Adding Licenses Mid-Term: Negotiating Changes During Your Microsoft Agreement

Adding Licenses Mid-Term: Negotiating Changes During Your Microsoft Agreement

Why Mid-Term Changes Matter in Microsoft Agreements

Business needs can evolve faster than your Microsoft licensing contract.

A typical Enterprise Agreement (EA) runs three years, but your organization might grow or change significantly in that time.

Whether it’s rapid headcount growth, an acquisition, or rolling out a new service, you may need to add licenses mid-term in your Microsoft agreement well before renewal.

These mid-term changes matter because handling them poorly can lead to unexpected costs and contractual headaches. For an overview, Managing Microsoft Licenses Mid-Term: Co-Termination, True-Downs & Ramp-Up Strategies.

If you add licenses mid-term without a plan, it can become expensive and rigid. Microsoft’s default is often to charge the full list price for any additions you make between renewals, which can blow your IT budget.

Worse, once added, those licenses usually lock in for the remainder of the term – you can’t easily remove them if circumstances change. In short, mid-term license additions must be managed strategically.

By anticipating growth and negotiating flexible terms up front, you can avoid paying a premium or getting stuck with unwieldy contract terms.

The sections below outline how to tactically handle mid-term additions under different Microsoft licensing programs and scenarios.

Adding Licenses in an EA via True-Up

If you’re on a Microsoft Enterprise Agreement, the standard method for mid-term increases is the true-up.

A true-up means you can add licenses as needed during the year, then report and pay for those additions at the next anniversary of your EA.

For example, if you started the year with 1,000 licenses and grew to 1,100, you’ll report the extra 100 at true-up time and be billed for them (usually prorated for the months they were used).

This process ensures you stay compliant with your contract by paying for everything you deploy.

However, true-up license pricing is something you need to lock down in your EA contract. Always negotiate that any mid-term license additions receive the same discounts or unit pricing as your initial purchase.

Do this during the EA negotiation or renewal – don’t assume Microsoft will automatically extend your original discount to new licenses. If it’s not in writing, Microsoft may charge a higher “then-current” rate or list price for true-up quantities.

For instance, if you secured a 20% discount on Office 365 in your EA, insist that any true-up licenses carry the same 20% discount. Otherwise, those extra licenses could come through at full price, eroding the value of your deal.

It’s wise to treat true-ups as a key part of your cost planning, not just a formality. Keep track of any licenses you add mid-year and forecast what that bill will look like at the anniversary.

Microsoft’s sales reps might say, “Just add what you need, we’ll sort it out later,” but be cautious. Never accept a vague “we’ll true-up later” without clarity on pricing – that convenience can turn into a surprise bill at a much higher rate.

By pre-negotiating true-up terms and monitoring your usage, you ensure that mid-term additions via true-up are predictable and reasonably priced.

Out-of-Cycle Mid-Term Negotiations

What if your needs change drastically, beyond the usual incremental growth? Perhaps your company acquires another firm and doubles its headcount, or a new project means rolling out 5,000 new licenses unexpectedly.

In such major expansions, a standard true-up could result in a huge one-time charge at list prices. This is when you should consider an out-of-cycle mid-term negotiation with Microsoft instead of simply trueing up at whatever cost.

Approach Microsoft to amend or renegotiate your agreement mid-term when the scale of addition is significant.

Treat it as a proactive re-negotiation: you’re bringing substantial new business to Microsoft, so leverage that to secure better unit rates or broader discounts.

Microsoft won’t volunteer a discount for mid-term changes unless you ask – their default is to charge the maximum they can. By opening negotiations, you can often turn a big increase into a more palatable deal.

Possible outcomes of an out-of-cycle negotiation can vary. In some cases, Microsoft may agree to adjust pricing on the new licenses (or even all your licenses) in exchange for a larger commitment.

They might propose a contract extension or a new three-year term that includes the higher license counts, effectively updating your baseline now rather than at the original renewal date.

For example, you might extend your EA by a year or start a fresh term early so that the new licenses are baked in at a better rate.

Microsoft might also offer bundled concessions to sweeten the deal – perhaps adding some free months, providing funding for deployment services, or discounting a related product, as part of incorporating the large expansion into your agreement.

The key with out-of-cycle changes is not to passively accept whatever quote Microsoft gives for the additional licenses. Use a major mid-term addition as an opportunity to negotiate, not just a cost to absorb.

Yes, it may involve some effort and even extend your commitment, but it can save your organization a substantial amount compared to paying for a huge true-up at list price. Always run the numbers: if adding those licenses mid-term will dramatically increase your spend, you have leverage.

Bring Microsoft to the table to re-cut the deal in your favor before you deploy everything, not after. A well-negotiated amendment can maintain or improve your discount level and keep your overall licensing costs optimized, even as your business grows.

Focus on flexibility to achieve savings, Ramp-Up and Ramp-Down in Microsoft Deals: Flexible Purchasing 101.

Adding Licenses via CSP Agreements

If you purchase licenses through Microsoft’s Cloud Solution Provider (CSP) program, the dynamics of mid-term additions are a bit different. CSP is designed to be flexible – you can add or remove subscription licenses monthly or annually through your CSP partner.

