EA Renewal vs. Switching to CSP: Evaluating Your Microsoft Licensing Options
Introduction – The Renewal Dilemma
Your Microsoft Enterprise Agreement (EA) is about to expire, and the vendor is eager for you to sign on for another three-year term. But your IT environment today isn’t the same as it was three years ago.
Perhaps you’ve embraced more cloud services, your workforce size has changed, or budgets have tightened. Microsoft’s one-size-fits-all push for an EA renewal might not align with these new realities.
The key question facing many CIOs and procurement leads: Should you renew your EA or switch to a Cloud Solution Provider (CSP) model?
In other words, do you double down on the traditional EA or leave the Enterprise Agreement for the flexibility of CSP?
This decision isn’t simple. It requires a clear-eyed comparison of costs, contract flexibility, and your organization’s strategy.
Below, we break down the benefits and drawbacks of each path plus a hybrid approach – so you can evaluate the EA vs. CSP decision with confidence.
Read our Microsoft Enterprise Agreement Negotiation Guide.
Benefits of Renewing EA
Renewing your Microsoft Enterprise Agreement can offer several advantages for the right scenario:
- Volume Discounts & Predictable Pricing: EAs often provide significant volume-based discounts and locked-in pricing for three years. If you have thousands of users, the per-seat cost under an EA (especially after negotiation) can be notably lower than standard CSP rates. You also gain price protection against Microsoft’s public price hikes during the term.
- Centralized Contract & Coverage: An EA is a single, enterprise-wide contract covering multiple Microsoft products and services. This centralizes your licensing under a single agreement, simplifying management and ensuring consistent terms cover all users. It co-terminates renewal dates and reduces the administrative hassle of juggling multiple separate subscriptions.
- Account Management & Added Benefits: With a large EA, Microsoft and its partners tend to provide enhanced account management. You might receive extras like training credits, planning workshops, or funding for deployments as part of your deal. The EA often bundles Software Assurance benefits (such as upgrade rights and support incidents), adding value that might otherwise incur additional costs in CSP.
- Stability for Large Steady User Bases: For enterprises with a stable (or growing) workforce and predictable IT needs, an EA offers peace of mind. You know your licensing costs for the next three years and don’t have to adjust licenses month-to-month. This stability and predictability can be ideal if you don’t anticipate major changes in user count or product mix.
Drawbacks of EA Renewal
Despite its benefits, renewing an EA comes with some notable downsides, especially if your situation is evolving:
- Rigid 3-Year Commitment: An EA locks you in for three years. That multi-year commitment means you’re betting that your needs today will remain the same for the duration. If your business contracts or priorities shift, you generally cannot reduce your license counts until the EA term ends. You’re committed, for better or worse.
- Limited True-Down Flexibility: Microsoft’s EA model makes it easy to add licenses (the annual “true-up” process for growth) but difficult to reduce licenses mid-term. If you have layoffs or reorganizations that cut usage, an EA provides little relief – you’ll likely continue paying for the originally contracted number of licenses until renewal. This can lead to paying for unused licenses (over-provisioning).
- Over-Provisioning Risk: Because of that lock-in, customers often end up overestimating needs to avoid compliance issues or to secure discounts. If you over-forecast (e.g. you commit to 5,000 users but end up with 4,500), you’re stuck paying for the higher number. In times of workforce reduction or cloud efficiency gains, an EA can leave money on the table.
- Bundled Upsell Pressure: Microsoft loves renewal time – it’s their opportunity to upsell your organization on more expensive subscriptions and additions. In an EA renewal negotiation, expect pressure to upgrade to pricier bundles like Microsoft 365 E5, add security suites, or tack on new products (hello, Microsoft Copilot!). These upsells are easier for Microsoft to push when you’re renegotiating a big bundle deal. If you’re not careful, you might end up committed to products or tiers you don’t truly need, inflating your spend.
Reshape your EA Microsoft True-Up vs. True-Down: Managing License Counts in Your EA.
