Important Update: Changes to Microsoft Volume Licensing Discounts Effective 1st November 2025
Wednesday 13th August 2025
Beginning 1st November 2025, Microsoft will flatten the volume licensing price level discounts (also known as waterfall discounts) for all Online Services products sold in Enterprise Agreement (EA) and Microsoft Products and Services Agreement (MPSA).
Microsoft will flatten volume licensing price level discounts for Online Services across EA and MPSA. This means:
- All customers will start at a standardised Online Services price, aligning with cloud industry norms.
- Price levels B-D will be updated to match Level A, simplifying pricing structures.
- Customers can more easily compare agreements and focus on business needs rather than pricing complexity.
- Education customers are excluded from this change.
This change is the next phase of Microsoft's commercial pricing strategy, which aims to simplify prices for customers by aligning with the industry standard approach to cloud services pricing. The change also builds on previous pricing strategy updates, such as the 2017 removal of Azure price level discounts, the 2018 removal of Level A waterfall discounts, and the 2023 change to offer all new Online Services products at a single starting price, publicly available on the Microsoft website.
Commercial and government customers with the following agreements are in scope for this change: direct and indirect EA (Enterprise Enrollment, Server and Cloud Enrollment, and Enterprise Subscription Enrollment), and MPSA. Education licensing customers will not be impacted by this change.
This change applies to Online Services products only, not to Microsoft software products.
What are pricing Waterfalls?
Historically, Microsoft’s EA pricing has been structured around volume tiers, where larger organisations received deeper discounts. These tiers—commonly referred to as Levels A through D— were based on the number of users or devices:
|
Level |
User / Device Count |
Typical Discount Range |
|
A |
500-2,399 |
~3% off ERP |
|
B |
2,400 - 5,999 |
~6% off ERP |
|
C |
6,000 - 14,999 |
~9% off ERP |
|
D |
15,000+ |
~12% off ERP |
How will this impact Enterprise Agreement customers?
This change will happen at agreement renewal or when customers purchase a new online service which is not already on their Customer Price Sheet (has not be previously purchased within the agreement) starting 1st November 2025 (this will include any agreement expiring 31st October 2025). This discount change only applies to Online Services, it does not apply to on-premises software products, Azure Services, or consumer products a customer might have within their EA. Note: Azure services do not have price level discounts.
Customers will see a substantial increase in price for their Online Services upon renewal of their agreement.
Which customers will be impacted by these changes?
This impacts all commercial and most government customers purchasing Online Services through the Enterprise Agreement's Enterprise Enrollment, Enterprise Subscription Enrollment, and Server and Cloud Enrollment. Also those purchasing through MPSA. Education customers are not impacted.
Whether government or commercial, price protected SKUs will not change until the enrolment/subscription expires. This change will apply at agreement renewal, or when a new Online Service is ordered.
How does this compare with CSP?
This change means that all retail pricing for Online Services is the same regardless of the program or volume being purchased. This means that CSP becomes a compelling option for customers of all sizes who can now benefit from the additional value add that Bytes provide through CSP.
What action should I take?
Engage with Bytes to:
- Assess how these changes affect your current agreements
- Explore alternative licensing models
- Plan for renewals and transitions effectively
- Optimise your Online Services licensing using Quantum 365
Where can I find more information?
Email [email protected] or contact your Bytes Account Manager.
Watch our video to find out more.
Read the public announcement here.
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