Microsoft will eliminate the longstanding waterfall discounts on its online services sold through volume licensing, a move that partners call the biggest change to Enterprise Agreements in more than two decades and one that will raise costs for thousands of large organizations. The policy, formalized on August 12, 2025, collapses price levels B through D into a single, web‑published list price for Microsoft 365, Dynamics 365, Windows 365, Defender, GitHub and other subscription services. The change takes effect November 1, 2025 for any renewals or new purchases under Enterprise Agreements (EA), the Microsoft Products and Services Agreement (MPSA) and the Online Services Premium Agreement (OSPA) used in China.

For decades, Microsoft’s volume‑licensing model rewarded scale. Organizations with 2,400 to 5,999 users or devices sat at price level B, those with 6,000 to 14,999 at level C, and accounts above 15,000 at level D, each tier carrying a deeper per‑seat discount. Come November, that architecture vanishes. Instead of sliding down a waterfall of lower unit prices, all online services will be sold at the publicly available Microsoft.com list price. Microsoft frames the update as a simplification that “builds on the consistent pricing model already in place for services like Azure,” promising greater transparency and easier automation for partners and customers. But independent licensing analysts and large resellers warn the financial impact will be immediate and, for many, painful.

Lane Shelton, vice president of licensing consulting and IT asset management (ITAM) at SHI, the No. 12 solution provider on CRN’s 2025 list, told CRN that discarding volume discounts “changes the dynamic of the relationship between the customer and Microsoft” and could send buyers scrambling to lock in existing terms before the November deadline. Shelton said the shift represents the biggest EA licensing change in 22 years. His team will prioritize its largest customers most exposed to the price increases.

Who Wins and Who Loses

The new policy does not touch on‑premises perpetual licensing, U.S. Government price lists, or the worldwide Education price list. It also does not represent a blanket list‑price hike. Instead, it eliminates the ability to apply programmatic discounts at the EA, MPSA, or OSPA level. Some customers may even see a net decrease if their negotiated EA price was above Microsoft.com’s rate. However, industry modelling suggests those winners will be scarce.

Third‑party estimates published by CRN and SDxCentral indicate that moving to the single web price could lift effective list spend by roughly 6 percent for former level B customers, 9 percent for level C, and 12 percent for level D. These are directional figures based on historical price‑band deltas and should be validated against each customer’s own Customer Price Sheet, but they underscore the materiality of the shift. A Fortune 500 company with an E5‑heavy mix and tens of thousands of seats could see its annual online services bill jump by millions of dollars.

The broad strokes are clear: smaller and mid‑market accounts, particularly those that already purchase through the Cloud Solution Provider (CSP) program or the Microsoft Customer Agreement for Enterprise (MCA‑E), may avoid direct exposure. Those that remained in EA/MPSA, however, will have their volume‑discount advantages erased at renewal. Partners that have long relied on margin arbitrage from waterfall discounts will lose a lever, forcing them toward services‑led or outcome‑based models.

Microsoft’s web‑direct sales channel benefits from parity and simplified quoting, and the Redmond giant itself stands to capture margin previously surrendered through volume concessions. The single‑price model also pushes remaining EA customers closer to the CSP ecosystem that Microsoft has been championing. Earlier this year, the company ended EAs for organizations below 2,400 users and introduced three‑year CSP subscriptions for products like Microsoft 365 E3, steps that made CSP a more natural landing zone. The pricing consolidation marks another nudge in that direction.

A Decade of Discount Dismantling

The August announcement continues a years‑long campaign to flatten volume‑licensing pricing. Microsoft eliminated Azure waterfall discounts in 2017 and scrapped level‑A EA discounts relative to CSP in 2018. Copilot for Microsoft 365 launched without tiered pricing at a flat $30 per user per month. The vendor now prioritizes consumption metrics and commitment roadmaps over raw seat counts. “Volume doesn’t really matter that much—it’s really about what you’re going to do with the Microsoft ecosystem,” Shelton said. “It’s really about your roadmap. How deeply are you going to go? How much are you willing to commit?”