In practice, adding licenses in CSP is as simple as logging into the portal (or asking your provider) and increasing the seat count.

This flexibility means you don’t have to wait for an annual true-up or a contract anniversary; you can scale up when you hire new employees or start a project, and even scale down later if needed.

For example, you might add 50 licenses one month for a new team and then reduce 30 licenses a few months later if a project ends, all without penalty. CSP license additions are very agile compared to an EA.

However, the cost of CSP additions requires careful attention.

Unlike an EA, a CSP agreement typically doesn’t come with big volume discounts off the list price – especially for large enterprises. You might be paying close to retail price per license, which is fine for small increments but can become expensive at scale.

If you suddenly need to add a large number of users via CSP, you risk locking in a high unit price for all those subscriptions.

For instance, adding 500 Office 365 licenses through CSP on the fly will likely be at standard rates, which could be 15-20% higher (or more) than the discounted rate you might negotiate in an EA for that volume.

Negotiation tip: Don’t assume CSP prices are non-negotiable when your volume spikes. If you foresee a big increase in licenses on CSP, talk to your provider about it. CSP partners have some latitude – they can sometimes apply special pricing for bulk additions or at least escalate to Microsoft for better rates if the deal is large enough.

For example, if you need to add hundreds of licenses for a new branch, request your CSP partner to seek a bulk pricing concession from Microsoft or check for promotions that might apply.

In some cases, it might even be worth moving that portion of users from CSP into an Enterprise Agreement if the numbers justify it, to take advantage of volume discounts.

In summary, CSP is excellent for tactical flexibility. It’s great for handling temporary needs, small-scale growth, or trying out a new service mid-term because you won’t be stuck long-term – you can true-down easily on CSP. But for strategic volume growth, keep an eye on costs.

Suppose your organization is consistently scaling up through CSP.

In that case, you should manage that growth strategically: either negotiate better terms with the partner/Microsoft or plan to transition into a volume licensing program that rewards your scale.

Don’t let the convenience of CSP additions lull you into paying list price for a large chunk of your licenses when alternatives exist.

Adding New Products Mid-Term

Mid-term changes aren’t just about more seats of the same products – sometimes you’ll want to introduce a new Microsoft product or service that wasn’t in your original agreement.

For example, maybe a year into your contract, you decide to adopt Power BI for analytics or add Teams Phone System for telephony. Adding a new product mid-term can be a bit tricky, but with foresight, you can do it smoothly without splurging or complicating your renewal schedule.

Firstly, ensure any new product you add is co-terminus with your main agreement. Co-terming means the new licenses will expire and renew on the same date as your master EA or CSP term, rather than starting their own separate timeline.

Microsoft and partners can pro-rate the first term of the new product so that it aligns with your existing agreement end date.

Always insist on this. If you don’t co-term, you could end up with fragmented renewal dates – for instance, your main EA renews in 2026, but the new product licenses come due in mid-2027.

That fragmentation creates administrative hassle and weakens your negotiation position (since your spend is split across multiple renewal events). To keep things simple and buyer-friendly, coordinate new product additions to the EA anniversary.

Next, think about pricing for the new product. Ideally, during your initial negotiation, you included pre-set discounts for any potential new SKU you might add later.

The best practice is to negotiate a pricing catalog for not just the products you’re buying on Day 1, but also other Microsoft products you think you might pick up mid-term.

For example, even if you weren’t ready to deploy Power BI at signing, you could negotiate that if you add Power BI Pro during the term, it will be at, say, 15% off list. If you secured such terms upfront, adding the new product is straightforward, and you know you’re getting a fair price.

If you didn’t pre-negotiate the new SKU’s price, you still have options. Don’t blindly accept the first quote for adding that product mid-term. Treat it as a mini-negotiation: ask for your enterprise discount to be applied or see if it can be bundled into your agreement as an “additional product” with favorable terms.

Often, Microsoft is eager to have you adopt a new product (especially cloud services), and you can leverage that interest. For instance, you might say, “We’ll start using Azure Data Lake mid-term, but only if you give us the same discount tier we have for other products.” The goal is to avoid paying full retail just because it’s a new line item.

By aligning the new service’s term and negotiating its price, you integrate it into your Microsoft environment seamlessly and cost-effectively, without creating a separate silo in your contract.

