A Microsoft Enterprise Agreement is a three-year volume licensing contract for organizations with 500 or more users or devices. You commit to a set of Microsoft products up front, you get volume pricing and Software Assurance for the term, and you reconcile growth once a year through a process called a true-up. For a long time it was the default way large organizations bought Microsoft, and for many it still is.
What has changed is that the EA is no longer the contract Microsoft wants to sell most customers. Since early 2025 it has been withdrawing Enterprise Agreements from parts of the market and pointing buyers toward other programs. So the useful version of this guide answers two questions at once: how an EA actually works, and whether the one you have is the one you will be offered next time. This matters most in the 90 to 120 days before a renewal, which is exactly when the details below stop being academic.
What is a Microsoft Enterprise Agreement?
An Enterprise Agreement is Microsoft’s volume licensing program for larger organizations. The documented entry point is 500 or more users or devices. In return for committing at that scale, you get three things: a locked set of products for the term, volume pricing based on your size, and Software Assurance included on the licenses you buy.
The structure is deliberately front-loaded. You agree to standardize on certain products across your organization, you count your users or devices at the start, and you license to that count. The agreement runs for three years. That commitment is what the pricing is built on, which is also why walking it back partway through is difficult by design.
Software Assurance is not optional inside an EA. It is bundled into every license, and it is what provides upgrade rights, certain support benefits, and the ability to spread payments. If you specifically need licenses without Software Assurance, an EA is not the vehicle for it.
How does a Microsoft Enterprise Agreement work?
You enroll, you count, you commit, and then once a year you reconcile. That is the whole rhythm, and each step has a cost consequence worth understanding.
At enrollment, your organization is placed at a price level based on how many users or devices you have. Historically those levels ran from A up to D, with the larger commitments earning the deeper programmatic discounts. You order your baseline licenses for everything you are standardizing on, and you pay across the three-year term rather than all at once.
From there, the agreement is mostly quiet until the anniversary. New hires, new devices, and newly deployed products accumulate through the year. You do not license each of those the day it appears. Instead you carry the count and settle it annually. That annual settlement is the true-up, and it is the single most misunderstood part of the agreement.
What is an EA true-up?
A true-up is the yearly reconciliation of what you actually deployed against what you originally licensed. On each anniversary of the agreement, you total the net increase in users, devices, and products since your last count, and you place one order to cover it.
The direction only goes one way. A true-up reports increases. It does not let you reduce your license count or hand licenses back mid-term. If you deployed something and later stopped using it, you keep paying for it until the agreement renews. The renewal is the only point at which you can reset your counts downward.
That one-way design is why true-ups are the most common source of surprise Microsoft bills. Usage grows on its own. People get provisioned, premium editions get rolled out more widely than planned, a product gets switched on across a division. None of it shows up as a decision anyone remembers making, and then the anniversary arrives and the number is bigger than finance expected. An EA rewards organizations that track their own deployment through the year and penalizes the ones that find out what they owe when Microsoft tells them.
EA vs CSP vs MCA-E: which contract are you actually on?
Most people say “our Microsoft agreement” and mean the EA. But there are now three contracts in play, and the differences decide what you pay and how much flexibility you have.
| Enterprise Agreement (EA) | Cloud Solution Provider (CSP) | Customer Agreement for enterprise (MCA-E) | |
|---|---|---|---|
| Who it is for | 500+ users, in practice larger commercial, government, education | Any size, no minimum | Microsoft’s positioned EA successor, direct |
| Term | 3 years | Flexible, monthly or annual | Subscription, no fixed multi-year lock |
| How you buy | Commit up front, true-up annually | Buy up and down through a partner | Direct from Microsoft, digital |
| Perpetual licenses | Available | Limited | No, subscription only |
| Software Assurance | Included, mandatory | Not the same model | Not in the EA sense |
| Programmatic discounts | Historically yes, now reduced | No | No guaranteed programmatic discount |
The practical reading of that table is this. CSP favors organizations with variable headcount, because it bills closer to real use and lets you scale down. The EA still favors very large, stable estates that can earn and hold volume pricing. The Customer Agreement for enterprise is what Microsoft increasingly offers in place of an EA, and while it is marketed as the EA’s digital evolution, it removes perpetual licensing and the guaranteed discounts that made the EA worth committing to. Knowing which of these three you will be offered at renewal is half the battle.
What is changing with the Enterprise Agreement in 2025 and 2026?
Two shifts matter, and both push in the same direction, which is upward on price.
The first is discounting. On November 1, 2025, Microsoft flattened the volume discount levels for online services. Organizations that previously sat at price levels B, C, or D for cloud products now pay level A list pricing, which licensing analysts estimate as an effective increase of roughly 6, 9, and 12 percent depending on where you used to sit. This applies to online services such as Microsoft 365, Dynamics 365, Azure, and the security and management products, not to on-premises software, and it excludes US government and education price lists. In plain terms, the reward for being a large cloud buyer on an EA got smaller.
The second is availability. Microsoft announced it would stop offering a subset of cloud Enterprise Agreements in direct markets from January 1, 2025, and began notifying affected customers that year. Licensing specialists report that the organizations most likely to lose EA access are commercial customers below roughly 2,400 users, who are being pointed to CSP or to the Customer Agreement for enterprise instead. That 2,400 figure is an observed market pattern, not a published Microsoft rule, so treat it as a strong signal rather than a hard line. The published position is simply that not every organization that has an EA today will be renewed on one.
