Microsoft has announced it will discontinue volume-based pricing levels from November 2025. While the official narrative promotes transparency the reality is a strategic shift that increases baseline pricing, reduces flexibility, and accelerates the move to MCA and CSP. For organisations reliant on Microsoft technologies, this is a critical moment to reassess licensing strategies and preserve negotiation leverage. 

Organisations will lose automatic volume discounts and face higher renewal pricing. As an example, current level D clients should expect baseline costs to increase by up to 20%. 

What’s Changing and Why It Matters 

Microsoft is removing the volume-based pricing tiers (Levels A–D) that historically offered automatic discounts based on purchase volume. Instead, pricing for online services will align with Microsoft.com’s public rates. 

This change affects: 

  • Enterprise Agreement (EA)
  • Microsoft Products and Services Agreement (MPSA) 

It excludes on-premises software, education sectors, and the U.S. Government. 

Why it matters: 

  • Organisations lose automatic volume-based discounts. 
  • Renewal pricing will increase. 
  • Negotiation dynamics with Microsoft will shift significantly. 

The Myth of Transparency 

Microsoft claims this change promotes pricing transparency. The reality: Microsoft.com pricing has always been higher than volume licensing rates. This isn’t a shift to Level A pricing, it’s a price hike beyond Level A. The move creates an artificially inflated starting point for negotiations. 

Additionally, for many organisations, especially those outside the US or transacting in non-USD currencies, this raises questions: 

  • How will FX fluctuations be managed? 
  • Will regional pricing parity be maintained? 

Microsoft has not clarified how FX fluctuations will be managed, leaving non-USD clients exposed to unpredictable pricing shifts. 

Discounting Isn’t Dead—It’s Evolving 

Volume-based pricing tiers were programmatic, not negotiated. They incentivised adoption of Microsoft’s strategic products and offered predictable price waterfalls (~3–7% between levels). 

True discounting has always come from negotiation, not programmatic pricing. Microsoft reps may have presented volume tiers as discounts, but real savings came from leveraging strategic value and understanding your plausible alternatives. 

Now, with the removal of these programmatic pricing tiers: 

  • Organisations must negotiate from a higher baseline. 
  • The importance of leverage and strategic positioning increases dramatically. 

The Real Agenda: Killing Legacy Licensing 

This isn’t just about pricing, it’s about how Microsoft contracts. 

Microsoft is: 

  • Phasing out legacy volume licensing agreements. 
  • Steering smaller/cloud-native clients to CSP, where Microsoft’s pricing to their partners is fixed. 
  • Pushing larger enterprises toward MCA, where license terms are less transparent and what/how you license their products/services is more restrictive. 

Recent trends include: 

  • Microsoft has removed hundreds of millions of dollars in annual partner funding that historically paid organisations that sold and/or facilitated Microsoft licensing sales. This funding has been redirected to partners to drive the deployment, adoption and consumption of their online services. 
  • Refusal to offer commitment discounts (MACCs) under EA, these incentives are only being offered under a MCA. 
  • A shift toward self-service and AI-led support models while continually increasing pricing. 
  • Increased product/service pricing has a direct flow-on cost increase to Unified Support cost increases, as this is priced as a percentage of your Microsoft spend. 

This is a multi-year strategy to consolidate licensing under terms that favour Microsoft, reduce negotiation flexibility, increase their margins, while reducing their risk exposure. 

What You Need to Do Now 

If you’re a Microsoft budget owner, procurement lead, or technology executive, here’s what to consider: 

  • Reassess your licensing roadmap: Understand how these changes affect your renewals and budgeting. 
  • Identify and articulate your leverage: What alternatives do you have? What strategic value do you offer Microsoft? 
  • Engage independent advisors: Avoid relying on Microsoft-funded partners or analysts. True independence is required to ensure you are not paying someone for advice that Microsoft is incentivising the market to deliver in alignment with their multi-year strategy. 

Why Keystone? 

Keystone Negotiation is: 

  • 100% independent from Microsoft 
  • A global leader in Microsoft negotiations and licensing advisory 
  • Specialised in helping clients navigate complex licensing transitions, identify/create and position leverage to consistently secure optimal outcomes 

Don’t wait until your next renewal because leverage moving forward will coexist with change, which requires a runway to execute if you want to be taken seriously. Contact Keystone for a free consultation and discover how to protect your budget and establish a fully informed Microsoft licensing strategy.