AT A GLANCE: THE KEYSTONE PREDICTIONS

  • The Shift: 2026 marks the death of the "easy" Enterprise Agreement; Microsoft is forcing a move to the stricter, riskier MCA contract.
  • The Cost: Expect effective price increases of 30-40% due to product re-tiering, removal of discounts, and list price increases.
  • The Strategy: Traditional "wait to the renewal negotiation and ask for more discount" is dead. The new leverage is updated Microsoft-specific negotiation strategy, having an independent Microsoft licensing specialist on your side of the table, and utilizing Azure Commitments (MACC) with AI and Security competitive threats.
  • The Source: These projections are based on Keystone Negotiation’s active 2024-2025 deal flow data.

If you thought your last Enterprise Agreement (EA) renewal was a bruising encounter, brace yourself. The 2024-2025 cycle was just the warm-up.

2026 is shaping up to be the most disruptive year in Microsoft commercial history. We aren't talking about standard inflationary ticks or a few new SKUs. We are talking about a fundamental restructuring of how Redmond extracts revenue from your P&L.

We’ve crunched the numbers, analysed the contract shifts, and watched the negotiation patterns in real-time. We have the receipts.

Here are the top 10 shifts coming for your wallet in 2026.

1. The Enterprise Agreement is Dead (Long Live the Trap)

Let’s stop pretending. Microsoft has been signalling the death of the EA for years. In 2025, they started refusing renewals for Level A customers (500-2400 users), herding them into the Microsoft Customer Agreement (MCA-E) like cattle.

The MCA isn’t an evolution; it’s a hostile takeover of your legal rights. Unlike the EA, the MCA allows Microsoft to change terms mid-contract (Oracle style), suspend service without notice, and—crucially—it removes audit restrictions. It is a contracting posture purely designed to favour the vendor. If you are moving from an EA to an MCA, you aren't just changing paper; you are exposing yourself to retroactive billing audits and infinite legal review costs. Unlike an EA where exchange rates are locked, MCA Azure pricing fluctuates monthly based on spot rates (for non-USD customers).

2. The 30-40% "New Normal"

Price increases are no longer incremental; they are systemic. Commercial and government customers are staring down the barrel of effective increases between 30% and 40% average (up to 60%).

How do they get there? It’s death by a thousand cuts. A 10% hike on on-prem servers here, a 20% jump on CAL suites there, and a discontinuation of the EMS E3 Kiosk (a casual 100% price doubling). Come July 1, 2026, the M365 E3 and E5 suites are jumping another 5-8%. This is on top of a long list of country-specific price increases in the last 24 months (up to 25%).

If you are waiting until renewal day to fix this, you have already lost. This requires surgery during the contract term, not a band-aid at the end.

3. Peak Pricing Power (And The Arrogance to Match)

Microsoft is betting the house that your switching costs are too high to leave. They are right, and they are monetising that captivity.

Microsoft will (a) charge you more for what you already have and (b) sell you new products. Doing (a) is easier than (b).

They are moving value down the stack (shifting products from E5 to E3) not to be generous, but to justify hiking the E3 price. Meanwhile, they are pushing the Azure ARC Agent onto on-prem servers under the guise of "management," which is really just a Trojan horse for licensing compliance. It isn't accidental; it’s strategic extraction. Expect double-digit price increases every 18 months. The beatings will continue until revenue targets improve.

4. The Copilot Bait-and-Switch

The Copilot hype train hit a reality wall in 2025: low adoption and patchy ROI. Microsoft’s solution? If you won’t buy the license, they’ll charge you for the consumption.

By late 2026, we predict the "per user" license will play second fiddle to consumption revenue from Agents. Microsoft is reshaping AI monetisation to mirror Azure: a baseline subscription plus metered usage. Heavy users get funnelled into full licenses; everyone else pays by the drink. It’s the only way they can offset the eye-watering compute costs of those LLMs.

5. Agent 365: The Governance Racket

Enter "Agent 365." This is Microsoft’s Agent Orchestration (AO) play to govern the chaotic explosion of enterprise AI agents. It spans Entra, Purview, and Defender.

The intent is unmistakable: they want to own the governance layer of the AI ecosystem just as they owned identity. By 2027, this won't be optional. If you want to run custom agents at scale, you will be paying the Microsoft toll collector. And yes…. also consumption-based licensing.

6. The Azure MACC Trap

The Azure Consumption Commitment (MACC) is the new default negotiation currency. It sounds great—discounts! leverage! funding!—but it’s a trap for the unwary.

