Microsoft changed the economics of enterprise licensing in Nov. 2025, and most EA customers will feel that at their next renewal. In a recent Redmond Magazine Tech Talk, Lane Shelton (Director of Advisory Services at Directions on Microsoft) and Jose Rodriguez (VP of Business Development at TrustedTech) went through what changed, what the renewal ‘financial cliff’ looks like, and how you decide between renewing your EA and moving to the CSP program.
What actually changed in November 2025
The CSP program itself didn’t change. Microsoft changed the price list underneath it. Lane Shelton put it this way: for a number of years EA customers had four discount levels (A to D), and the larger you were, the bigger the discount. In November 2025, Microsoft removed the discounts for subscription licensing. Level D is still on the price list, but the discount is gone (apart from perpetuals for now).
The end result is a level starting line. A 50k-seat company and a 5-seat company are both starting their next renewal from the same base price. That’s why CSP (which was designed for the small and mid-market) is now something that a larger organization can seriously consider. Your EA and your CSP quote both start from the same point.
Microsoft has been progressively increasing the number of customers it hands over to partners. It started off at around 2,500 to 3,000 users, and now TrustedTech is seeing EA customers moving over at 30,000 seats. If Microsoft doesn’t see an account growing into an E5 or an E7, they may well decide that a partner is the way to go with that customer.
Why the renewal hits harder than the price list suggests
Beware of the renewal cliff as a number of the increases all coming in at once. The discounts you negotiated on the last renewal don’t normally carry over, EA price protection runs out, and all of the price increases that Microsoft made during your term come in at once. His rule of thumb is that 15 to 25% is ‘table stakes’ for an increase, and it can be significantly higher. That’s just one expert’s view; that’s not a guarantee at all. Your number will be determined by answering three questions.
- How big is your EA? The bigger your EA (Level D and above), the bigger the swing you’ll see. You’ll have negotiated better prices, and those prices will expire.
- What did you get last time? Protections that survive renewal (e.g. a not-to-exceed clause) make the landing a bit softer. You’d have no protection at all without one.
- How long has your EA been running? A 5- or 7-year term sees the prices drift further and further away from where Microsoft is today. By year 7, according to Lane, it’s absolutely horrendous.
The useful bit is that everyone now starts from list price, so you can look up what’s coming rather than having to work it out. Do the calculation before Microsoft gets round to sending you a quote.
What life under CSP looks like next to an EA
An EA locks you into a 3, 5, or (in some cases) 7-year commitment. CSP gives you a menu of options: 3-year, annual, annual with monthly billing, or month-to-month. Microsoft added the 3-year CSP SKUs as part of its push to get customers into the CSP program, covering the core product SKUs (E3, E5, E7 and Copilot), so the old argument that CSP meant no long-term pricing is no longer valid for the core products. For a full side-by-side, see our breakdown of the pros and cons of switching from EA to CSP.
CSP can be visualized as a three-layer cake. The monthly is the most expensive, the annual is in the middle, and the 3-year is the cheapest. Once you’ve got a 3-year contract, you pay for all three years. A 1000 seat company might go with 700 3-year licenses for the people it knows it’s not ever going to lose, 200 annuals, and then some monthlys for the people who are seasonal. Organizations will occasionally split their licensing 80/20 between the committed and the flexible terms. That 80/20 split is the one that really matters for organizations that are going through acquisitions and divestitures or have a lot of headcount that’s on the frontline that’s going to be moving around.
It doesn’t have to be all one or the other. You can have an EA for part of your estate and then use CSP for the rest (for example, seasonal staff), or you can have Azure running through CSP and the rest of the estate in EA. That ability to scale seats up and down is also why many enterprises are walking away from paying for seats they don’t use. We cover that trade-off in shelfware vs. elasticity and why enterprises are moving from EA to CSP.
Four things large organizations should check before moving
Now comes the ‘wonky’ bit, and it’s the bit where the big organizations get caught out.
From SA discounts
Lots of the larger organizations still have their “From SA” discount (that was a discount Microsoft offered way back when you swapped perpetual rights for a subscription in the form of Office 365 E3). CSP has no such thing, and that’s what used to rule it out for the large customers. To check, simply ask your contract admin for your price sheet and look for a line that says M365 FSA at a rate below the standard rate. The November price change has made that a much smaller barrier than it used to be, but it is still a barrier to entry.