Put together, the EA is becoming a narrower, more expensive, and less automatic option. For the organizations that keep it, the pricing is less generous than it was. For the ones that lose it, the replacement contracts cost the control that made the EA valuable.
What does this mean for your renewal?
It means the renewal is no longer a formality, and the preparation has to start earlier than it used to. You need to know three things before your window opens: which of the three contracts Microsoft intends to offer you, what your real deployment looks like versus what you are licensed for, and where the discount changes land on your specific products. Those answers take time to assemble, and they are far harder to produce once the renewal clock is already running and the leverage has shifted to the seller.
The mechanics of actually negotiating that renewal, the preparation, the counter-positions, and the timing, are their own subject. We cover them in detail in our guide to Microsoft EA renewal negotiation. This guide is about understanding the instrument. That one is about getting the best outcome from it.
Where UMS fits
We spent years on the other side of these agreements, building the pricing and the programs that Microsoft and other publishers put in front of enterprises. That is the knowledge we now use in the opposite direction. An Enterprise Agreement is not a document most organizations read closely until the bill is already set, and by then the decisions that drove the number are locked in.
What we do is get in front of that. We reconcile what you actually run against what you are licensed for, we model the EA against CSP and the Customer Agreement for enterprise using your real numbers, and we tell you which contract and which counts leave you paying the least for what you genuinely need. Because we are paid from the savings we find rather than a fixed fee, the incentive is straightforward: we only win when your Microsoft bill goes down.
If your EA renews in the next few months, or you have been told your agreement is changing, the time to understand your position is now. Start with Microsoft EA renewal negotiation, the broader picture in software cost optimization, or how we approach contract negotiations.
Frequently asked questions
What is a Microsoft Enterprise Agreement? A Microsoft Enterprise Agreement, or EA, is a volume licensing contract for larger organizations, available to those with 500 or more users or devices. It runs for a three-year term, locks in a set of products and a price level for that period, and includes Software Assurance on the licenses it covers. In exchange for committing up front, the organization gets volume pricing and the ability to add licenses through an annual true-up rather than buying each one separately.
How many users do you need for a Microsoft Enterprise Agreement? The documented minimum is 500 users or devices. In practice that number no longer reflects who Microsoft will actually sign. Since early 2025, licensing specialists report that Microsoft increasingly declines new and renewal EAs for commercial organizations below roughly 2,400 users, steering them toward the Cloud Solution Provider program or the Microsoft Customer Agreement for enterprise instead. The 500 figure is the rule. The 2,400 figure is the reality for commercial buyers.
What is an EA true-up? A true-up is the annual reconciliation under an Enterprise Agreement. On the agreement anniversary each year, the organization counts how many more users or devices it has added since the last count and places a single order for those additional licenses. You report increases, not decreases. An EA does not let you reduce your license count mid-term, so a true-up can only ever add cost during the three years. The time to reduce counts is at renewal. True-ups are where most surprise EA bills come from, because usage grows quietly and nobody reconciles it until the vendor asks.
What is replacing the Microsoft Enterprise Agreement? For organizations Microsoft no longer wants on an EA, the two replacements are the Cloud Solution Provider program, bought through a partner with no seat minimum and month-to-month flexibility, and the Microsoft Customer Agreement for enterprise, a direct digital contract Microsoft positions as the EA’s successor. The important difference is that the Customer Agreement for enterprise is subscription only, with no perpetual licenses and none of the guaranteed programmatic discounts an EA used to carry.
Is the Microsoft Enterprise Agreement going away? Not entirely, and not all at once. Microsoft announced it would stop offering a subset of cloud Enterprise Agreements in direct markets from January 1, 2025, and began notifying affected customers that year. Large organizations, government, and education are the least affected. Smaller commercial customers are the most affected. The practical takeaway is that you cannot assume your EA will renew on the same terms, or at all, and you need to know which contract you will be offered before your renewal window opens.
Is a Microsoft Enterprise Agreement cheaper than CSP? It depends on size and how the agreement is built, so any blanket answer is wrong. An EA historically earned volume discounts that CSP did not, which favored large, stable estates. That advantage narrowed on November 1, 2025 when Microsoft flattened its online-services discount levels, and it disappears entirely for organizations too small to be offered an EA. CSP can be cheaper for organizations with variable headcount because it bills closer to actual use. The honest answer is that the cheapest path depends on your numbers, and the only way to know is to model both against your real usage before you commit.
Source notes
- Microsoft Enterprise Agreement (Microsoft Licensing): the program definition, the 500-user entry point, the three-year term, and the role of Software Assurance.
- Microsoft EA online-services discount changes: the November 1, 2025 flattening of volume discount levels for online services, the estimated 6 to 12 percent effect by prior level, and the exclusion of on-premises software, US government, and education.
- Independent licensing analysis (SAMexpert and others): the observed withdrawal of EAs from smaller commercial customers in direct markets from January 1, 2025, the roughly 2,400-user market pattern, and the positioning of the Microsoft Customer Agreement for enterprise as a subscription-only EA successor. Treated in this article as reported market observation, not published Microsoft policy.
- UMS Microsoft EA renewal negotiation: the UMS method for preparing and negotiating an EA renewal.