Benchmarking Microsoft Licensing Costs: Are You Overpaying?

Benchmarking Microsoft Licensing Costs

Introduction – Why Benchmarks Matter

Microsoft’s licensing costs are famously opaque. Two similar enterprises can end up paying very different prices for the same Microsoft products.

Microsoft reps often claim you’re getting their “best deal,” but how do you know for sure? Without solid benchmarks to compare against, you’re essentially negotiating in the dark.

That’s where Microsoft price benchmarking comes in.

Comparing your contract’s prices to what other companies pay gives you a reality check on whether you’re overpaying. Benchmarks shine a light on the true market rates for Microsoft deals.

This guide explains what benchmarking means in Microsoft negotiations, where to find reliable data, and how to use it to your advantage in securing a better deal.

Read our Microsoft Pricing Negotiation Strategy.

What Benchmarking Means in Microsoft Deals

In Microsoft negotiations, benchmarking means comparing your deal’s pricing and terms to the market norm (what other similar companies have agreed to). It’s how you tell if your Microsoft contract is competitive or not.

This is critical because Microsoft reps often claim you’re already getting their “best price.” With benchmarks, you can verify those claims.

In reality, many enterprises have found that they can negotiate better terms once they know what others are paying.

Sources of Benchmark Data

How can you find out what “market price” is?

Try a mix of these sources:

• Peer Networking: Quietly network with peers under NDA. CIOs and IT leaders in similar companies sometimes share what they pay for Microsoft licenses. These informal conversations can give you rough benchmark figures.
• Independent Advisors: Licensing consultants work with many clients and have anonymized pricing data. They can quickly tell you if your deal is above or below the norm. Their reports or guidance provide an outside perspective on what’s achievable.
• CSP Quotes: Ask Microsoft Cloud Solution Provider partners for quotes on the same licenses or Azure usage. If a CSP offers a lower price for a comparable package, you can use that as leverage in your negotiations with Microsoft.
• Public Info: Look for case studies or articles that mention companies’ Microsoft deals (for example, a news piece noting a firm secured 30% off Azure). These anecdotes aren’t exact benchmarks but hint at what’s possible.

No single source is perfect, so gather multiple data points. If several benchmarks all suggest that a certain price or discount is common, you can be confident asking Microsoft to match that level.

Read how Microsoft sets your price, Microsoft Enterprise Pricing: How Your Quote Is Structured.

Key Metrics to Benchmark

To effectively benchmark your Microsoft licensing costs, break your deal into key components and compare each one to market norms.

Focus on these metrics:

Microsoft 365 (per user): Large enterprises often push E5 prices down into the $40s (versus a ~$57 list price). If you’re paying near the top end for E3 or E5, that’s a sign you could negotiate a better deal.

Server licenses (per core): Big-ticket items like SQL Server are typically heavily discounted. It’s common to pay roughly half of the official list price per core in an EA. Also, watch your Software Assurance (support) renewal rates – ensure they aren’t increasing beyond normal levels.

Azure cloud: Azure usage is negotiable. Many enterprises secure something like 15–25% off Azure’s standard rates, and very large or competitive deals can get 30–40% off. If your Azure agreement has little to no discount, you’re likely overpaying compared to what others get.

Read about different negotiation strategies, Negotiating Multi-Year Microsoft Deals: Step Pricing and Ramp-Up Strategies.

How to Use Benchmarks in Negotiation

Having good benchmark data is powerful, but you must deploy it wisely when you negotiate:

• Speak in General Terms: Don’t divulge exactly who or where your benchmarks came from. Instead, say things like, “Industry benchmarks suggest companies our size pay about $X for this.” This signals that you’ve done your homework without naming sources.
• Set Expectations Early: Make clear what price or discount you are aiming for. For example, “We believe our Microsoft 365 costs should be around 25% lower based on market benchmarks.” By anchoring the discussion with a specific target, you frame the negotiation around meeting that benchmark.
• Anticipate Pushback: Microsoft might insist “every deal is unique” to downplay your comparisons. Acknowledge that, but stick to your data. You can respond, “These companies are similar to us in scale, so we know what’s achievable.” If you remain firm, the rep will often go back and see what more they can do.
• Leverage Other Offers: If you have a quote from a CSP or a competing vendor, use it. You could mention, “We have an alternative proposal that’s 20% cheaper for similar services.” Even without naming names, this puts pressure on Microsoft. They know they must compete to win your business, which can prompt a better offer.