Your perpetual estate
There’s no apples-to-apples comparison to be made between EA convenience on perpetual licenses and CSP. Workarounds do exist. Lane gave the example of a customer who priced their server licensing via the transactional MPSA program (which discounts on volume purchased rather than company size) and found that actually came out cheaper than their EA. It’s all down to what you actually own and how you go about pricing it.
The Microsoft Customer Agreement
EA terms go back to the negotiable Microsoft business agreements. The MCA under CSP is not negotiable at all. No amendments. No modifications. It’s a very short agreement which just links out to the product terms, the data protection agreement and the service level agreement. It was designed for consumption billing, so signing one for Azure is straightforward. For a user-based license at a very heavily regulated company which used to have ten amendments on its EA, it definitely warrants a close read. If your contract or your privacy terms are in play, then get Legal in early.
Support
CSP has support baked in. If you’ve got a large Unified Support contract, work out your baseline support under CSP and whether you can then add to that. Jose sees that conversation all the time. Unified Support is priced as a % of your Microsoft spend (he’s seen 3.5 to 12%), and one customer came to him with a contract where they were paying around $30k per ticket and were filing 27 a year. A direct CSP partner like TrustedTech can offer you a consumption-based alternative to Unified Support with the exact same escalation path to Microsoft.
E7, Agent 365, and the case for buying time
Why did Microsoft go with E7 rather than just adding agent management to E5? Licensing is the language of Microsoft’s business model. Agent 365 requires E5-level Defender telemetry, E5 data protection via Purview, and E5 agentic identity governance via Entra. E3 doesn’t qualify. E7 has all of E5 in it, and there’s no From SA discount in E7, so those old discounts go away when you move up. If you’re on CrowdStrike, Proofpoint, or some other third-party tool in parallel with Microsoft, then E7 forces you to look very hard at whether you actually need to be paying for both.
E7 is costly (he cited $99 per user as “just the beginning” - check current pricing in Partner Center), comes with Azure meters that will spin as you go (i.e., it’s not a free plan), and is essentially a bet that Microsoft’s vision of agentic AI is the right one. The aggressive E7 offers also typically come with a floor on how much you can reduce your counts.
TrustedTech has a customer at approx. 30k seats being pushed towards E7 with excellent introductory pricing. Their job is to model the impact of a price move after the first three years, as that swing of 30k seats can be in the millions. The alternative is that if you’re not ready, a one-year CSP term (or monthly) gives you the time to see where the market goes. Cost check is well worth taking on board too. You can very quickly end up spending more on E5 with Copilot, Agent 365 and the other add-ons than you would on E7, so you need to price both before you make a decision.
Azure: MACC versus pay-as-you-go
Your EA will very likely not have covered Azure, so Azure deserves its own comparison. A very real risk with the Microsoft Azure Consumption Commitments (MACC) is that you do a massive commitment and there are actual capacity constraints, so you may well be unable to consume what you’ve committed to, and you still end up paying the bill. Pay-as-you-go via CSP looks far more attractive in that context as you’re not on the hook for spend that you can’t actually execute.
With direct Pay-as-You-Go via an EA or MCA-E, there are no discounts at all, whereas with CSP you can have a discount as a % of the term. Organizations sign a MACC, don’t use it at all, and have absolutely no recourse. The bigger long-term risk isn’t the user license at all. It’s the Azure meters you can’t see. That’s particularly the case as the AI models and token-based billing start to take off. You can’t really see that budget in any case. If Azure is part of your move, our best practices for Azure migration from EA to CSP walk through how to do it cleanly.
Price protection, and the October incentive change
Is CSP’s exposure to price increases actually greater than an EA’s three- to five-year lock? CSP doesn’t have the same price protection as an EA, but noted that EA protection can also be ramped so the increases don’t all hit at once. Some CFOs would prefer to absorb the price increases over time. Others will just say you’re effectively allowing the vendor to train you to pay higher prices.
The October change is a “reverse price increase”: Microsoft reduced partner incentives on SKUs like E1, E3, SharePoint, and Exchange Online, which naturally raises the customer price. To compare fairly, TrustedTech locks the core three-year SKUs (M365 E3, E5, E7, Copilot and some Dynamics licenses) in a financial model and sets that against the EA over the same three years. The add-ons that aren’t available as three-year SKUs are where the customer carries price risk. Some partners will lock a percentage discount for three years. That protects the discount, not the price, so ask exactly what you are getting.
