Back in summer, we alerted you to Microsoft’s removal of the tiered “Level B/D” discount model for Online Services under the Enterprise Agreement (EA). As of 1 November 2025, this change is in effect, meaning your next EA renewal (or any addition of new Online Services) will be priced at the “Level A” baseline. For organisations with complex licensing estates, this shift is not just a line in the contract. It impacts budget, strategy, and platform adoption.

What’s actually changed

• The automatic volume-based discount tiers (Levels B, C, D) for EA/MPSA Online Services have been removed. Everyone renewing from now on will default to the Level A list price unless they negotiate otherwise.

• The trigger is renewal or first-time addition of an Online Services SKU to the CPS after 1 November 2025.

• On-premises software, US Government and Education licensing are not directly impacted by this change.

What’s being felt in the market

• Early reports suggest uplift of ~6-12% depending on previous discount tier. Organisations that previously sat at Level D are seeing higher impacts.

• Secondary effects are emerging: e.g., higher cloud subscription spend feeds into increased support costs (for example via Unified Support) because support costs are often a % of overall Microsoft spend.

• Some organisations, faced with tighter budgets and this cost increase, are choosing to pause new add-ons, re-evaluate licence plan types, or shift more heavily into usage optimisation ahead of renewal.

If your EA renewal is within the next 12 months, here’s what you should do

1. Run an impact model

Establish a baseline of your current on-line services spend and licence mix. Model the shift from whatever discount tier you were on, up to Level A, and include any indirect impacts (like Unified Support).

2. Optimise before you renew

Clean up inactive accounts, re-evaluate your E3/E5/F-SKUs, purge unused add-ons like Audio Conferencing or Teams Premium, check security-suite deployment.

3. Re-assess your buying route

With the tiered discounts gone, the value trade-offs between EA vs CSP/MCA are changing. Evaluate total cost, flexibility (term, ramp up/down etc), and any partner offers.

4. Negotiate terms, not just price

With list price more fixed, the negotiation levers are:

• term length
• swap/step-up rights
• true-up/down flexibility
• migration/technical-support funding
• price-caps for future add-ons

5. Set governance now

Put in place quarterly license hygiene, a watchpoint for workloads still on old pricing, and guardrails for new add-ons (for example, limit Copilot or security roll-outs until value is proven).

Livingstone’s Point of View

At Livingstone we strongly believe that this change isn’t just a price hike. It represents a structural shift in how Microsoft wants organisations to buy, use and govern their cloud licensing. The tiered-discount world encouraged broad consumption as the scale lever; the new baseline means value will increasingly come from smart adoption, commercial negotiation and optimised usage rather than simply “buy bigger for cheaper”.

For our clients this means three key focus areas:

• Data-led negotiation readiness: We help you unearth hidden licence waste, model future state cost and usage, and prepare the hard questions for your Microsoft negotiation.

• Route-to-market strategic choice: With EA’s discount model changed, many organisations are re-thinking EA vs CSP vs hybrid models. We help you compare and select based on total cost of ownership, flexibility and your roadmap.

• Governance and adoption foundation: Once you’ve negotiated good terms, the real game becomes “are we getting value?” Quarterly hygiene, adoption metrics, and usage optimisation will determine whether you pay more but get less, or pay more and get much more.

Need help?

If your EA renewal is within the next 12 months, now is the time to act.

Reach out to info@livingstonetech.com to talk to one of our experts about how to ensure your next Microsoft contract works for you.

Learn more

Get our Altitude guide, a step by step approach to optimising your Microsoft agreement throughout its life.