Summary
It's hardly surprising that Microsoft raises its prices on a regular basis. But what is happening now is highly unusual. On 1st November 2025, large organisations will have to start paying more for online services like Microsoft 365 E3 and E5. The bigger your organisation, the bigger the difference between what you're paying right now and what you will have to pay starting 1st November 2025.
Let me explain
In Microsoft's words, they are levelling the prices for all their online services, including Copilot, Microsoft 365, Project Online, Visio Online, and all other online services you may or may not know.
For over 25 years, Microsoft, through the Enterprise Agreement programme, has been offering different price levels depending on the organisation's size. There are discounts that some call programmatic discounts, a nonsensical term for most people. Others call them waterfall discounts because the diagram resembles a waterfall, if you have a good imagination. But what it means is just volume discounts or guaranteed volume pricing levels.
There are four different price levels: Level A, Level B, Level C, and Level D, depending on how many users you have in your organisation, or rather, how many licences you procure from Microsoft. Level A pricing is the base pricing: the full price of a Microsoft product or online service. The price of online services for Level B, which is over 2,400 users, would normally be cheaper by about 6%. Level C discounts by about 9%, and Level D gets the highest discount, which for online services is roughly 12%. These figures are not precise, but they give you a rough idea.
This tiered discounting has been the backbone of the Enterprise Agreement for decades, rewarding enterprises with lower per-user cost as they grow. From 1st November 2025, Microsoft is eliminating those tiered discounts. Everyone will start (and I emphasise the word "start") from the same Level A pricing, regardless of the organisation's size.
From November 2025, all organisations—big or small—will start at Level A pricing.
To put it in concrete numbers: an organisation with 24,000-plus users with Microsoft 365 E5 hypothetically would have to pay $2 million more per year for their Microsoft 365 E5 licences. The word hypothetically is key. We don't believe that a large organisation will be slapped with a higher price from 1st November. But what has been a guaranteed discount would now have to be negotiated. You would now have to ask for it. If Microsoft gives it to you upfront as a gesture of goodwill, that's what it will be: a gesture of goodwill that can be taken away. It's another lever for Microsoft to negotiate something with you.
The Discount Game
Microsoft is trying to push large organisations to a newer form of agreement called Microsoft Customer Agreement. They pitch it as a new evolution of the Enterprise Agreement. It's not. But it's their next programme for enterprises, where they want everybody to switch eventually. One of the benefits of the Microsoft Enterprise Agreement has been this discounting system, which Microsoft Customer Agreement doesn't have. In the MCA, everybody has the same price at the start of the negotiation. One of the reasons Microsoft may be doing this is to remove that advantage of the Enterprise Agreement, to take away another financial argument.
MCA ends automatic volume discounts. Reductions now rely on negotiation.
Now, the discounts may still be there. It's rumoured (it's not confirmed) that Microsoft sales representatives have internal guidance on offering upfront discount levels for Microsoft Customer Agreement clients. When you approach your next Enterprise Agreement renewal after 1st November 2025, Microsoft may offer different alternatives.
If an Enterprise Agreement is absolutely vital for you and you can't or won't switch to an MCA because there are more reasons to stay on EA, Microsoft may apply the same guidance to your EA discounting. We don't know for certain, but they may apply the same guidance to your EA discounting. But again, it won't be a guaranteed discount. It will be a gesture of goodwill or they may tell you: we can't discount your Enterprise Agreement anymore, but if you switch to an MCA we can work something out.
Or it could be used as leverage to convince you to buy more Copilot, sign a Unified Support agreement, take something that Microsoft considers strategically important right now in exchange for the discount that you used to just get off the price list.
What Can You Do?
The million-dollar question: can anything be done about it? The answer depends on whether your renewal is soon or far ahead. If you are renewing your Enterprise Agreement in the next three to six months, you can reach out to Microsoft right now, talk to your resellers and ask them for an early renewal. If you start negotiating right now, one of the key points you want to put on your early renewal is to keep the current pre-November pricing.
Secure early renewal, optimise licence usage, and prepare negotiation leverage before November.
For the rest of you who don't have an upcoming renewal in the next three to six months (and even if you do), inform your C-level, tell your budget-handling people what is happening, so it's not a massive surprise when you are approaching your renewal. Start preparing.
The almost forgotten art of optimisation needs to be revived. You can't do much about price increases and moves like this. It's their product, it's their price. You can negotiate, but to stop costs piling up uncontrollably you need to take control of and optimise your current estate. You might not need that many Copilot licences. You might not need those security packages. Question everything. Reassess actual usage.
You can also look (depending on your size and benefits) whether you actually want to switch to Microsoft Customer Agreement. For small organisations, somewhere between 2,400 and 5,000 users, CSP could be a better option than MCA and could even be better than renewing your Enterprise Agreement. But it depends on your licensing scenario, the services you consume, and where you want to be in the next three to five years.
Everyone's scenario is different, but what's common for every large organisation right now is that this price increase is unavoidable. Don't wait for the renewal. Inform and educate your board. Prepare negotiation leverage. Review your current licensing models and consult with somebody who can walk you through the alternatives and assess whether your current consumption is correct.
Start the conversation now. This is a change you can't afford to ignore.