Using benchmarks shifts the discussion from a sales pitch to a fact-based negotiation. It shows Microsoft that you know the going rates, so they’ll have to work harder to justify any price that’s above market.

Countering Microsoft’s “Best Price” Argument

Microsoft reps often claim that you’re already getting their “best price.” Benchmark data lets you challenge that.

If they say, “This is the best we can do,” you can respond, “Our research shows other companies like us are getting better pricing.” It forces Microsoft to back up its claim or improve the offer.

For instance, if Microsoft offers 20% off but your benchmarks show others get 30%, you know 20% isn’t truly the best. We’ve seen customers push back with that knowledge and get Microsoft to improve an offer from 20% closer to 30%.

The takeaway: never accept the first “best price” line at face value. When you can cite outside comparisons, it often prompts Microsoft to take a second look and find additional savings for you.

Staying Current with Benchmarks

The market for Microsoft licenses isn’t static. What was a “great deal” a few years ago might be average today.

Microsoft regularly adjusts prices and introduces new offerings, and competitors (like Google or Amazon) keep pressure on Microsoft to stay flexible. All this means you should refresh your benchmarks before every negotiation or renewal.

If you rely on old information — say, assuming your last 20% discount is still good — you might miss out on better deals now available.

Always gather new data on current Microsoft 365 costs, Azure discounts, and other terms. For example, if you got 15% off Azure in your last agreement, it’s possible 25% off is achievable now due to increasing competition in cloud services.

Make benchmarking a habit in every contract cycle. By staying current, you’ll spot changes like price increases or new discount programs early.

That lets you address them in negotiations rather than discovering too late that you’ve been overpaying. In fast-moving areas like cloud, up-to-date benchmarks are essential to avoid unwittingly paying a “loyalty tax.”

Conclusion – Benchmarks as a Negotiation Weapon

In the end, negotiating a Microsoft deal without benchmarks is like flying blind. Data changes the game from a guessing contest into a fair, fact-driven fight.

Companies that leverage current benchmarks consistently secure better prices and save money. The bottom line: never walk into a Microsoft negotiation without solid market data in your back pocket.

FAQs

How much discount is typical for Microsoft EAs?
Most organizations end up roughly 15–30% off Microsoft’s list prices in their EAs. Smaller customers might only get around 10%, while the largest enterprises could secure 35% or more off. There’s no fixed standard—the more leverage and competition you have, the better your discount.

Do benchmarks differ by region?
They can vary by region due to local market conditions and currency. However, Microsoft’s overall discount patterns are similar worldwide. It’s best to use region-specific benchmarks if possible, but global data will give you a decent ballpark if not.

Can smaller enterprises still use benchmarks?
Definitely, even a smaller company should find out what organizations of similar size are paying. You might not get the massive discounts a Fortune 100 company gets, but knowing that peers your size typically get around 15% off gives you a realistic target to aim for.

Is Azure pricing negotiable, or is it standard?
Yes, Azure pricing can be negotiated for enterprises. If you’re making a sizable commitment (via an EA or a large Azure agreement), you should push for discounts or credits on Azure. Microsoft often provides tiered discounts for big spenders, especially if AWS or Google are in the mix. Don’t assume you must pay the full sticker price for Azure in an EA.

Should I share benchmark numbers directly with Microsoft?
No, you shouldn’t reveal another customer’s exact pricing. It’s safer to reference the figures in general terms. For example: “Market data suggests we should be around $Y,” rather than “Company X pays $Y.” Microsoft will get the hint that you’ve done your research, without you violating any confidentiality.

Five Expert Recommendations

Here are five expert tips to keep in mind:

1. Always enter renewal talks with fresh benchmark data. Don’t rely on old information – the market moves fast, so refresh your intel each time.
2. Compare at least three key metrics (M365, servers, and Azure). Don’t focus on just one area; get a full picture of how your pricing compares across the board.
3. Use partner or competitor quotes as leverage. Even if you stick with Microsoft, having a quote from a CSP or a rival (like Google or AWS) gives you a strong bargaining chip.
4. Never reveal your benchmark sources. Present numbers as “market intelligence,” not as coming from specific companies. Keep Microsoft focused on the pricing, not where you got the info.
5. Re-benchmark every 2–3 years. A good deal won’t stay good forever. Regular benchmarking before each renewal helps catch price creep and keeps Microsoft accountable.

Read more about our Microsoft Negotiation Services.

Do you want to know more about our Microsoft Services?

Please enable JavaScript in your browser to complete this form.

Name *

Email *

Company

Message *

Submit