Read about consoldiation, Consolidating Microsoft Licenses: How to Manage Multiple Contracts Efficiently

To summarize the main options for mid-term license additions and their implications, here is a quick comparison of approaches:

Risks of Mid-Term License Changes

Mid-term changes carry certain risks if not managed properly. Be aware of the following pitfalls before you add licenses or products outside your renewal cycle:

• Paying above your negotiated rate: If your contract terms aren’t clear, you could end up paying full list price for mid-term additions. Any licenses added without pre-negotiated discounts or price protections will likely be charged at Microsoft’s prevailing rates. This can wipe out the savings you achieved in the initial deal. Always assume that if it’s not explicitly in your contract, Microsoft will default to charging more for new licenses mid-term.
• Fragmented renewal schedules: Adding products on separate timelines (or using multiple licensing programs) can lead to fragmented renewals. For example, a new product added mid-term without co-terming might expire later than your main agreement, meaning you have to renew it off-cycle. This fragmentation complicates license management and weakens your negotiation leverage. You lose the “big bang” of a single, unified renewal where all your spending is on the table. Instead, you might face smaller, staggered renewals that Microsoft can pick off one by one, often at less favorable terms. Avoid this risk by aligning all additions to your primary agreement’s end date whenever possible.
• Pressure to re-open the entire deal: A large mid-term addition can trigger Microsoft’s sales pressure to re-negotiate or extend your EA on their terms. If you suddenly need thousands more licenses, Microsoft may push for an early renewal or a contract extension as a condition to give you better pricing. This can be risky if you’re not prepared – you might concede to extending your contract or adding products you didn’t plan, just to get a discount on the immediate need. Essentially, Microsoft might use your mid-term growth as leverage to lock you in longer or upsell you. The risk here is losing control of the timing and scope of your agreement adjustments. To mitigate it, plan your approach: engage Microsoft proactively (as described above in out-of-cycle negotiations) so that any re-opening of the deal happens on your terms and with clear benefits, not just as a reaction to their sales tactics.

In short, the risks of mid-term changes revolve around cost overruns and loss of control. But with the right precautions – contract clauses, co-terming, and strategic negotiation – you can manage these risks and turn mid-term changes into an opportunity rather than a setback.

Checklist for Managing Mid-Term License Additions

Use the following checklist to stay in control of mid-term license changes and avoid unwelcome surprises:

• Track license usage vs. forecast regularly: Don’t wait until year-end to realize you added 200 more users. Continuously monitor your license consumption against your plan. This helps you catch growth trends early and budget for them. (For example, perform quarterly “mini true-ups” internally to see if you’re trending above your licensed counts.)
• Pre-negotiate true-up discounts in the EA: Before signing or renewing an Enterprise Agreement, ensure it includes discounted pricing for any mid-term additions. Lock in those true-up rates or caps in writing. This way, if you grow during the term, you’ll pay the same discounted rate instead of a premium. It’s much easier to negotiate this upfront than after you’ve already committed and need the licenses.
• Flag potential growth scenarios early: Communicate with leadership and project teams about anything that could drive a spike in license needs. Mergers, new offices, big hiring plans, or major IT initiatives should all be flagged well in advance. By anticipating these, you can engage Microsoft or your partner early, explore licensing options, and avoid scrambling (and overpaying) at the last minute.
• Insist on co-terming new products: Make it a policy that any new product or service added mid-term aligns to your master agreement’s end date. Include co-term clauses in your contracts or simply enforce this through purchasing practices. Co-terming keeps your renewal cycle unified and prevents the administrative tangle of off-cycle renewals. It also preserves your bargaining power by keeping purchases consolidated.
• Leverage major additions for better terms: If you have to make a large addition, treat it as a chance to renegotiate – not just a procurement task. Don’t just accept whatever quote Microsoft gives you for 500 new licenses; use that requirement as a bargaining chip. You might negotiate a broader discount, get some free services, or restructure your deal to be more favorable. Always ask: “If we’re adding this many licenses, what can we get in return?” Major mid-term changes should be a two-way conversation, not a one-sided bill.

By following this checklist, you’ll integrate new licenses on your terms, maintaining cost optimization and contractual flexibility even as your organization evolves.

Five Recommendations for Procurement Leaders

Finally, here are five key recommendations for procurement and IT leaders to ensure mid-term changes don’t derail your Microsoft licensing strategy:

1. Never accept out-of-cycle additions at list price – Push for pre-negotiated discounts or better rates on any license increase. Even mid-term, you have leverage; don’t settle for Microsoft’s default pricing.
2. Model license growth scenarios before signing an EA – Do the homework on potential growth (or downsizing) during the term. By forecasting different scenarios upfront, you can build contract provisions to handle them (and avoid nasty surprises later).
3. For acquisitions or big spikes, immediately open renegotiation – The moment you know you’re acquiring a company or adding a large number of users, engage Microsoft to adjust the agreement. Don’t just bolt on new licenses blindly; reset the deal if needed to accommodate the change on favorable terms.
4. Align new product purchases to EA dates – Whenever you introduce a new Microsoft service mid-term, co-term it to your EA anniversary or renewal date. This alignment maintains a single renewal timeline, maximizing your negotiating leverage when that date arrives.
5. Use CSP for tactical flexibility, but manage volume strategically – The CSP program is great for quick, small-scale adjustments or trials. However, if your usage under CSP keeps climbing, treat it strategically: negotiate with your partner or consider transitioning into an EA to get volume discounts. In other words, enjoy CSP’s flexibility, but be mindful of cost efficiency as you scale.

By adhering to these recommendations, procurement leaders can ensure that growth, changes, or surprises mid-term don’t lead to overspending or unfavorable contract terms. Instead, you’ll turn mid-term license additions into a well-managed aspect of your Microsoft agreement – keeping your IT environment agile and your costs under control even as your business evolves.

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