A MACC locks in a discount, not a price. List prices can (and do) change. If you underspend, you write them a cheque for the difference, often undiscounted. Microsoft is pushing this to defend territory against AWS and lock in multi-year revenue. Don't let a MACC become an anchor that drags your negotiation into the deep end.

Single cloud strategy with Azure can technically have merits… but you’re digging a commercial hole for yourself that you’ll need to climb out of when the MACC needs renewing.

7. E5 is Old News; It’s All About Defender & AI

For a decade, the Microsoft rep’s bonus depended on selling you E5. That game has changed. The new holy trinity of revenue scoring is Copilot, Defender, and Azure.

They are even moving Defender for Office 365 P1 down into E3. Why? Because they need to justify the E3 price hike, and they need to strip market share from Proofpoint and Mimecast. And after the 2025 US Fed Government M365 hack, Microsoft is under pressure to improve the base level of email security.

Getting Defender for Office 365 P1 down into E3 pulls through Sentinel, Security Copilot, and Purview revenue.

8. The Google Threat is Real (Use It)

Here is the one lever you actually have. Microsoft is terrified of Google Gemini.

Google finally has an end-to-end stack that rivals the Redmond ecosystem: Gemini + Google Search + Workspace + GCP + Chrome. Add to that their specialized AI arsenal: Pomelli (marketing), NotebookLM (private AI based on your content), Veo (video), and Google AI Studio (AI dev).

Thinking ahead – picture AI being the place you go to for email, calendar, meetings, and editing documents. If Microsoft loses the AI interface, they lose the Windows + M365 franchise. Genuine competition from Google wakes Microsoft up at the negotiating table. Use it.

9. Unified Support: The Money Pit

Unified Support remains one of the most impressively misaligned products in the IT world. You pay 20-40% more each year for "support" that increasingly consists of AI bots and offshore call centres.

The model compounds yearly, completely detached from your actual support needs. Ask yourself: do you actually need "unlimited" support? Because you’re paying a premium for a service that is actively degrading.

10. The Talent Drain

In 2025, Microsoft cut 9,000 staff. Surprisingly, they torched a lot of their seasoned sales talent.

The result? You are now negotiating against a machine that has aggressive growth targets but fewer capable humans to structure a deal that actually works for you. This is bad news for customers, but good news for our clients. We know where the bodies are buried, even if the new rep on your account doesn't.

The Bottom Line

If 2024-2025 was the squeeze, 2026 is the crush. The old playbook—calling your rep six months before renewal—is dead.

Microsoft proposals are now fabricated guesses designed to make ramped-down discounts look like "value". You can accept the "new normal" of 30% hikes, or you can get serious.

At Keystone, we don't just read the licensing rules; we run the game. We are already seeing these shifts in live negotiations. If you want to survive 2026 and beyond with your budget intact, you need to start preparing now.

Connect with me here or contact Keystone Negotiation. We sell independent leverage, not licenses.

ABOUT KEYSTONE NEGOTIATION

Keystone Negotiation is a dedicated Microsoft commercial advisory firm. Unlike analyst firms and Microsoft licensing resellers, Keystone is 100% independent of Microsoft. We do not sell licenses; we sell leverage.

Multiple times in 2025 we reduced Microsoft price increases back to 0%.

We specialize in high-stakes Microsoft Enterprise Agreement (EA) renewals, Azure/M365 cost optimization, and ongoing licensing support and cost savings. With customers globally, we help CIOs and Procurement leaders reverse the balance of power against the world's most aggressive software vendor.

FAQ: Navigating the 2026 Microsoft Landscape

Q: Is the Microsoft Enterprise Agreement (EA) really going away? A: Yes. Microsoft is actively blocking renewals for Level A customers (500-2400 users) and forcing them onto the Microsoft Customer Agreement (MCA). This removes critical price protections and audit restrictions found in the traditional EA.

Q: How much should we budget for our 2026 Microsoft renewal? A: Keystone data suggests a baseline increase of 30-40%. This accounts for list price hikes, the removal of EA Level discounts, and being force-fed E5 products.

Q: Why is Keystone Negotiation different from an analyst firm or licensing reseller? A: Analyst firms and resellers often receive money from Microsoft or have partnerships with them. Keystone Negotiation is paid by you to reduce those costs. We sit on your side of the table, structuring the strategy and handling the direct commercial negotiation to ensure you don't overpay.