Benefits of Moving to CSP
Switching to a Microsoft Cloud Solution Provider (CSP) model can deliver flexibility and other benefits that address EA pain points:
- Flexibility to Scale Monthly: CSP licensing lets you adjust on the fly. You can increase or decrease user counts month-to-month as your needs change. Hiring a new project team? Add licenses for a few months. Going through a downsizing? Drop licenses and stop paying for them immediately, rather than carrying excess until some distant renewal. This pay-for-what-you-use model means far less waste.
- No Long-Term Lock-In: There’s no three-year ironclad contract in CSP. Most CSP subscriptions are month-to-month or annual at most. If budgets get cut or a project ends, you’re not locked into a multi-year obligation. This is ideal for organizations facing uncertain growth, seasonal workforce changes, or simply wanting the option to pivot tech strategies within a shorter horizon.
- Partner-Provided Support & Services: With CSP, you purchase through a Microsoft partner (reseller). A good CSP partner can offer highly responsive support and even bundle in managed services. For instance, many CSPs provide 24/7 support, licensing audits, or migration assistance as part of their offering. You essentially get an extra layer of service that Microsoft might not provide directly to an EA customer without a pricey support agreement. The partner can act as an extension of your IT team for license management and troubleshooting.
- Easy Pilots and Product Trials: CSP makes it simple to start small. Want to try a new Microsoft product or feature with a team? You can spin up 50 licenses on CSP just for that pilot and cancel if it’s not useful. Under an EA, adding a new product often means committing enterprise-wide or for the long term. CSP’s granularity allows you to pilot or use niche services without a big commitment. If a service isn’t delivering value, you drop it—no harm done.
CSP Trade-Offs and Risks
Going the CSP route isn’t all upside-down; you should be aware of the trade-offs and potential disadvantages compared to an EA:
- Higher Unit Costs: If you compare prices line by line, CSP licensing often carries a higher per-user or per-product cost than an EA. Large enterprises can negotiate substantial EA discounts (volume pricing that might be 5–15% or more below retail). CSP prices are typically closer to Microsoft’s list prices. This means if you keep a steady 5,000 users on CSP with no changes, you’ll likely pay more over a few years than you would under an EA discount.
- No Long-Term Price Lock: In an EA, your pricing is locked for the full term – a buffer against Microsoft’s annual price increases. CSP, on the other hand, has less price protection. Prices are set per subscription term (which could be month-to-month or one year). Microsoft can adjust cloud and subscription prices periodically, and you’ll have to pay the new rates once any short-term contract period elapses. This can introduce some budget uncertainty over time (though you could opt for annual CSP plans to lock a rate for 12 months).
- Less Direct Relationship with Microsoft: When you buy via CSP, your primary relationship is with the partner, not Microsoft. For some enterprises, this is a non-issue or even a positive (the partner advocates for you). But it does mean you’re one step removed from Microsoft’s ear. Negotiating special terms or getting Microsoft’s attention might be harder when you’re not a direct EA customer. Major issues are escalated through your CSP provider rather than a named Microsoft account team.
- Complexity with Multiple Resellers: If different parts of your organization go with different CSP providers (or if you also use Microsoft’s direct web purchasing), it can get complicated. Multiple invoices, portals, and points of contact can emerge, whereas an EA is one agreement. Consolidating under one CSP provider helps, but large distributed enterprises might find CSP licensing fragmented if not managed carefully.
- Smaller Discounts & Incentives: CSP programs generally don’t offer the same big upfront discounts that an EA might for a huge commitment. Any cost savings in CSP usually come from usage optimization (dropping unused licenses) rather than bargain-basement pricing. Some CSP partners might sweeten deals with their own promotions or bundling (for example, giving you a slight discount if you commit to a 1-year term, or bundling in free services), but you shouldn’t expect the kind of tiered volume discounts Microsoft gives in an EA.
Cost Comparison – EA vs. CSP
What does all this mean in dollars and cents? Let’s compare a simplified scenario of EA vs. CSP costs to illustrate how flexibility can impact the bottom line.
