Enterprise Agreement vs. Enterprise Subscription (EAS): True-Down Benefits Explained

Introduction – EA vs EAS Confusion

Microsoft offers two similarly named contracts – the Enterprise Agreement (EA) and the Enterprise Subscription Agreement (EAS) – and it’s easy to mix them up.

Both are popular 3-year licensing agreements for large organizations, but the key difference lies in their flexibility. Read our complete guide to Microsoft Licensing Programs.

An EA locks you into a fixed number of licenses for the term, whereas an EAS provides true-down rights that let you reduce license counts annually.

This distinction has big financial and operational implications.

In short, the EA is a traditional “buy and hold” approach with long-term license ownership, while the EAS is a “pay-as-you-go” subscription with the freedom to scale down if your needs decrease.

Let’s clarify how each works and why the flexibility of EAS matters when it comes to costs and negotiations.

EA Recap – Perpetual Rights, Limited Flexibility

An Enterprise Agreement (EA) is the classic Microsoft volume licensing contract. It typically runs for three years and requires you to standardize on certain Microsoft products enterprise-wide.

In an EA, you make an upfront commitment to a baseline number of licenses for the entire term – for example, Office or Windows for every user or device in your organization.

You usually pay annually (often splitting the cost into three equal payments), and Software Assurance (SA) is included, which gives you access to upgrades and support during the term.

The important part: EA licenses are perpetual, meaning once you’ve paid for the full term, those licenses are yours to keep permanently.

This can be valuable long-term – you could choose not to renew the EA after three years and still legally use the last version you paid for.

However, the EA comes with limited flexibility. Your initial license counts are essentially locked in for the full three years. If your organization grows, you can always true-up – report additional usage at the anniversary and pay for the extra licenses needed.

But if your organization shrinks or usage drops, you cannot reduce your count during the term.

You’re stuck paying for that original number of licenses (plus any true-ups) even if they turn into shelfware. In an EA, there is no “true-down” mechanism mid-term.

The only chance to adjust downward is at the very end, when the agreement comes up for renewal. This rigidity means an EA works best when you have a stable or growing user base, because you’re locked into a long-term commitment.

The upside is you gain perpetual usage rights and potentially deeper Microsoft discounts upfront, but the downside is no escape hatch if your needs decrease.

EAS Overview – Pure Subscription with True-Downs

The Enterprise Subscription Agreement (EAS), by contrast, is all about flexibility.

Like an EA, it’s usually a three-year contract and requires enterprise-wide coverage for chosen products. But all licenses under an EAS are subscription-based – you are essentially renting the software.

There are no perpetual rights included (unless you later exercise a separate buyout option at the end of the term).

Because you’re not purchasing licenses to own, the upfront cost is lower and payments feel more like an operational expense (OpEx) than a capital investment. In an EAS, you pay an annual subscription fee for each user or device, and you only pay for what you actually need each year.

The biggest advantage of EAS is the ability to true-down. This means that at each anniversary of the agreement, you can reduce your license counts if your usage or headcount has dropped.

You still report any increases (true-ups) and pay for those, but unlike a standard EA, you’re allowed to scale back as well. In other words, an EAS lets you both expand and contract your licensing in sync with your business needs.

For organizations with fluctuating size or undergoing downsizing, this is a game-changer. You won’t be stuck paying for licenses you no longer use.

The trade-off is that because the licenses are subscription, if you drop a certain number of seats, you lose the rights to run that software for those seats unless you re-subscribe in the future.

And at the end of the term, if you decide not to renew the EAS, all rights to use the software end (there’s typically a buyout option to purchase perpetual licenses at that point if you want to keep using the software without a subscription, but that involves an extra cost).

In summary, an EAS offers greater flexibility and a lower initial cost structure, but it involves renting instead of owning. It’s ideal if you prefer to treat software as a service or expect your needs to possibly decrease.

The downside is that if you end up maintaining or increasing usage, you’ll be continuously paying and won’t own any assets outright at the end. You’re trading ownership for agility.

Cost Differences – EA vs EAS

The cost structure of an EA versus an EAS can differ significantly, and this is where strategy comes in. Under an EA, you effectively commit to the full cost of the licenses (plus Software Assurance) upfront, albeit paid over three years.

