Introduction – Why Pitfalls Happen
Microsoft Enterprise Agreement (EA) renewals are high-stakes undertakings. They lock in your IT spend for years and can cost millions if mishandled. Yet Microsoft’s renewal process is full of subtle traps for the unprepared.
The vendor’s complex licensing, aggressive sales tactics, and tight timelines all tilt the field in Microsoft’s favor.
Many organizations inadvertently fall into common pitfalls – and the result is overspending or getting stuck in rigid contracts that don’t fit their needs. Read our guide to Microsoft Renewal Negotiation: How to Cap Price Uplifts and Secure Discounts.
The good news is that awareness is the first step toward stronger negotiations.
By understanding these pitfalls in advance, CIOs, CFO,s and procurement leaders can sidestep costly mistakes and negotiate a renewal on their terms, not Microsoft’s.
Let’s walk through five of the most common Microsoft renewal mistakes and how to avoid them.
Mistake #1: Starting Too Late
Rushing into an EA renewal a few weeks (or even months) before the contract expiration is a recipe for disaster. Microsoft’s team loves a last-minute customer – because if you’re short on time, you have minimal leverage. With the deadline looming, you can’t thoroughly explore alternatives or push back on unfavorable terms.
Microsoft’s deal desk knows you’re likely to sign whatever is on the table, because there’s no time left to do otherwise. In practice, organizations that start late often end up cornered into accepting Microsoft’s initial offer, even if it’s less than ideal.
The fix: Start the renewal process early, ideally 9–12 months before your EA expires. A long runway gives you time to audit your current usage, set clear goals, and even let Microsoft know that you’re prepared to negotiate hard. Internally, you can align IT, finance, and procurement teams on a strategy well in advance.
If you truly find yourself only weeks from expiration, consider asking Microsoft for a short-term extension (3–6 months). They would rather extend your current deal briefly than lose your business entirely. In short, control the timeline.
Early preparation shifts leverage back to you and prevents the time-crunch pressure Microsoft counts on.
Mistake #2: Assuming Renewals Are Automatic
Many companies treat an EA renewal as a routine paperwork exercise – a simple rollover of the last contract. This mindset is not only wrong, it’s expensive.
In reality, every aspect of your agreement is negotiable at renewal: pricing, product selection, discount levels, contract terms, and more.
If you assume the renewal is just automatic, you’re likely to rubber-stamp the same deal as before, leaving money on the table and carrying forward terms that might no longer serve you.
Microsoft won’t remind you that you have options; they benefit if you renew on autopilot. We’ve seen clients who “auto-renewed” later realize they kept paying for features nobody uses or missed out on new discounts that other customers got.
Treating a renewal as mere paperwork means missed opportunities – it’s a mindset Microsoft’s sales teams hope you have.
The fix: Treat each EA renewal as a fresh negotiation, not a formality. Approach it like you’re signing a brand-new deal from scratch. First, scrutinize your current contract and usage: What did you actually use? Which services or licenses could be removed or downgraded?
Next, think about changes in Microsoft’s offerings and market pricing since your last agreement – there may be new bundles or competitors driving better pricing. Go into discussions prepared to renegotiate every term.
Even if you plan to stick with Microsoft for all the same products, challenge the status quo on price and conditions.
By signaling that nothing is guaranteed without a review, you invite Microsoft to come back with sharper pencils and more flexibility to earn your renewal.
Keep all your options open, Microsoft Renewal vs. Rebid: Should You Switch Licensing Programs?
Mistake #3: Not Cleaning Up Licenses
One of the costliest pitfalls is renewing your EA without trading down unused licenses. Over a three-year term, it’s almost inevitable that you’ve accumulated some amount of “shelfware” – licenses that are paid for but sit idle.
Common examples include Office 365 or Microsoft 365 seats assigned to departed or inactive employees, E5 security or compliance add-ons that were never fully deployed, or niche products like Visio and Project, where maybe only half the purchased licenses are actually in use. If you simply renew all these licenses as-is, you’re committing to pay for that waste for another three years.
The impact of not cleaning up can be huge. In many enterprises, a significant percentage of licenses (sometimes 15%–30%) are underutilized or completely unused.
That silent overspend drains the budget that could be saved or reallocated to real needs. Microsoft isn’t going to point out your software – it’s extra revenue for them when you renew it. The onus is on you to find and eliminate it.
The fix: Audit and right-size your licensing before you renew. Several months ahead of renewal, run a thorough usage audit across all your Microsoft products. Identify accounts that haven’t logged in recently, users assigned high-end licenses (like E5) who aren’t using the advanced features, and any duplicate or redundant tools.
Armed with this data, perform a true-down: remove or reduce any licenses that aren’t needed in the future. Drop unnecessary SKUs entirely.
For instance, if you bought 500 Visio licenses but only 100 people actively use Visio, plan to cut the other 400 in the renewal. Likewise, if thousands of users have an E5 license but only core IT staff use the E5-only features, consider downgrading a chunk of those users to E3.
By cleaning house, you not only slash the “shelfware tax” from your new EA, but you also strengthen your hand in negotiations – it’s hard for Microsoft to argue against facts showing those licenses bring no value. The result is a leaner, more cost-effective agreement in the future.
Mistake #4: Ignoring Alternate Options
Another classic pitfall is focusing only on renewing your EA and never exploring alternatives. Microsoft’s dominance can make it feel like EA is the only game in town, but that’s exactly the mindset that hurts your leverage.
Customers who don’t investigate other licensing avenues – such as the Cloud Solution Provider (CSP) program or Microsoft’s newer Microsoft Customer Agreement for Enterprise (MCA-E) – end up negotiating in a vacuum.
Microsoft’s sales reps know that if you haven’t shopped around, you likely won’t walk away from the table. That often means they have little incentive to offer their best pricing or terms.
Ignoring alternatives can cost you in two ways. First, you might miss out on a model that actually fits your needs better or saves money. For example, CSP allows month-to-month license adjustments, so you pay only for what you need and can drop excess at any time – a flexibility the EA can’t match.
Some organizations find that moving certain workloads or users to CSP or MCA-E yields immediate cost savings or at least avoids long-term lock-in.
Second, even if the EA is still your preferred route, not having a Plan B means you have no credible threat in your negotiation.
Microsoft is far more willing to make concessions if they know you’re evaluating, say, shifting a portion of users to CSP or considering Google Workspace for some functions.
If they sense you’re all-in on renewing no matter what, they’ll naturally hold firmer on price.
The fix: Always benchmark alternative options before and during your renewal process. Get pricing quotes from CSP providers for an equivalent set of licenses and services. Explore the pros and cons of an MCA-E agreement (which, unlike a fixed-term EA, is an evergreen contract that might offer more flexibility in some cases).
Also, consider competitive solutions in areas where Microsoft isn’t your only choice (for example, Google or Zoom for collaboration, AWS or Google Cloud for certain cloud services).
The point isn’t necessarily to abandon Microsoft; it’s to gather data and cultivate leverage. When you can casually mention to Microsoft that you’ve modeled out moving 20% of your licenses to CSP, or that you’re piloting an alternative solution, it changes the tone of the talks.
Microsoft will realize they need to earn your business back. Even if you stay on the EA, you’ll likely end up with a better deal whether that’s a bigger discount or more favorable terms – because you took the time to test the market. Don’t leave money on the table by renewing in a Microsoft silo.
Mistake #5: Accepting “Standard” Terms
During renewal negotiations, Microsoft representatives might tell you that certain terms or price increases are “standard policy” and can’t be changed.
A common scenario is the built-in price uplift: Microsoft might propose, say, an 8% annual uplift on your Microsoft 365 licenses (meaning your cost per seat rises each year of the term), framing it as the normal rate.
Other times, they’ll present the contract with boilerplate clauses around audits, true-ups, or limitations on future flexibility, implying these are non-negotiable.
Too many customers take these at face value – mistakenly assuming that because Microsoft calls them “standard,” they must simply accept them.
The pitfall here is obvious: by accepting all standard terms, you could be locking in higher costs and reduced flexibility unnecessarily.
An 8–10% yearly price increase, for example, can compound to a huge budget jump over three years – yet some clients quietly agree, not realizing they might have negotiated it down or capped it.
Similarly, “standard” audit rights might allow Microsoft to audit you with very little notice or leeway, which can be disruptive and costly if it happens. Microsoft’s default contract terms are written in their favor, not yours.