Assume a company has 5,000 users initially, and under the EA, they get a discounted rate. In CSP, the rate is a bit higher per user, but they can drop licenses if needed:
| 3-Year Licensing Scenario | EA (3-Year Fixed) | CSP (Pay-as-you-go) |
|---|---|---|
| 5,000 users steady for 3 years | ~$3.0M total cost (locked in for all 5,000 users, with volume discount) | ~$3.3M total cost (higher unit price, but all 5,000 users utilized continuously) |
| 5,000 users, then drop to 4,000 users after Year 1 | ~$3.0M total cost (you committed to 5,000 for full term, so savings from 1,000 fewer users are not realized) | ~$2.86M total cost (paid for 5,000 in Year 1, then only 4,000 in Years 2–3; avoided paying for those 1,000 unused licenses for two years) |
In the first scenario (constant usage), the EA’s discount makes it cheaper overall than CSP despite CSP’s flexibility. In the second scenario (usage drops mid-term), the ability to true-down immediately with CSP yields cost savings – enough to outweigh CSP’s higher unit price. In this hypothetical case, the CSP model saved over $140,000 by not paying for 1,000 unnecessary licenses for two years.
Note: The exact numbers will vary based on your pricing and discount levels, but this shows the trade-off. If you expect user counts to fluctuate or decrease, CSP can prevent overspending on idle licenses. If you expect steady or growing usage, an EA’s discounted pricing often wins out in total cost.
Hybrid Approach – Best of Both Worlds
Who says you must choose only one licensing model? Many organizations adopt a hybrid strategy, leveraging the strengths of both EA and CSP.
For example, you might renew an EA for your core, stable workforce (to get the best discounts on those 3,000 or 5,000 steady users) and use CSP for more variable needs. Things like seasonal workers, contractors, newly acquired small subsidiaries, or experimental projects can be put on CSP subscriptions.
This way, your base is covered under a cost-efficient EA, and the overflow or flexible needs are handled via CSP’s adjustability.
Another hybrid approach is to negotiate a smaller EA renewal – covering only the products or user counts you’re fairly confident about – and move the rest of your services to CSP.
For instance, an enterprise could maintain an EA specifically for Windows and Office for full-time staff, but handle Azure or certain specialist software through a CSP, where they can scale usage up or down. This targeted approach ensures you’re not over-committed in areas that are likely to change.
The hybrid model can truly offer the “best of both worlds”: stability and discounts on one hand, agility on the other.
It also has a side benefit we’ll discuss next – negotiation leverage. Knowing you have the option to shift some business to CSP gives you more power at the bargaining table.
Negotiation Angle – Using CSP as Leverage
Even if you intend to stick with an EA, it’s wise to keep CSP in your back pocket during negotiations. Microsoft’s sales teams are aware that customers have alternatives, and you should make this clear.
When Microsoft knows you’re considering a move to CSP (or even a competitor’s solutions altogether), they often become more flexible on EA pricing and terms to entice you to stay.
From a negotiation standpoint, gathering CSP quotes and scenario plans is a smart move.
You can approach your Microsoft rep saying, “We’ve run the numbers with a CSP provider, and here’s what it would cost and allow us to do. We need our EA renewal to match that flexibility or cost-effectiveness.”
This signals that you won’t simply accept a status quo renewal on Microsoft’s terms. It might result in better discount tiers, more favorable cancellation terms, or concessions, such as the ability to reduce licenses mid-term if certain events occur.
On the flip side, if you’re inclined to switch to CSP, let Microsoft know that too – they may counter with an attractive EA offer. Perhaps they’ll propose a shorter-term agreement or a custom hybrid deal to keep your business.
Either way, showing you have options puts you in the driver’s seat.
Don’t be afraid to leverage a bit of competition between Microsoft’s EA and the CSP channel to get the best outcome for your organization.
Checklist – EA Renewal vs. CSP Decision
Not sure which path to choose? Use this quick checklist to evaluate your situation.
If you find yourself answering “yes” to many of these, it may guide you toward one option over the other:
✓ Do we have a stable or a fluctuating user base? (Stable user counts favor EA; fluctuating counts favor CSP’s flexibility.)