It’s often thought of as a CapEx model – you’re investing in software licenses as assets. The benefit is that after the term, you own perpetual licenses and could potentially save money by not renewing or by using those licenses for many years.

For instance, some companies might stick with an older version of software for a while to avoid new spending.

In many cases, Microsoft offers steep discounts on EAs to reward that long-term commitment and large volume purchase, so your per-license cost can be lower than other licensing models. Over a long horizon, an EA can be more cost-effective if you remain fully deployed on those licenses.

An EAS, on the other hand, is a pure OpEx model with a “pay as you go” feel. Your upfront costs are lower, you only pay for the first year’s subscription to start, and you have the flexibility to adjust the spend yearly. If your usage stays the same or grows, you’ll keep paying roughly the same amount (or more) every year of the subscription.

Over multiple years, continuously renewing an EAS can end up costing more than an EA, because you’re essentially renting indefinitely.

There’s no point at which you’ve “paid it off.” If you have stable needs over, say, 5-6 years, an EA (with perpetual rights) might have been cheaper because after year 3, you could stop paying and still use the software.

With EAS, you’d be paying in years 4, 5, 6, etc., to keep using it.

In other words, EAS is financially advantageous primarily when you actually make use of the true-down flexibility or have short-term needs.

If you treat an EAS like an EA (keeping the same counts the whole time and beyond), it can be more expensive in the long run.

It’s also worth noting that Microsoft sometimes charges a slight premium for the flexibility of EAS. This often comes in the form of slightly higher per-user pricing or a smaller discount compared to an equivalent EA.

From Microsoft’s perspective, they have less guarantee of future revenue with an EAS, so they may not discount it as heavily.

As a customer, you might see that the same product license costs a bit more per year under EAS than it would average under an EA – essentially a flexibility fee.

This isn’t universally true in every deal, but it’s common enough that you should run the numbers.

To summarize the key differences in cost and structure between EA and EAS, here’s a side-by-side comparison:

True-Down Benefit Explained

“True-down” is the standout benefit of an EAS, so it deserves a closer look.

In practical terms, true-down means you have the right to reduce your license count each year of the agreement to match your actual usage.

The process typically works like this: at each anniversary, you review how many licenses you are actually using or need going forward, and you report that number to Microsoft (usually through your reseller or Microsoft account team).

You will then renew for the next year with that lower count and pay accordingly.

This is the inverse of a true-up. Instead of only reporting growth, you’re allowed to report a shrinkage.

Why does this matter? Consider an example: You start an agreement with 1,000 users licensed. By year 2, due to organizational changes or layoffs, you may have only 850 users who need the software.

Under an EAS, you can true-down by those 150 licenses at the anniversary.

In year 3, you’ll only pay for 850 seats, saving you a substantial amount of money compared to year 1. If that same scenario happened under a traditional EA, you would still be on the hook for all 1,000 licenses through the end of the term, paying for 150 unused licenses (often called shelfware).

Multiply that wasted spend across multiple years or larger license counts, and it becomes a huge inefficiency. EAS true-down rights ensure you only pay for what you actually use each year, which is a very attractive feature if your company’s size or software usage might decline.

True-downs are especially useful for organizations with volatile headcounts or those transforming.

For example, companies facing a merger, divestiture, or restructuring often choose an EAS so that if parts of the business are sold off or closed, they can scale their Microsoft licensing costs down accordingly at the next anniversary. It provides a financial safety valve.

However, you need to use it actively – it requires that you keep track of your usage and communicate reductions in the official true-down window. Microsoft isn’t going to reduce your bill automatically; you must exercise the option.

When used correctly, true-downs enable IT and finance teams to avoid overpaying and trim waste, making the EAS a highly cost-effective approach in the right scenario.

One thing to keep in mind: any licenses you “drop” in a true-down are no longer licensed for use. You can’t keep using software for those dropped users or devices unless you have some other license for them.

In practice, this just means you should only true-down to the level that reflects reality – if you go too far, you’d have to purchase licenses again to stay compliant (more on that in the FAQs).

But when aligned with genuine reductions in need, true-downs are a straightforward way to match costs to actual demand year by year.

Choosing EA vs EAS – Which Fits Best?

So, which agreement should you choose?

The decision comes down to your organization’s situation and priorities:

• When an EA is the better fit: If your user base is steady or growing, and you anticipate needing at least the same number of licenses (or more) throughout the next three years, an EA can be attractive. You’ll get perpetual rights, which serve as a long-term fallback – for instance, if budgets get tight after the term, you still own the software and could skip renewal for a while. If you highly value owning the licenses outright for strategic reasons (maybe you want the security of being able to use the software indefinitely), the EA provides that peace of mind. Also, organizations that prefer a CapEx approach or have a capital budget to utilize may lean toward EA – you’re essentially pre-paying for a software asset. Importantly, Microsoft often dangles bigger discounts for EAs because of the committed revenue. If you can negotiate a significant discount that makes the EA’s total 3-year cost much lower than an equivalent EAS, that could outweigh the benefit of flexibility. In short, choose EA if you’re confident you won’t need to downsize your licenses and you want the lowest unit cost and perpetual usage rights.
• When an EAS is the better fit: If your organization expects any kind of volatility in workforce or technology usage, EAS is likely the smarter option. This includes scenarios like planned downsizing, potential layoffs, contractions in your industry, or even just uncertainty (e.g., startups or businesses in dynamic markets). EAS is also compelling if you prefer operational expense budgeting – paying as you go can be easier for approval than large upfront commitments. Companies undergoing digital transformation or shifting to cloud services might choose EAS because they aren’t sure how many on-premises licenses they’ll need a year or two from now; the true-down gives a safety net if you reduce on-prem software usage. Additionally, if the idea of being “locked in” makes you uncomfortable, EAS gives you wiggle room to adjust course annually. Even if EAS might carry a slightly higher price per license, the ability to avoid paying for unused licenses can easily make it cheaper overall if your needs decrease. In sum, choose EAS if flexibility and cost variability are more important to you than owning the software outright. It’s a way to stay agile and not overspend if your situation is in flux.

It’s worth mentioning that some organizations adopt a hybrid approach: leveraging both EA and EAS where each makes sense.

Microsoft allows you to have multiple enrollments, so a company might put its most critical, stable products under a traditional EA (locking in a good discount for, say, core Office 365 or Windows licenses they know will be needed for all employees), but use an EAS for other product sets or user groups that are less predictable.

For example, you could enroll your permanent staff’s Office licenses in an EA, but have an EAS for a pool of contractor accounts or for a business unit that might be divested in a year.

Another scenario is mixing by product category: maybe an EA for desktop software, but an EAS for server licenses if you plan to decommission some data centers over the term.

This hybrid strategy can get complex, but it shows that EA vs EAS isn’t necessarily an all-or-nothing choice – you can tailor different parts of your Microsoft licensing portfolio to the model that fits best. Just ensure you have clarity on what’s covered under each agreement type and manage them carefully.

Negotiation Considerations

From a negotiation standpoint, understanding Microsoft’s incentives is crucial. Microsoft’s sales teams generally prefer EAs because they guarantee a fixed, long-term revenue stream with less risk.

An EA locks in your spend and removes the chance you’ll shrink it – a very comfortable position for Microsoft. As a result, Microsoft often offers larger initial discounts on EA deals to make them attractive.

You might hear things like “we can give you a better price per user if you go with an EA.” This isn’t just generosity – it’s a strategic move on Microsoft’s part to steer you toward the agreement that benefits them (locked revenue) over the one that benefits you (flexibility).

Knowing this, you, as the customer, should be a bit skeptical of the first offer.

If flexibility is important to you, don’t be afraid to push back and ask for EAS options. Microsoft reps may not volunteer an EAS quote unless asked, since it’s not in their interest to highlight a more flexible deal.

But you absolutely can negotiate an EAS and work to minimize the “flexibility premium.”

