Microsoft’s cloud services are at the heart of how organizations operate and innovate—and staying ahead of changes in licensing and pricing is more important than ever. With the announcement of sweeping changes to Microsoft’s pricing for online products—including the widely used Microsoft 365—businesses must prepare for new financial realities and strategic decisions. Navigating these updates isn’t just about crunching numbers; it’s about making smart, forward-thinking decisions that support long-term growth and sustainability.
This blog unpacks the details behind Microsoft’s new pricing strategy, clarifies who will feel the impact and offers actionable steps to help your team stay ahead of the curve. Whether you’re planning renewals, fine-tuning IT budgets or negotiating with Microsoft, you’ll find practical guidance here to ensure your organization thrives in this evolving landscape.
What’s happening?
Microsoft is standardizing its pricing for online services, including Microsoft 365. As part of this standardization, Microsoft is eliminating automatic volume-based discounts for online services. While tiers B–D remain nominally, all pricing will default to level A list pricing, which doesn’t have discounts. These changes will affect several purchasing programs and will have a direct impact on many organizations.
Key details of the Microsoft pricing changes
- Effective date: November 1, 2025
- Impacted programs: Enterprise agreement (EA), online services premium agreement (OSPA), Microsoft products and services agreement (MPSA)
- Changes: Elimination of volume-based, tiered pricing for online services, including Microsoft 365
- Impacted customers: All EA, OSPA and MPSA customers with online services in their agreement
- Exclusions: U.S. government and global education customers; on-premises software pricing won’t change
Why is Microsoft making these changes?
Microsoft has stated publicly that these changes are the next step in standardizing pricing models across products and purchasing channels. However, this move also accelerates the shift away from volume as a primary metric and negotiating tactic and toward consumption-based and strategic value negotiations.
What does this mean for you?
For many of you reading this, your prices will increase the next time you renew or purchase new cloud products from Microsoft. All customers renewing or purchasing after November 1, 2025 will receive standard level A pricing, which doesn’t include discounts. Tiers B (6% discount), C (9% discount) and D (12% discount) will no longer be automatically applied. For example, this means that for a typical tier D customer, with more than 15,000 users, may see cost increases of up to 12% at renewal.
Proactive steps you need to take
- Review your Microsoft EA agreement to determine if you have products impacted by this pricing change
- Assess your current entitlements and consumption within your IT estate
- Determine your current discount tier can help you plan for and budget for these price increases at your next renewal
- Review your future roadmap for Microsoft product needs and your existing EA. Now is a great time to explore alternative licensing models, such as the cloud solution provider (CSP) agreement, to determine if making a licensing model change might benefit your business
Why is this important?
Microsoft’s pricing changes highlight just how challenging it can be to manage technology spend and risk in today’s rapidly evolving IT landscape. Even when you feel confident about your current agreements and budgets, unexpected shifts from major vendors can disrupt financial planning, operational stability and long-term strategy. For many businesses, these price increases may mean significant new costs at renewal, requiring adjustments to budgets and potentially impacting other IT initiatives.
How Flexera can help
Flexera is the industry leader in hybrid IT asset management (ITAM) and FinOps. From on-premises to SaaS to the cloud, we can provide complete visibility into your Microsoft estate, as well as all major technology vendors. Contact us to learn how we can help you navigate these changes and solve your technology management challenges.
Want to learn more? Hear from Microsoft licensing experts on December 2nd. Grab your seat:
