In this article, we analyze the main types of Microsoft contracts, clearly explaining how they work and how different conditions can affect costs and license management, making it easier to evaluate their impact on budget and business operations. For the same license, the price can vary by as much as 40% between companies.
Let’s take Microsoft 365 E3, with a public list price of around €35/user/month: it can cost €29 or €40, and for 1,000 users the difference exceeds €130,000 per year—without the product changing by a single comma.
We’re not talking about “mysterious” discounts or pricing errors: the variability lies entirely in Microsoft’s contractual structure. An element often invisible to those who look only at the sticker price, but which creates conditions that can impact the budget, operational flexibility, license management, and compliance.
The principle is simple: what you pay and under what conditions (how, when, and under which rules you can use and modify the licenses) depends on the type of agreement you sign and the level of commitment you accept.
The Microsoft Enterprise Agreement (EA) has historically been one of the most widely used Microsoft licensing contracts by large organizations with at least 500 or more users/devices, as it allows licensing of Microsoft cloud services and/or on-premises software over a three-year period, with centralized license management and volume-based discounts.
Starting in January 2025, as announced in the November 12 blog post by Nicole Dezen, Chief Partner Officer and Corporate Vice President, Global Partner Solutions, some Enterprise Agreement (EA) contracts for the direct cloud market will no longer be renewable under the current EA framework. Microsoft will begin notifying affected customers—according to the blog, “a small percentage”—that EA renewal will no longer be possible at the beginning of the year.
In place of the EA, Microsoft will propose to these customers the Microsoft Customer Agreement for enterprise (MCA-E), the digital evolution of the traditional EA. For SMC customers (for Microsoft, these are companies with fewer than 3,000 users), the recommended options will be the Cloud Solution Provider (CSP) Program (for those seeking a services and support experience via a partner), or the MCA-E (for those preferring a direct purchasing relationship or a per-user purchase model).
This decision by Microsoft aims to strengthen its partner ecosystem in the small and medium customer (SMC) segment, which, as a reminder, includes companies with fewer than 3,000 users. Still in the blog post, Nicole Dezen highlights the company’s commitment to supporting the needs of this segment, allocating 70% of total incentives to partners serving it.
The market appears highly profitable: according to IDC data from October 2024, the Total Addressable Market (TAM) for SMCs in FY25 will be $661 billion (of which $467 billion in cloud solutions), with an annual growth rate of 15% (20% for cloud) over the next 4 years.
With an Enterprise Agreement (EA), typical of large organizations, you sign a three-year contract and maintain a minimum number of licenses, receiving in return double-digit discounts compared to the list price. On the other hand, with monthly purchases through a Cloud Solution Provider (CSP), you have maximum flexibility—licenses can be added or removed almost in real time—but at a higher cost that can exceed 30%. There are also differences when it comes to compliance: in the EA, conditions are more structured, with formal audits and periodic reporting, offering greater stability and traceability in case of reviews. In the CSP model, management is leaner and decentralized, but requires constant attention to avoid non-compliant usage, since the increased flexibility reduces the degree of “automatic control” provided by the contract.
After seeing how contract type can affect license price by up to 40%, the next step is to understand two variables Microsoft uses to segment customers: commitment level (committed vs transactional) and license volume.
Microsoft, in fact, does not sell licenses in the same way to everyone.
Here the commitment level variable comes into play:
The accessibility matrix thus defines not only which contracts you can sign based on company size but also whether you can access more advantageous “committed” rates or if a “transactional” approach is more appropriate. Some benefits—like volume discounts, Software Assurance, or three-year payment plans—remain Enterprise-only.
Important Update – August 2025 Microsoft announced that from November 1, 2025, it will eliminate Price Level discounts for online services in Enterprise Agreement (EA) and Microsoft Products and Services Agreement (MPSA) contracts. This means prices for levels B, C, and D will be aligned with level A (public price). We discussed this in a dedicated article. [insert link to new article]
Contracts typically for Enterprise companies, i.e., with a minimum of 500 users, include:
L’EA è pensato per chi ha una base utenti stabile e vuole una copertura completa, sia per il cloud sia per il software on-premises, con incluso Software Assurance (attenzione però che Microsoft ha ritirato le offerte From SA per Microsoft 365 e Dynamics 365 dal 1 aprile 2024: si possono rinnovare, ma non estendere/aggiungere).
Il rovescio della medaglia? Durante l’anno si possono aumentare le licenze, non ridurle: la flessibilità è limitata, ma la prevedibilità dei costi e i vantaggi economici lo rendono ancora oggi la scelta preferita di molte enterprise.
Una variante più recente è il Microsoft Enterprise Agreement Subscription (EAS), che mantiene la stessa logica di impegno triennale dell’EA ma con un modello in abbonamento: i costi sono inferiori rispetto all’EA tradizionale ma alla fine del contratto le licenze non restano di proprietà dell’azienda.
From January 2025, Microsoft will start not renewing some direct cloud EA contracts (we also discussed this here), encouraging interested customers to migrate to the Microsoft Customer Agreement – Enterprise (MCA-E), the more modern “cloud-first” version of EA.