Here are some key tactics and considerations when negotiating:

• Discount parity: Try to negotiate the EAS pricing so that it’s as close as possible to EA pricing for the same set of products. If Microsoft offered, say, a 30% discount on an EA, push for that same level on the EAS. They might argue the EAS should be a bit higher, but there’s often room to narrow the gap. Emphasize your volume and the fact that you’re committing to Microsoft’s platform either way; you just need the flexibility due to business conditions. A savvy approach is to get quotes for both EA and EAS and use them as leverage against each other: “We’ll choose the model that gives us the best overall value – show us the best pricing you can do for EAS, otherwise we might lock into EA at a deeper discount.”
• True-down terms: Ensure the EAS contract clearly spells out how true-down works and if there are any limits. Standard EAS allows annual reductions, but sometimes there could be fine print like needing to maintain a minimum of a certain number of licenses (for example, you generally can’t drop below the program’s minimum of 500 seats if you want to keep the agreement active). Also, ask if there are any percentage limits (some agreements might informally expect that you don’t drop, say, more than 20% without renegotiation – not a hard rule typically, but worth clarifying). If you anticipate a major drop, discuss it openly so there are no surprises. You want the ability to reduce licenses without penalties. Make sure the contract doesn’t contain any unexpected “exit fees” or that the buyout terms (if you need them at the end of the term) are understood.
• Price protections: In an EA, one benefit is that the per-license prices are locked for all three years – Microsoft can’t raise your costs mid-term. With EAS, because you place orders annually, you should negotiate similar protections. Ideally, have Microsoft commit to a pricing table for years 2 and 3 upfront or to a cap on any year-over-year price increase. For instance, you might negotiate that even if Microsoft’s list prices go up, your price per user will only increase by at most X% per year. This prevents surprises and ensures you aren’t punished for choosing a flexible model. Additionally, if you think you might add licenses later (growth in one area even if another shrinks), negotiate that any additional licenses you add mid-term receive the same discount as the initial ones. You don’t want to pay full price for growth just because you’re in an EAS.
• Leverage your scenario: If you truly need an EAS due to likely downsizing, use that as leverage. Explain to Microsoft that a traditional EA would result in you over-licensing and overspending, which your organization cannot justify. Essentially, position it as: “We want to stay on Microsoft’s platform, but only an EAS aligns with our business reality.” Microsoft would rather keep you as a customer under an EAS than lose the business entirely. This can help them justify giving you better EAS terms. Also, if you have competitive alternatives (for example, considering shifting some users to a different product), subtly make it known – flexibility might be non-negotiable for you. If Microsoft wants to secure your commitment, it needs to accommodate that.
• Be prepared to walk (if viable): In any negotiation, including Microsoft agreements, the side that can walk away has more power. Suppose an EA offer is good but not flexible, and an EAS offer is flexible but too expensive. In that case, you might consider interim alternatives like short-term extensions or even moving certain workloads to CSP (Cloud Solution Provider), on a month-to-month basis. This is a big move, but letting Microsoft know that you have contingency plans can make them more willing to meet your needs. The end goal is to get the best of both worlds: a fair price and the right flexibility.

In summary, don’t accept the first proposal blindly.

Microsoft’s job is to maximize its revenue, and your job is to get the best value and terms for your organization. With careful negotiation, you can often make an EAS nearly as cost-effective as an EA, all while retaining that crucial ability to true-down.

And if you do go with an EA for the discount, be very sure your growth projections justify it – otherwise you might save on paper but overspend in reality.

Always center the negotiation on what’s important for your business (cost flexibility, budget certainty, etc.), not just what Microsoft is pitching. A buyer-first approach will serve you well.

Checklist – EA or EAS Decision Factors

When evaluating EA vs. EAS for your organization, consider the following key factors. This simple checklist can guide your decision:

✓ Is your workforce stable or shrinking? (Stable or growing headcount leans toward EA; shrinking or uncertain headcount leans toward EAS.)

✓ Do you want perpetual rights for long-term fallback? (If having the option to keep using the software after the contract ends is important, EA provides that. If not, EAS might be fine.)

✓ Do you prefer CapEx or OpEx budgeting? (Some organizations have a capital budget for software and prefer owning assets – that’s EA. Others prioritize operational flexibility and cash flow – that’s EAS.)

✓ Is license reduction flexibility critical for you? (If yes, EAS’s true-down is likely a must-have. If no – you’re confident you won’t need to reduce – EA could work.)

✓ Can you negotiate discount parity with EA? (If you can get similar pricing/discount on an EAS as an EA, then EAS gives you more value due to flexibility. If EAS comes with a big premium and you’re less likely to need to true-down, an EA might be more economical.)

Reflecting on these questions will help you determine which path aligns better with your organization’s needs and risk tolerance.

