Introduction – Preparation Is Half the Battle
Preparation is the difference between an overpriced software deal and a successful, cost-effective partnership.
When it comes to Microsoft contracts, going in unprepared can leave you stuck with default terms and costly commitments that favor Microsoft’s bottom line.
In contrast, a well-prepared customer can push back, find savings, and secure terms that align with your own business goals. This Microsoft negotiation checklist is your tool to make sure no critical step is missed. Read our Microsoft Negotiation Guide.
Below are ten essential steps to prepare for your Microsoft negotiation. Use them as your playbook for Microsoft contract planning so that you enter talks knowing you’ve left no stone unturned.
Checklist Item 1: Inventory Current Licenses & Usage
Start by auditing what you have and how it’s being used. Make a detailed list of all your current Microsoft licenses and check the actual usage for each.
The goal is to find any shelfware – licenses you’re paying for but not actively using – and spot where you may actually need more.
- List and compare: Catalog every Microsoft product and subscription your organization owns, then compare it to what people are actually using. If you see licenses assigned to former employees or unused services, mark them for removal in the renewal.
- Identify needs vs. waste: Determine which licenses are truly needed and which are excess. Usage data is your evidence – it lets you confidently cut unused licenses and justify any new ones you might require.
Checklist Item 2: Define Business Needs and Priorities
Before looking at Microsoft’s offerings, clarify what your organization actually needs for the next few years. Not every product in the Microsoft catalog is relevant to you.
Focus on:
- Strategic alignment: Map your software needs to your business plans. For example, if you expect to expand or adopt new technology, ensure your license counts and product choices will support that growth. Also, avoid renewing licenses for any systems you know you’ll retire.
- Must-haves vs. nice-to-haves: Identify which Microsoft services are mission-critical – those are your must-haves. Then list secondary tools that are useful but not essential. This clarity helps you push back on any upsell that doesn’t fit your priorities. If a product isn’t truly needed, you can confidently leave it out.
Checklist Item 3: Research Pricing Benchmarks
Don’t start negotiating until you have a sense of market pricing.
Knowing what discounts and deals other companies get will give you a reality check on Microsoft’s offers:
- Ask around for benchmarks: Consult peers or use a licensing advisor to learn what discount percentages similar organizations are getting. Having a benchmark prevents you from accepting an outlier offer.
- Obtain alternative quotes: Even if you plan to buy direct, get a quote from a Microsoft Cloud Solution Provider (CSP) reseller for comparison. A CSP price can serve as a competitive baseline and highlight wiggle room in Microsoft’s direct offer.
Very important to read, Must-Have Terms in Your Microsoft Contract: Negotiation ‘Red Lines”.
Checklist Item 4: Identify Negotiation “Asks”
Go into the negotiation knowing exactly what you want. Make a list of specific “asks” – the terms and concessions you will request from Microsoft.
These could include:
- Pricing and discounts: Target a strong discount on key products (say 20% off) and insist those prices stay fixed for the contract term. Any new licenses you add later should get the same rate.
- Payment terms: Request a more favorable payment schedule (for example, annual payments instead of one upfront lump sum) to ease cash flow.
- Renewal protections: Negotiate a cap on price increases at renewal, or the option to renew at the same discount. The idea is to avoid a big jump when this contract ends.
By defining your asks upfront, you set the agenda. Rather than reacting to Microsoft’s offer, you’ll be steering the discussion toward the outcomes you need.
Checklist Item 5: Plan Alternatives (BATNA)
Always have a backup plan. In negotiation terms, this is your BATNA (Best Alternative to a Negotiated Agreement) – what you’ll do if you can’t reach a satisfactory deal.
Think about how you would manage if Microsoft doesn’t budge:
Could you extend your current licenses every month through a reseller? Could you delay certain projects or use another vendor’s services in a pinch? Even though these options might not be ideal long-term, having them up your sleeve gives you leverage.
It signals to Microsoft that you won’t accept an unreasonable deal because you have other ways to keep your business running.