However, the transition is not always advantageous: EA offered structured volume discounts and price protection on Azure for three years—benefits that may be lost with MCA-E, leaving room for more volatile pricing and case-by-case negotiations, also influenced by currency exchange rates. Moreover, MCA-E is an evergreen contract, without fixed expiration dates: fewer formal opportunities to review conditions and prices, with the risk of dragging a suboptimal model for years.
With the removal of Price Level discounts for online services from November 1, 2025, the direction is clear: Microsoft is reducing the historical advantages of EA and pushing more customers toward MCA-E and CSP, models where discount leverage is lower and prices are increasingly aligned to public list prices.
At least regarding “enterprise-only” benefits—and the constraints that come with them—it is essential to correctly read and interpret the structure of Enterprise Agreement (EA) contracts. Many elements impacting budget, flexibility, and compliance are hidden in clauses and documents composing the agreement: from volume discounts and price protection to restrictions on license reduction and true-up rules. For this reason, here is a quick deep dive into the EA structure and its component documents to understand where key conditions hide and how they interrelate.
The legal foundation of an EA is the Microsoft Business & Services Agreement (MBSA), an “evergreen” document that sets general business terms with Microsoft, from privacy management to audit procedures, without specific purchase obligations.
Under the MBSA umbrella sits the Enterprise Agreement, defining specific terms and conditions: duration, license transferability, product use, inclusion of Software Assurance, and rules for mergers or acquisitions.
However, the EA alone is not enough to purchase licenses: at least one Enrollment is required, the operational contract that defines what is purchased. Two main types are available:
In summary: EA is a multi-level structure where MBSA defines general rules, EA adds specific conditions, and Enrollments determine the products actually purchased and govern operational modes. Knowing this well is key not to miss opportunities and economic benefits.
In the corporate segment (50–500 users), the most common contracts are the Microsoft Customer Agreement (MCA), which has no minimum user constraints, and the Microsoft Products and Services Agreement (MPSA), available for organizations with at least 250 users/devices.
For SMEs (typically under 50 users), the historically most common models were Microsoft Open—now being phased out—and the direct channel.
The Open License, although simple and familiar to many resellers, is gradually disappearing from official options: Microsoft is pushing for more modern models like Open Value or purchases via CSP. The direct channel is mainly used by micro-businesses or those wanting immediate Microsoft relationships but does not offer volume discounts or deferred payment conditions.
When talking about Microsoft contracts, attention almost always focuses on the type of agreement—EA, MCA, MPSA—and their conditions.
However, an equally important, often overlooked variable is the purchase channel. Even with the same contract, the final price can vary significantly depending on who sells you the licenses and how many intermediaries exist between you and Microsoft.
An example is the Cloud Solution Provider (CSP) program: it allows buying monthly or annual licenses through Microsoft CSP partners, with billing modes defining whether the agreement is committed or transactional. The partner acts as an intermediary in license management and can offer additional services (support, migrations, training). This model guarantees maximum operational flexibility but often at higher prices than an Enterprise Agreement.
The reason is simple: every link in the commercial chain—from Microsoft (direct) to Licensing Solution Provider (LSP), CSP partners offering extra services, down to distributors and local resellers—applies its own margins and adds services that inevitably reflect on the final price.
Take a three-year EA for Microsoft 365 E3 with 1,000 users: if you sign it directly with Microsoft, you might get a discounted list price (e.g., €33 per user/month). Passing through an LSP, the cost rises 3-5% to cover margins and extra services. If you rely on a local reseller who buys from an LSP or distributor, two margin layers can make you pay 10-15% more.
Every Microsoft contractual choice—from agreement type to purchase channel, through commitment level and management methods—has concrete effects on four key areas: ha effetti concreti su quattro aree chiave:
Le condizioni contrattuali possono inoltre influire su aspetti pratici legati alla flessibilità operativa come la possibilità di aggiungere o rimuovere licenze in corso d’anno, gestire picchi temporanei di utilizzo, estendere rapidamente la copertura a nuove sedi o società acquisite, effettuare switching tra SKU in base alle esigenze, favorire la migrazione graduale verso il cloud, o applicare downgrade. This,upgrade senza dover attendere la fine del contratto. Questi margini di manovra variano molto a seconda della struttura dell’accordo e possono fare la differenza tra un licensing agile e uno vincolante.
Modelli più snelli e decentralizzati come il CSP — soprattutto in modalità transactional — privilegiano flessibilità e rapidità operativa, ma richiedono controlli interni più rigorosi, una gestione autonoma del reporting e un monitoraggio continuo, poiché l’assenza di scadenze e audit programmati porta a individuare eventuali problemi solo a posteriori.
In altre parole, scegliere il contratto più indicato significa bilanciare costi, flessibilità, possibilità di ottimizzazione e requisiti di compliance in base al proprio profilo aziendale e ai piani di crescita.
At WEGG siamo consulenti esperti di licensing Microsoft, con una conoscenza approfondita delle condizioni contrattuali e delle diverse tipologie di accordo. Possiamo supportarti nella valutazione e nella scelta del modello più adatto per la gestione delle licenze, delle relative ottimizzazioni e nella negoziazione dei rinnovi.
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