FAQs

Can I switch from an EA to an EAS mid-term?
No, not in the middle of an existing contract. An Enterprise Agreement is a binding 3-year enrollment – you can’t convert it to an EAS until that term is over. You typically make the EA vs EAS choice at signing or renewal time.

If you’re in an EA and realize you need EAS-like flexibility, your best bet is to plan for that switch at the next renewal. (In extraordinary cases, very large customers might renegotiate terms mid-stream, but that’s the exception and would likely come with financial penalties or concessions.)

Do EAS licenses include Software Assurance?
EAS licenses don’t include Software Assurance as a separate item because they’re inherently subscription licenses. In practice, a subscription license gives you the same benefits that SA would – for example, the right to upgrade to the latest versions, use of certain other SA benefits – for as long as your subscription is active.

You don’t own the license, but you get the functionality and upgrades during the term. So, you can think of it this way: with EAS, the subscription fee covers what SA would. (For an EA, you pay for a perpetual license + SA; for an EAS, you just pay yearly and always have current rights, but no perpetual ownership.) In short, there’s no separate SA fee in EAS because it’s all rolled into the subscription model.

Is EAS always more expensive than EA?
Not necessarily – it depends on your situation and how you use it. If your license needs remain the same (or grow) over the term and beyond, EAS will typically cost more in the long run than an EA because you keep paying, and might be paying a premium for the flexibility you didn’t use. However, if you actively turn down due to reduced needs, an EAS can save you a lot of money by avoiding payments on unused licenses.

Also, if you only need certain software for a short time or a specific project, a 3-year subscription might be cheaper than buying perpetual licenses you don’t need afterward.

It’s all about the usage pattern: stable usage = EA often cheaper; declining usage = EAS saves money. And of course, how well you negotiate the pricing matters. With good discounts, an EAS can be quite cost-effective. So, EAS is not inherently more expensive – it’s a matter of long-term cost versus flexibility trade-offs.

What happens if I true-down too aggressively?
“True-down too aggressively” would mean you reduced your license counts beyond what your organization’s actual usage justified. If you drop more licenses than you really should have, you could find yourself with too few licenses to stay compliant. Essentially, you’d have under-licensed your environment.

The immediate consequence is you’d need to correct that – either by re-subscribing for those licenses (true-up in the next cycle or even immediately if it’s a big gap) or halting use for those users/devices to stay legal.

There isn’t a monetary “penalty” from Microsoft for reducing (after all, they agreed you can), but the risk is on you to not cut past the bone. Another angle: if you cut licenses to the minimum and later your needs bounce back, you might have to add licenses again at the then-current price.

So it could cost more later if you were overly optimistic in a cut. The best practice is to true-down in line with actual reductions in staff or usage, and keep a little buffer if you expect fluctuations. Use the flexibility, but don’t game it in a way that leaves you short – it’s meant to right-size your spend, not to temporarily evade compliance. If unsure, you can always true-down what you’re confident about and remember that you can true-up any new additions without hassle.

Can I run both an EA and an EAS at the same time?
Yes, you can. Many large organizations do exactly this. Microsoft’s licensing programs allow multiple enrollments, and you might have different ones for different circumstances. For example, one division of your company might be under an EA while another division (or set of products) is under an EAS. Or, as mentioned earlier, you might maintain an EA for certain stable products and use an EAS for other products or user groups that need flexibility.

There is no rule that you must pick one model for everything. It does require careful management to ensure you’re not double-licensing or missing anything – you’ll be reporting true-ups on the EA separately from the EAS adjustments, etc. But operationally, it’s feasible. Microsoft will be happy to sell you multiple agreements if it means covering your needs appropriately.

Just be sure to coordinate internally: having both an EA and EAS could confuse some procurement or IT staff, so make it clear why each is used and how to manage each contract. In negotiations, you can also leverage this – perhaps telling Microsoft you’ll do an EA for one set of products if they give you an EAS on another set with good terms, for instance.

Read more about CSP, Microsoft CSP Program for Enterprises: Pros, Cons, and Cost Considerations.

