Microsoft kills volume rebates in name of 'transparency'

Online Services price changes start November 1, aligning with Microsoft.com rates and eliminating programmatic discounts

Microsoft is updating its pricing approach for Online Services in Enterprise Agreements in the name of consistency and transparency, but could leave some customers paying more.

Many customers, particularly larger ones, enjoy substantial discounts via volume licensing and the change, which will bring the Online Services pricing model into line with those already rolled out for services like Azure, "reflects our ongoing commitment to greater transparency and alignment across all purchasing channels."

Online Services include products such as Dynamics 365 and Windows 365.

Exactly how big a discount customers enjoyed depends on the deal they scored. The change will mean that "pricing will align with the pricing published on Microsoft.com."

According to Microsoft, "This change reduces licensing complexity, enabling partners to invest less time evaluating Microsoft pricing and programs and more time working with customers on their business needs.

"With simplified and standardized prices, partners can shift their focus to delivering unique services that will propel their customers' growth."

Directions on Microsoft's Mary Jo Foley noted: "Neither customers nor licensing experts buy that explanation. Instead, they say the move is part of Microsoft's ongoing push to move all but the largest commercial customers from EAs to other types of channels like Microsoft Customer Agreements (MCAs) and MCAs for Enterprise (MCA-E)."

Foley said, "Microsoft has been actively working to require smaller and mid-size customers to work with Cloud Solution Providers (CSPs), while grabbing the largest volume customers for itself. The thinking: By eliminating volume discounts and taking the biggest customers direct, Microsoft will be able to grow its services revenues faster."

The changes, which apply to Online Services, will take effect on November 1, 2025, and will apply at the customer's next renewal or if they make a new purchase not already listed on their Customer Price Sheet.

The situation is likely to confuse some customers, and there's a good chance that customers will end up paying more as programmatic discounts are eliminated.

Directions' Rob Horwitz said some customers will have also lost their account managers during Microsoft's layoffs in 2025. "Some programmatic discounts are being eliminated. The names of some things are changing.

"But the importance of and procedures for preparing for an upcoming contract negotiation remain largely unchanged ... it is still important to assemble and manage your internal contract negotiation team, clarify your current use and future needs for Microsoft products, understand the special concessions that you got last time that must be maintained, and develop financial models for various scenarios."

Or customers could decide that now is a good time to finally push for an alternative? Some think UK taxpayers might be better off if the government grabbed the bull by the horns rather than paying Microsoft £1.9 billion a year in licensing costs. ®