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Microsoft CSP explained part III: The small to mid-sized Enterprise Agreement customer

In the 3rd part of this blog series, I’ll cover a specific customer scenario that’s very common in the market today. If you are facing this scenario, I encourage you to read on as this blog will help you to understand the issues involved and navigate this important change in Microsoft policy.

Microsoft CSP explained part III: The small to mid-sized Enterprise Agreement customer

In February 2016, Microsoft made a major announcement about a change in licensing. Previously, an organisation needed to have a minimum of 250 qualified users or devices in order to sign an Enterprise Agreement (EA). Starting on July 1, 2016, the new minimum threshold for an EA would be increased to 500 seats. This meant that customers in the 250 – 499 user or device range would no longer be able to sign an EA.

However, customers who had an existing EA would be allowed to extend it by an additional three years. If a customer with 300 users signed an EA in June 2016, they would be able to renew their EA again in June 2019 which would then expire in June 2022. At that point, the customer would need to sign an alternate agreement. This situation is still an issue that thousands of customers are going to need to work through.

What does Microsoft recommend for customers who have 250 – 499 users? The current recommendation is for customers to transition to a CSP agreement. While changing the type of agreement you have with Microsoft may seem like an administrative burden, it is actually a benefit for customers. The reason is because customers want more flexibility when it comes to cloud licensing. See part 1 of my blog series for more on that. The EA had a stipulation that an organisation needed to make an enterprise-wide commitment to certain products (such as Windows Client and Office). The CSP agreement has no such restrictions. This means that an organisation can purchase licenses as they deploy them, rather than buying for the whole organisation at the start of the agreement term.

CSP Volume Discounts

Another question that is very common with customers who are coming from an EA is around pricing. If you have a Microsoft Enterprise Agreement (EA), you will recall that the discount that Microsoft applies is based on the number of qualified desktops or qualified users. The level of discount was indicated by a letter such as A, B, C, or D. This system of discounting made sense when Microsoft’s focus was primarily around selling Windows and Office. Now that focus has changed. Microsoft still wants you to use Windows 10 and Office 365, but there are other cloud products in the Microsoft portfolio which are just as important as Windows and Office.

An organisation with 250 – 499 users would have previously qualified for a Level A discount under an EA. The good news is that Microsoft has considered this specific scenario. The prices on a CSP agreements are very similar to what an EA level A discount would be. Customers who move to one of these new agreements would not be worse off. Microsoft knows that changing an agreement type is hard enough for customers. They don’t want to add insult to injury by also raising their prices.

The CSP discount structure varies by product. It is not in any way tied to the size of your organisation. Windows 10 and Office 365 do not offer any volume discounts under CSP. The unit price is the same whether you buy one license or 400 licenses. Dynamics 365 does have a tiered pricing structure which has the following categories:

  • 1 – 99 users
  • 100 – 249 users
  • 250- 499 users
  • 500 – 999 users
  • 1000+ users

The greater the number of user licenses purchased, the lower the cost of the license. Because customers can buy whatever quantity they need under CSP, purchases generally start in the 1 – 99 tier. If the initial purchase is greater than 99 users, the customer is automatically priced into the higher tier. If the customer decides to start small, they will be automatically bumped into the higher tier once they cross the user threshold for the next tier.

Consider your options

If you are a customer who currently has an EA and has fewer than 500 qualified users or devices, now is the time to speak with a Microsoft licensing partner about your options. Maybe you have a combination of agreements and want to consolidate them into something simpler to manage. Licensing can be a complicated topic, so it pays to work with a partner who has experience in this area. 

Intergern and many other partners like us, do not charge a fee for licensing advice. Partners are generally paid by Microsoft for the sale. Therefore, there is no risk in speaking with a partner to come up with a plan. Even if you plan to continue with your EA for a few more years, it is always a good idea to start thinking about what to do when it expires. 

I hope you have enjoyed this blog series on Microsoft CSP. Follow the links to read Part 1 and Part 2 of the series to gain the full picture.

Intergen is passionate about this program because it is a key part of helping customers adopt cloud services. If there are other questions or topics around CSP that I have not covered in this series, please contact us here. We are always happy to speak with you directly about your specific situation.


This blog is part of a three-part series about the Microsoft Cloud Solution Provider (CSP) program and Microsoft Licensing for the cloud

Microsoft Cloud Solution Provider and licensing

Posted by: Harris Schneiderman, Regional Sales Manager, Seattle | 08 August 2019

Tags: Office 365, Cloud Solution Provider, CSP, Microsoft Licensing, Microsoft Licensing for the cloud

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