That strategic pivot places the onus on procurement teams to find value elsewhere. Multi‑year commitments, Azure consumption rebates, or bundled service packages may offset the lost waterfall discounts. But the timeline is tight. With the November 1 trigger, contracts that renew after that date will be priced under the new rule unless customers act before their anniversary.

Action Plan for IT and Procurement

The window for planning is narrow but actionable. SHI’s Shelton advises that even three months is enough for affected customers to reassess and, if necessary, pull forward purchases or early‑renew to lock in current pricing. The immediate steps for any organization facing an EA or MPSA renewal in late 2025 or beyond are:

  • Inventory every online service SKU on your existing Customer Price Sheet.
  • Map renewal dates and planned new purchases onto a calendar; highlight any items that would be priced after November 1.
  • Run a line‑item comparison between your effective EA/MPSA price and the current Microsoft.com list price. Model the net‑present‑value impact over one, three, and five years, including sensitivity analysis for product mix shifts.
  • Engage your Microsoft account team or partner of record immediately to explore early renewal, term extension, or other protective measures.
  • Negotiate compensating concessions: multi‑year discounts, committed‑use rebates, or services bundles that recoup the lost volume benefit.
  • Evaluate alternative procurement channels: for some workloads, CSP or MCA‑E may now offer more favorable economics.
  • Strengthen FinOps and ITAM practices. Accurate tagging, resource right‑sizing, and elimination of idle or over‑provisioned licenses will be critical to offset the license cost pressure.

Broader Industry Pressures

Microsoft’s pricing overhaul does not exist in a vacuum. Hyperscalers and major software vendors are rationalizing license models. Broadcom’s post‑acquisition revisions to VMware’s Cloud Service Provider program forced similar binary choices between subscription and perpetual savings. Amazon Web Services raised pricing for Cognito; Google Cloud recast Workspace plans. Each move heightens enterprise scrutiny on cloud cost predictability.

The elimination of waterfall discounts may also attract regulatory attention in markets where Microsoft holds dominant share. Price standardization across the board can simplify procurement auditing but simultaneously raises questions about supplier concentration. Public‑sector bodies, already wrestling with tight IT budgets, will likely feel the sharpest sting.

Meanwhile, Microsoft’s own sales organization has undergone headcount reductions in 2025. Customers report longer response times from account teams and partners, a friction that could complicate renewal negotiations during the compressed planning window. License management experts urge companies to begin price‑impact modelling independently rather than waiting for vendor‑provided assessments.

What the Change Means for Windows and Cloud Admins

For Windows administrators and cloud architects, the pricing shift adds a financial lens to architectural decisions. Services once discounted as part of a bundle—Defender for Endpoint, Windows 365 Cloud PCs, GitHub Enterprise, or identity and management suites—will now carry the full public list price. That may accelerate evaluating whether to replace certain Microsoft online services with third‑party alternatives or to bring workloads back on‑premises where perpetual licensing remains unaffected.

Multicloud strategies may also gain momentum. If broad Microsoft commitments no longer yield proportional discounts, organizations can apply more pressure by diversifying cloud spend across Azure, AWS, and Google Cloud. Hybrid architectures that keep sensitive workloads on‑premises while consuming specific SaaS where the value is clear become more attractive.

The November 1 date is not a hard cliff for every customer. Existing Customer Price Sheet terms remain in effect until the next renewal or the addition of net‑new online services not already listed. But for the majority of large enterprises with fall or winter anniversaries, the new pricing reality arrives within months. As Lane Shelton put it: “This is a great time to sit down and look at where you are at with your agreement and plan accordingly.”

Procurement teams that move now can soften the blow; those that wait will find renewal quotes reflecting a simpler but steeper Microsoft price list.