Five Expert Recommendations

To wrap up, here are five expert tips when considering and negotiating EA vs EAS:

1. Model out 3-year and 6-year scenarios for both options. Before deciding, run the numbers. Calculate what an EA would cost over 3 years (and what owning the licenses might save you in years 4-6 if you didn’t renew). Then calculate EAS costs for 3 years (and possibly assume renewal into years 4-6) with different usage assumptions. This will provide a clear picture of the total cost of ownership versus the subscription. Seeing these side by side, especially in charts or tables, can be powerful evidence when making the case to executives (or in negotiations with Microsoft). It highlights whether the flexibility truly saves money or if the EA’s discounts/ownership provide more value over time.
2. Only choose EAS if the flexibility genuinely outweighs the lost perpetual value. In other words, don’t be swayed by the allure of true-downs if you realistically won’t use them. If your organization is quite stable and you’re fairly certain you’ll use all those licenses for many years, the perpetual rights of an EA could be more valuable. EAS is fantastic if you need it, but if you don’t foresee any reduction in use, you might just be paying more to rent licenses unnecessarily. Do a candid assessment of your growth or contraction projections. The EAS should be chosen for strategic reasons (uncertainty, potential downsizing, short-term needs), not just because it sounds modern or because “subscription” is a buzzword. Conversely, if you do need that flexibility, don’t hesitate to take it – shelfware can burn a huge hole in your budget, and no perpetual right is worth paying 50% extra for licenses you never use.
3. Negotiate price protections and avoid “flexibility premiums” in the EAS. If you go the EAS route, remember that flexibility is only as good as your contract terms. Push for caps on price increases, and ensure your year 2 and year 3 pricing is either fixed or at least predictable. Try to get rid of any extra premiums – for example, if Microsoft initially offers EAS pricing 10% higher than EA pricing, negotiate that down. Sometimes, you can agree to terms like a price hold or a fixed uplift (e.g., prices will only rise 3% annually, regardless of global list price changes). The goal is to prevent the situation where you enjoy true-down rights but end up paying significantly more per license, eroding the savings. A well-negotiated EAS can actually approach the cost efficiency of an EA, so invest time in those details.
4. Use your expected workforce volatility as a bargaining chip. When talking to Microsoft, be transparent (to a degree) about why you need flexibility. If you expect, say, a 20% headcount reduction due to automation or restructuring, make that part of the conversation. It shows that an EA would be ill-suited for you. Microsoft might not love to hear it, but it puts pressure on them to make an EAS deal palatable – otherwise, they risk you drastically downsizing at renewal or exploring other vendors. Also, if you have internal approval to spend only on an OpEx basis (some companies have mandates or financial constraints that favor subscriptions), mention that too. Essentially, align the negotiation with your business story: “Our reality is X, therefore we require Y.” This can justify better discounts or terms on an EAS, because Microsoft will realize it’s the only way to keep your business.
5. Reassess and optimize annually to maximize true-down benefits. If you do sign an EAS, don’t “set and forget” it like an EA. Make it a point each year to thoroughly review your license usage before the anniversary. Engage your IT asset management (ITAM) or software asset management team to determine if any licenses are unused or if any projects have ended, etc. Additionally, please communicate with HR about any planned staffing changes. By doing a proper true-down exercise, you ensure you actually capture the savings EAS offers. Many organizations fail to truly downsize fully because of poor internal tracking, leaving money on the table. Treat each anniversary as an opportunity: right-size everything. Similarly, plan ahead for any true-ups you may need so you can budget accordingly. The EAS gives you a chance to course-correct every year – take advantage of that. Over three years, those adjustments can add up to huge savings. And when you come to the end of the term, you’ll have a clear record of how your usage trended, which will help in deciding the next step (renew EAS, switch to EA, etc.). In short, the EAS is not a one-time negotiation but a continuous optimization process – commit to that process to fully realize the benefit.

By following these recommendations, you’ll be well-equipped to make an informed, strategic decision between an Enterprise Agreement and an Enterprise Subscription – and to negotiate the best possible deal, whichever route you choose.

The key is balancing cost and flexibility in a way that aligns with your business’s needs and avoiding being locked into a bad fit.

With the right approach, you can either secure the comfort of perpetual licenses at a great price (EA) or the agility of true-downs without breaking the bank (EAS).

The power is in understanding the trade-offs and seizing the negotiation advantage. Good luck with your Microsoft licensing strategy!

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