When Microsoft knows you’re willing and able to walk away if necessary, they are far more likely to come back with a more customer-friendly offer.
How to get the best deal, Securing Microsoft Discounts: 5 Strategies to Get Better Pricing.
Checklist Item 6: Assemble Your Negotiation Team
Negotiating with Microsoft is a team effort. Assemble a cross-functional group so all angles are covered:
- Procurement lead: Coordinates the negotiation strategy and keeps everyone aligned.
- IT representative: Provides usage data and technical insight to ensure the deal meets your IT needs.
- Finance representative: Keeps the budget in focus and analyzes the financial impact of proposals.
- Legal advisor: Reviews and redlines contract terms to protect your interests.
- Executive sponsor: A CIO, CFO, or other executive who lends weight and can make high-level decisions quickly. Their involvement signals Microsoft that your company is serious and unified.
Checklist Item 7: Timing and Approval Planning
Time your negotiation for maximum advantage and avoid internal bottlenecks:
- Leverage Microsoft’s calendar: Be aware of Microsoft’s quarter-end and fiscal year-end (June 30) crunch times. Sales reps get especially eager to close deals as these dates approach. Try to schedule your negotiations around these periods to capitalize on their urgency. But don’t ever sacrifice a good deal just to hit their deadline – you can let a quarter-end pass if needed and continue negotiating.
- Align your internal approvals: Map out all the internal approvals you’ll need (budget sign-offs, executive green lights, etc.) and schedule them early. Being ready on your side means you can move quickly on a great offer or deliberately slow down talks as a tactic. The point is to control the tempo of the negotiation rather than be rushed at the last minute.
Checklist Item 8: Gather Microsoft Sales Intel
Do some homework on what’s motivating Microsoft’s side. The more you know about their sales objectives, the better you can negotiate:
- Find their focus: Find out which products or services Microsoft is pushing most (e.g. Azure, certain security add-ons, etc.). If one of those aligns with your plans, you could leverage that for a better deal.
- Spot their urgency: If your rep is pressuring you to sign by a certain date or dangling a “limited-time” deal, that’s a sign of quota pressure. Use it to your advantage – you can hold out for sweeter terms knowing they need the sale.
- Ask about promotions: Ask if any special promotions or programs could apply. Sometimes there are extra discounts or freebies (training credits, deployment help) available, but you only get them if you ask.
Knowing Microsoft’s incentives helps you craft proposals that appeal to them and spot when you have leverage on your side.
Checklist Item 9: Prepare Counteroffer Scenarios
Before you meet with Microsoft, brainstorm how you’ll handle different scenarios. For example, if their initial quote comes in way over budget, decide whether you’ll counter by cutting out some products or demanding a much steeper discount (or both).
Likewise, identify which contract terms are your non-negotiables and which you could give ground on if necessary.
Having these counteroffer plans ready means you won’t be thrown off course – you can respond confidently no matter what curveballs Microsoft throws your way.
Checklist Item 10: Review Contract Fine Print
Before finalizing any deal, scrutinize Microsoft’s contract terms and note which clauses to negotiate.
Pay special attention to:
- Pricing protections: Ensure your negotiated discounts are locked in. If you add licenses during the term, they should come at the same rate. Also, try to cap any price increases at renewal so you won’t get an unpleasant surprise later.
- Flexibility if needs change: Microsoft’s agreements let you increase but not usually decrease licenses mid-term. If there’s a chance you’ll need fewer licenses later, ask for some flexibility (or consider a shorter agreement). Also, clarify what happens if your company merges or splits – can you transfer or drop licenses in those cases?
- Audit and compliance: Microsoft will likely audit you at some point. Negotiate for reasonable notice and a fair process in the contract. You want time to resolve any compliance issues rather than facing immediate penalties.
Catching these fine-print issues in advance means fewer surprises down the road. Raise any problematic clause during negotiations – Microsoft won’t change boilerplate terms unless you ask. Remember, a truly good deal isn’t just about price; it also needs to have terms that protect you.
Read about our Microsoft Negotiation Services.
