Microsoft Replaces Free CSP Grace Period with Paid Continuation

From 1 April 2026, Microsoft will replace the free grace period for CSP subscriptions with a paid Extended Service Term (EST). If you have auto-renew disabled, your subscription will automatically continue at a 23% premium instead of entering a free 30-day buffer.

This is both a price increase and an improvement. You lose the free buffer, but you gain protection against service interruption when renewals slip.

How It Works Today (Before April 2026)

When a CSP subscription expires with auto-renew disabled, customers receive a free grace period (typically 30 days) during which services continue working. This buffer allows time to sort out renewals, complete approvals, or resolve payment issues.

After the grace period ends, services stop. Data enters retention (typically 30 days), then deletion (typically 90 days). If you miss the window, you lose access and potentially lose data.

The risk: procurement delays, approvals stuck in committee, someone on holiday, or simply forgetting can push you past the grace period into service interruption.

What Changes in April 2026

The free grace period is replaced with automatic paid continuation.

To actually stop paying: You must explicitly set the subscription to cancel at term end. Turning off auto-renew no longer stops billing. It moves you to EST.

This flips the default. Previously, auto-renew off meant “stop after grace period.” Now it means “continue at premium rate.”

Microsoft announced this change on 14 October 2025, with full enforcement from 1 April 2026.

The Trade-Off

What you lose: Free 30-day buffer after expiration.

What you gain: Unlimited paid continuation with no service interruption. No cliff edge. No “your data is gone because finance was slow.”

The 23% premium is insurance against delays. Procurement delays happen. Approvals get stuck. People go on holiday. Previously, that meant a hard deadline: miss it and services stop, data enters deletion. Now you pay the premium and keep running while sorting things out.

For enterprises where service interruption or data loss would be catastrophic, 23% for a month or two is nothing compared to the alternative.

The Maths

Microsoft’s EST documentation states EST is charged at “the current monthly term rate plus a 3% uplift (or 23% if no monthly plan exists).”

CSP subscriptions come in several pricing tiers:

EST pricing works as follows:

• For products with a monthly plan available: - EST = Monthly rate + 3% - Monthly rate is base + 20%, so EST is roughly base + 23.6%

• For products without a monthly plan: - EST = Base + 23%

Microsoft chose 23% as the flat uplift for products without monthly options, roughly matching 20% + 3%.

Uncertainty: We expect Microsoft will apply a uniform 23% uplift for simplicity rather than maintaining two different EST prices ($123 vs $123.60 on a $100 base) for the same product. EST price lists publish in February 2026 and will clarify this.

Cost Impact by Subscription Type

Using $100 as a base price example, and assuming a uniform 23% EST rate:

If Microsoft applies the literal “monthly + 3%” calculation for products with monthly plans:

Microsoft 365 E5 Example

M365 E5 base price is $57/user/month (until July 2026 when it increases to $60).

Current pricing tiers:

EST pricing (assuming uniform 23% uplift):

If Microsoft applies literal “monthly + 3%” instead:

For an organisation with 10,000 M365 E5 users on annual billing, slipping into EST costs an extra $131,100 per month compared to renewing on time.

Which Subscriptions Are Affected

Subscriptions automatically enter EST at expiration if all three conditions are met:

1. Purchased on or after 1 April 2025

2. Expires on or after 1 April 2026

3. Auto-renew is set to off

Microsoft is backfilling existing subscriptions with auto-renew off to this behaviour through January 2026. After 19 January 2026, any API request setting auto-renew to false will default to EST unless you explicitly set cancel.

Your Options

1. Understand the new default. Auto-renew off no longer means “stop at term end.” It means “move to EST at 23% premium.” If you want services to stop, you must explicitly cancel.

2. Decide: auto-renew, EST, or cancel.

Three real options:

• Enable auto-renew to continue at normal rates

• Leave auto-renew off and accept EST as your safety net (23% premium, but no service interruption risk)

• Explicitly set cancel at term end if you genuinely want to stop

3. Adjust renewal processes. If your organisation habitually turns off auto-renew to manage renewals manually, that workflow now costs 123%. Either switch to keeping auto-renew on, or budget for potential EST charges when renewals slip.

4. Consider EST as intentional insurance. For critical services where interruption is unacceptable, leaving auto-renew off and accepting EST may be a reasonable strategy. You pay more, but you are protected against timing mistakes.

🖐 Quantify the cost of EST exposure and renewal slippage across your CSP subscriptions. Learn more: Pricing Research and Pricing Metrics.

Timeline

CSP subscription management gets more complex every year. EST adds another variable to track, and the consequences of getting it wrong are either unexpected bills or service interruption.

We don’t sell Microsoft licences or cloud services, so our advice is impartial. If you need help reviewing your CSP subscriptions before April 2026 or understanding how EST affects your renewal strategy, get in touch.