Will you lose your Microsoft account team?
No, not with a direct partner. Jose referred to that as a very widespread misconception. A Tier 1 partner such as TrustedTech works directly with the Microsoft teams on the support escalations and on understanding what the customer is actually trying to achieve. That’s part of their role. Which CSP you pick is the key issue here. You need to ask any provider whether they are a direct or indirect partner.
The cutover isn’t a migration; people should stop using the term. It’s a transfer, and it’s done one of two ways. The first is for the existing licenses to simply transfer to the CSP (covers around 90-95% of products). The second is for the CSP to inject the licenses into your tenant, and the EA licenses then drop off. Either way, there is no downtime. Lane’s advice is the same in either case: if you’re considering a partner, then you need to get them to explain their cutover process, name the people they’ll be working with, and tell you who to contact if anything goes wrong. If they can’t, then they’re not the right partner.
When to start, and how to use CSP as leverage
You can’t move from an EA to a CSP at the midterm. Contracts are contracts. You don’t need to wait until the term ends to start looking, though. Jose would suggest you start looking about six months prior to renewal (which is also around the time that Microsoft will issue you their renewal quote). One caveat, though: customers will often take the CSP quote and compare it to three-year-old EA pricing, and that’s not a fair comparison. Larger or more complex estates may need an even longer lead time, which we explain in why your EA to CSP transition needs a long runway.
Does CSP as a negotiating tool work? It only works if you’re not using it as a tactic. If you’re genuinely modeling your life under CSP and it’s a viable option, the leverage is there. Either way, you end up with a win. Microsoft improves their offer, or CSP becomes your licensing vehicle. It is recommended to get independent advice prior to signing anything, even if you’re already in discussions with Microsoft or another partner.
Frequently Asked Questions
Q. What precisely changed in November 2025?
A. Microsoft has taken the Level A through D discount off the subscription licensing, so everyone’s renewal is now from the same base price. Perpetuals are the only exception at the moment. Always check the terms in Microsoft Partner Center prior to renewal.
Q. What’s the size of the EA renewal ‘financial cliff’?
A. 15-25% is typical, and it can go significantly higher. It’s all down to your agreement size, what you negotiated last time, and how long your EA has been running. It’s an estimate, not a guarantee, so you’ll need to model your own numbers.
Q. Can I move from an EA to a CSP prior to the end of my EA?
A. No. There is no midterm move. You start looking at six months out from renewal when Microsoft will provide you with a renewal quote.
Q. Do I lose my Microsoft account team under CSP?
A. Not with a direct (Tier 1) partner such as TrustedTech, who work directly with the Microsoft teams on escalations and customer outcomes. You need to establish whether the partner you’re considering is a direct or an indirect partner.
Q. Is the EA to CSP cutover going to be disruptive?
A. It is just a transfer, not a migration, with no tenant downtime at all. The licenses either transfer over, or a CSP injects the new ones in and the EA licenses just drop off. Ask any partner to walk you through their cutover, and they’ll be able to name you their contacts.
Q. Does CSP work for highly regulated organizations?
A. It’s harder. Regulated industries with data sovereignty needs and a requirement for heavily negotiated contracts will find it harder as the MCA is not negotiable. Born-in-the-cloud, subscription-heavy organizations tend to fit more easily.
Conclusion
The lesson from both speakers is that CSP is no longer just the small business program. With the Microsoft discounts now leveled, the real comparison is a renewal quote against a modeled 3-year CSP plan with your perpetual estate, your SA discounts, your contract terms, and your Azure strategy all factored in. That takes time, and that’s why you absolutely need to be looking at it six months out.
If you want to see how other companies have gone about the move, then have a look at the TrustedTech guides on planning your EA to CSP transition, the EA to CSP FAQs for the midmarket customer, and the strategic reasons behind Microsoft’s move. For real-world examples, see how Togetherwork left an EA renewal behind for a leaner CSP model and how Nordic Investment Bank found that CSP beat its EA.
If you’re up against a renewal, then TrustedTech’s EA to CSP transition services start with a no-commitment look at your agreement so you can see the cliff and the alternatives side by side.