The fix: Push back on these terms – politely but firmly. Nearly everything in an EA is negotiable if you have leverage and a clear business case. Don’t accept an uplift percentage just because it’s presented as routine.
If Microsoft proposes an 8% increase, counter with data: maybe your headcount or software usage isn’t growing much, so a lower (or zero) uplift is justified. Aim to negotiate caps on price increases in writing (for instance, no more than 3% per year, or even a flat price over the term). It’s not unheard of to get a 0% uplift if you make the case or exchange it for a concession on your side.
Likewise, scrutinize the contract language on compliance and audits.
You can request modifications – such as longer notice periods before an audit, or clarification on what triggers a true-up – to avoid nasty surprises. If something doesn’t sit right (e.g., a clause that forces you into Microsoft’s cloud for any new software purchases), bring it up and seek a change.
Microsoft may push back initially, but if you’re a significant client or you’ve shown willingness to consider alternatives (see Mistake #4), they often will relent on some “standard” items to secure the deal. In short, nothing is truly non-negotiable until you agree to it.
By insisting on caps and customizing key terms, you ensure your renewal agreement protects your interests, not just Microsoft’s.
Check out our tips, Avoiding Microsoft Renewal Price Creep: How to Cap Annual Uplifts.
Pitfalls vs Impact vs Fix
To summarize, here’s a quick reference table of these common renewal pitfalls, the impact they have, and how to fix them:
| Mistake | Impact | Fix |
|---|---|---|
| Starting too late | Lost leverage | Begin prep 9–12 months out |
| Treating renewals as automatic | Missed discounts | Negotiate every term |
| Not cleaning up licenses | Shelfware costs | True-down before renewal |
| Ignoring alternatives | Weak leverage | Benchmark CSP, competitors |
| Accepting “standard” terms | High costs, weak flexibility | Demand caps & term changes |
FAQs
- Why is starting late a mistake? – If you wait until the eleventh hour, Microsoft knows you can’t walk away, and they’ll use that time pressure to force a higher-priced deal on you. Starting late leaves you with no fallback and little negotiating power.
- Are renewals negotiable? – Absolutely. Every aspect of an EA renewal is negotiable – from pricing and discounts to contract terms and product selection. Don’t let anyone tell you otherwise or pressure you to simply accept the standard offer.
- How do I spot “shelfware”? – Audit your licenses and usage. Compare the list of licenses you’re paying for to actual active usage and assignments. Any license not being actively used by an employee (or providing business value) is shelfware that you might not need in the renewal.
- Is CSP always cheaper? – Not in a straightforward price-per-license way – Microsoft often prices EA and CSP similarly now. However, CSP can save money through flexibility: you only pay for what you use and can drop excess licenses monthly. Even if it isn’t dramatically cheaper per unit, it prevents overspending on unused licenses and gives you leverage in negotiations.
- Can uplifts be capped? – Yes, but only if you negotiate it into your contract. Microsoft won’t voluntarily cap price increases, but you can insist on it. For example, you can add a term that limits annual price hikes to 3% (or 0% for certain products). The key is to get any cap or protection in writing in the EA – verbal assurances won’t count.
Five Expert Recommendations
- Start negotiations at least 9 months in advance. This ensures you have the time to explore options and won’t be pressured by deadlines.
- Audit usage and true-down before signing anything. Clean up inactive licenses so you’re only renewing what you actually need.
- Always test market alternatives for leverage. Whether it’s CSP, a Microsoft Customer Agreement, or a competitor, knowing your options strengthens your hand.
- Push back on uplifts – aim for caps of 0–3%. Don’t accept big annual price increases as a given. Negotiate them down or cap them in your contract.
- Treat renewal as a fresh negotiation, not a rollover. Even if you stay with Microsoft, approach the deal as new. You’ll secure better terms and avoid paying for past mistakes.
By avoiding these pitfalls and following these best practices, you can turn a Microsoft EA renewal from a potential budgetary trap into an opportunity.
With early preparation, hard data, and a willingness to negotiate every detail, you’ll come out of the renewal with a deal that delivers value, flexibility, and confidence for the next term – instead of surprises and regrets.
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