✓ Are we willing to lock in for 3 years, or do we need the option to adjust sooner?
✓ Can we absorb a higher per-user cost in exchange for month-to-month flexibility? (Is paying a bit more worth it to avoid paying for unused licenses?)
✓ Do we want to maintain a direct relationship with Microsoft (EA), or are we comfortable working through a partner (CSP)?
✓ Have we crunched the numbers for both models using our actual usage data and growth projections? (A data-driven cost comparison of EA vs CSP for our scenario is essential.)
Reflecting on these questions can help determine whether an EA renewal or a CSP approach (or a combination of both) is the better fit.
Conclusion – Match the Contract to Your Strategy
When it comes down to EA renewal or CSP, there is no universally “right” choice – there’s only the choice that best aligns with your organization’s strategy and circumstances.
Enterprise Agreements favor size, predictability, and long-term partnership; they shine when you have a large, steady environment and want to lock in pricing.
CSP, by contrast, favors agility and cost optimization; it’s ideal when you need to stay flexible and avoid over-committing resources.
The smartest move is to let your business needs drive the decision, rather than automatically accepting Microsoft’s default renewal pitch. In fact, the best deals often come from carefully evaluating both options.
By doing so, you might discover that a hybrid arrangement delivers maximum value – or you might reaffirm that sticking with an EA (at a better negotiated price) is the way to go.
Finally, remember to use CSP as leverage in any case. Even if you renew your EA, knowing you have an alternative keeps Microsoft on its toes and more likely to craft a contract that truly fits you, not just their sales quota.
FAQs
Is CSP really more expensive than EA?
On a per-license basis, CSP plans tend to be a bit more expensive than a heavily discounted EA seat price. However, the overall cost might be lower with CSP if you’re able to drop unused licenses and avoid paying for oversubscription. In short, if you use everything you commit to in an EA, the EA will usually be cheaper per user. But if your usage would shrink or fluctuate, CSP can save you money by letting you pay only for what you need.
Can we move workloads mid-term from EA to CSP?
Not easily – a standard EA doesn’t let you downsize during the term. You’re generally committed to the licenses and costs until the EA’s end date. You could add new workloads in CSP (for example, new projects or departments) while still under an EA for the rest, but you’ll still be paying for your EA commitments regardless. Most organizations wait until the EA is up for renewal to make a wholesale switch, unless they negotiate an exception with Microsoft.
Do CSP partners offer real discounts?
CSP partners can offer some discounts or promotions, but they usually won’t match the deep volume discounts of a big EA. For instance, a CSP might give you a small percentage off for committing to an annual term, or bundle in free services as an incentive. The pricing model for CSP is closer to pay-as-you-go retail rates. That said, shopping around different CSP resellers or Microsoft’s New Commerce Experience promotions might yield some savings. The value from partners often comes more from their added services and support rather than from dramatically lower Microsoft pricing.
Can large enterprises run CSP-only?
Yes – even very large companies can use CSP for all their Microsoft needs, and some do. Typically, these are organizations that prioritize flexibility over the absolute lowest unit price, or whose user counts don’t meet Microsoft’s increasing EA minimums. Running CSP-only might mean you pay a bit more per user, but you avoid being tied into a contract. It requires good internal license management (possibly with help from your CSP partner) to ensure you’re optimizing costs. While historically most large enterprises have stuck with EAs, moving to CSP-only is becoming increasingly common, especially for cloud-focused businesses or those undergoing significant change.
Is hybrid EA + CSP common?
Absolutely. Many enterprises are finding that a hybrid approach is the sweet spot. For example, they maintain an EA for core licenses (ensuring they get the best price on the majority of their consistent needs) and use CSP to handle all the variable or unforeseen requirements. Hybrid setups can also be transitional – companies might dip their toes into CSP with certain departments or functions before deciding whether to move more in that direction. This is a very common strategy, as it enables organizations to maximize both discounts and flexibility simultaneously.
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