 1, 2026, at a retail price of $99 per user per month. It combines Microsoft 365 E5, Microsoft 365 Copilot, Agent 365, Microsoft Entra Suite and advanced security capabilities. (Microsoft announcement)
For organizations that genuinely need and use those capabilities, the bundle may compare favorably with buying each component separately.
The important phrase is “genuinely need and use.”
E7 should not become the new executive default simply because “AI transformation” appears somewhere in the strategic plan. A finance analyst, developer, frontline worker and occasional Office user do not require identical licensing. Buying the premium suite for everyone is not simplification. It is shelfware with excellent branding.
Microsoft is also expanding the Microsoft Customer Agreement as an alternative renewal path for eligible direct EA customers.
Microsoft’s own documentation states that a direct Enterprise Agreement enrollment that has expired or is approaching expiration can be renewed through an MCA. The transition changes the billing structure for Azure, requires a new support plan because existing support benefits do not transfer, and cannot be reversed after Azure billing has moved. If an EA expires before the transition is completed, Azure services continue running, but Microsoft states that the customer may be charged pay-as-you-go rates. (Microsoft MCA transition guidance)
This does not mean the EA has disappeared. It does mean buyers should stop assuming the next agreement will look, behave or negotiate exactly like the last one.
CSP may offer another route, but its flexibility has limits. Monthly subscriptions generally carry a premium over annual commitments, while annual subscriptions cannot usually be reduced freely throughout the term. Flexibility is available. Microsoft has simply remembered to monetize it.
The response is not to accept Microsoft’s first quote while muttering something about inflation.
Start by rebuilding the baseline. Separate programmatic discounts, negotiated discounts, promotional pricing and one-time concessions. Determine exactly what is disappearing and what Microsoft has simply chosen not to carry forward.
Then model EA, MCA and CSP scenarios over the full proposed term, including Azure, support, foreign exchange exposure, growth assumptions and price protections. A lower Year One quote can become a very expensive decision if the commercial baseline deteriorates in Years Two and Three.
Finally, challenge the product mix:
At NET(net), we have helped clients optimize strategic technology agreements since 2002 using a right-buying, right-licensing and right-pricing methodology. We remain independent of technology suppliers and can support the analysis, optimization strategy and direct negotiation, rather than merely providing a benchmark and wishing the client good luck.
Microsoft’s renewal reset is real. The 25% increase is not guaranteed, but neither are your old discounts, licensing structure or negotiating leverage.
The worst time to discover that is when Microsoft places the renewal order form in front of you.
The second-worst time is approximately two weeks earlier.
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