Microsoft's 2026 enterprise agreement renewals will be the most expensive ever. The company is eliminating its four-tier pricing system that offered 5-7% discounts, cutting typical discounts from 15% to roughly 7-8%, slashing partner rebates, and taking large customers direct instead of through resellers.
Chapters
So we're definitely going to focus very heavily on that. And so why this is important is Microsoft is setting 2026 up to be the most expensive renewal cycle we've ever seen. The change that they made, you know, they're eliminating price tiers. And what that means is right now Microsoft in an EA has four price levels. Level A, level B, level C, level D. And between those on the Microsoft 365 product, there's anywhere between about 5 and 7%. So if a product is $100 on Level A, it's probably 93 or, you know, between 93 and 95 on B, et cetera, et cetera. Now they've announced that they're eliminating some of those price tiers. Now, they also have not, as of today, announced which products they're eliminating this on. But there's speculation in the market that it's going to be all of the subscriptions. So your M365E5, your project online, your Dynamics, your Vizios, your power apps, all of that. So there is speculation that it's going to be all products that are in the M365. Now, Microsoft said they're doing that to get price parity, but they started this actually with Copilot. When Copilot launched, it was one of the first products that we saw that did not have level discounts. The list price for each level was $30 per user per month. And so what they've said is we're eliminating some, we're waiting to see what those sum are. Like I said, speculation is it's going to be all products. And you know, they're, they're aligning that to the prices that are on Microsoft.com now here in a little bit, I have a slide that shows what the impact is. But the other thing that they, they're doing in general in market is they're tightening their discounting policy. So in the past, for instance, if you were negotiating an enterprise agreement and, you know, let's say the target discount that you potentially could get was maybe 15%, we're seeing half or less in terms of what they're pushing out into the market. Now they've also cut, you know, the way that they pay your partners, so your reseller on your enterprise agreement or your lsp, they in December of last year basically eliminated the rebates that they gave back to them, which has forced those companies to write lower levels of services to their clients. And then the other thing that they've done is they've started to take a number of their larger clients direct cutting the channel completely out. And so if you look at all of these things that they're doing, everything that they're doing in market right now is pushing things to drive your cost up. And I'm not even talking about some of the typical tactics that we see from Microsoft around, things like bundling and putting in.
