Microsoft's Move to Kill Volume Discounts Could Shake Enterprise Budgets

Microsoft has announced it will discontinue volume discounts for enterprise customers on Microsoft 365 and other cloud-based services starting November 1, 2025, a move that could lead to price increases of up to 12% for larger customers who previously benefited from tiered pricing structures. The change affects companies with 2,400 or more devices, removing the existing discounts tied to volume levels B, C, and D. Customers in the B category (2,400 to 5,999 devices) may face a 6% increase, while C (6,000 to 14,999 devices) and D (15,000+ devices) could see hikes of 9% and 12%, respectively. Microsoft stated that the move is part of its broader effort to simplify licensing and improve pricing clarity, aligning it with the consistent pricing model already in place for services like Azure.

The company emphasized that the change would apply only to new customers or those renewing contracts after November 1, with existing agreements unaffected. It also noted that on-premises software, U.S. government contracts, and education subscriptions remain outside the scope of the update. This strategic shift follows previous moves by Microsoft to eliminate discounts in Azure and for smaller volume customers. Analysts and industry experts have interpreted the change as part of a broader push to transition customers from Enterprise Agreements (EAs) to other licensing models, including direct deals and Cloud Solution Providers (CSPs), in an effort to expand its revenue base.

UBS analysts suggested that the impact of the pricing change has already been factored into Microsoft's guidance, noting the company’s continued growth trajectory and its recent fiscal projections. Microsoft's Productivity and Business Processes unit, which includes Microsoft 365, contributed approximately $128.5 billion in operating profit for fiscal 2025, with 73% of that segment’s revenue coming from commercial Microsoft 365 products and cloud services. Some industry advisors, like UpperEdge’s Adam Mansfield, suggested that while some companies may accept the higher costs to continue using Microsoft's applications, they may also scale back commitments to other Microsoft services like Azure.

For enterprise customers, the elimination of volume discounts raises concerns about budget management and long-term cost predictability. IT firms like Sourcepass have suggested that companies could potentially mitigate the price impact by purchasing through cloud resellers rather than directly from Microsoft, though this strategy has not yet shown widespread adoption. Microsoft’s decision has also been compared to similar moves by cloud competitors, including AWS and Google Cloud, which have also raised prices for certain services in recent months.

The transition away from EA-based volume discounts aligns with Microsoft’s broader efforts to streamline its licensing models and reduce the complexity of its pricing structure for partners and customers alike. Directions on Microsoft’s Rob Horwitz noted that while the changes could create confusion for customers, the core principles of contract negotiation remain unchanged, emphasizing the need for companies to assemble internal teams and develop financial models to navigate the new pricing landscape. As Microsoft continues to restructure its enterprise licensing approach, the move highlights its strategic focus on increasing per-seat revenue through add-ons like Copilot and by steering customers toward higher-tier subscription plans.

Source: [1] Microsoft guidance probably includes gutting volume discounts, analyst says (https://www.cnbc.com/2025/08/20/microsoft-guidance-probably-includes-gutting-volume-discounts-analyst.html) [2] Microsoft Is Dropping EA Volume Discounts Starting in November 2025 (https://www.directionsonmicrosoft.com/microsoft-is-dropping-ea-volume-discounts-starting-in-november-2025/) [3] Microsoft's 'simplified' Online Services pricing sees big customer discounts cut (https://www.sdxcentral.com/news/microsofts-simplified-online-services-pricing-sees-big-customer-discounts-cut/)